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2019 (6) TMI 1600 - AT - Central ExciseClassification of goods - dant mukta used in manufacture of lal dant manjan - classifiable under Chapter sub-head 33061010 or otherwise? - benefit of N/N. 02/2011 CE dated 01.03.2011 - extended period of limitation - penalty - HELD THAT - The word tooth powder has been taken away from the existing eight digit tariff and any kind of powder which is the preparation for oral or dental hygiene is held covered under Chapter heading 33061010 - Otherwise also, the Tribunal Mumbai in the case of ECO VALLEY FARMS FOODS LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE, PUNE-III 2013 (1) TMI 51 - BOMBAY HIGH COURT has held that the amendment of tariff from six digit to eight digit regime was brought about with a view to covert the existing six digit entries in Schedule to the 1985 Act to eight digit entries on par with the entries in the Schedule to the Customs Tariff Act and not with a view to bring in new goods within the purview of excise. The said observation was based on the clarification under Notification No. 01/2005 dated 24.02.2005 and a subsequent Trade Circular No. 808 dated 25.02.2005 clarifying that the amendment of 2004 is merely a technical change of transition from six digit to eight digit classification with no substantive change to be brought in. In the present case, admittedly, the impugned product, i.e. the raw material/ intermediary product in manufacture of lal dant manjan (tooth powder), namely dant mukta has an essential character of lal dant manjan . Admittedly, it contains all such ingredients as are the ingredients for lal dant manjan . It is only one constituent, i.e., gairric powder which is being added to dant mukta for it to be finally called as lal dant manjan . There is no denial on record to the fact that dant mukta imparts the essential character to the final product lal dant manjan and the garric powder which is found in a higher concentration in lal dant manjan does not contain any tooth cleansing property and it only acts as a carrier - this intermediary product is nothing but the tooth powder (under six digit regime) or powder for oral hygiene (under eight digit regime), classifiable under 330610/33061010 respectively. Applicability of Notification No. 02/2011 CE dated 01.03.2011 - HELD THAT - The impugned product dant mukta is entitled for benefit of the Notification. Denying the said benefit on the ground that it is not sold in packages for retail, is also not appropriate finding because the goods in packages of a kind sold by retail are not the only goods for holding 3303 3307. Rather Chapter Note 3 also uses the word inter alia , which as per the dictionary meaning is amongst other things . The word inter alia in Chapter Note 3 is comprehensive in nature to include even the products sold in lump sum packages and also products sold in retail packages. Hence, irrespective dant mukta is not sold in retail packages but in bulk packages, it is eligible for the benefit of concessional duty under Notification No. 02/2011 dated 01.03.2011 - Department has wrongly denied the benefit of the impugned Notification to product of the appellant called dant mukta . Extended period of limitation - Penalty - HELD THAT - Department initiated the proceedings alleging dant mukta , an intermediary product of the appellant required to make lal dant manjan has been mis-declared with an intent to evade payment of duty - In the present case, where it is already held that dant mukta has rightly been declared as tooth powder/ powder meant for dental or oral hygiene. The alleged mis-declaration has already been set aside. It thus, becomes clear that there was no intention to act dishonestly so as to evade the payment of duty. Hence, the extended period of limitation could not be invoked. Otherwise also, the extended period of limitation is not invokable in the cases pertaining to classification as interpretational issue - Remaining demand for the period January, 2016 to January, 2017 though within the normal period of one year is also liable to be set aside, in view of both the questions for adjudication as framed to have been decided in affirmative i.e., in favour of the appellant. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Classification of "dant mukta" under Chapter Heading 33061010. 2. Eligibility for benefit under Notification No. 02/2011-CE dated 01.03.2011. 3. Invocation of the extended period of limitation. 4. Imposition of penalty and interest. Issue-wise Detailed Analysis: 1. Classification of "dant mukta" under Chapter Heading 33061010: The primary issue was whether "dant mukta" used in the manufacture of "lal dant manjan" is classifiable under Chapter Heading 33061010. The appellants argued that "dant mukta" is akin to tooth powder and should be classified under tariff item 33061010, thus eligible for a concessional duty rate. The respondent contended that "dant mukta" is merely a raw material and not tooth powder, hence not classifiable under 33061010. The Tribunal analyzed the transition from six-digit to eight-digit tariff codes, noting that the change was technical and did not substantively alter the classification. The Tribunal held that "dant mukta" has the essential character of tooth powder and is correctly classifiable under 33061010, supporting the appellant's position. 2. Eligibility for benefit under Notification No. 02/2011-CE dated 01.03.2011: The Tribunal examined whether "dant mukta" is eligible for the benefit under Notification No. 02/2011-CE, which provides a concessional duty rate for tooth powder. Given that "dant mukta" was classified as a powder for dental hygiene under 33061010, the Tribunal concluded that it qualifies for the benefit of the notification. The Tribunal rejected the argument that the benefit should be denied because "dant mukta" is not sold in retail packages, noting that Chapter Note 3 includes products sold in bulk packages. 3. Invocation of the extended period of limitation: The Tribunal considered whether the extended period of limitation could be invoked. The demand period was from December 2015 to January 2017, with the show cause notice issued on 11.01.2018. The Tribunal found no evidence of intent to evade duty, as "dant mukta" was correctly classified. Citing the Supreme Court's decision in Densons Pultretaknik Vs. CCE, the Tribunal held that mere classification disputes do not amount to suppression of facts. Consequently, the demand for December 2015 was time-barred, and the extended period of limitation was not applicable. 4. Imposition of penalty and interest: Given the Tribunal's findings on classification and eligibility for the notification benefit, the allegations of mis-declaration were set aside. The Tribunal determined that there was no dishonest intent to evade duty, thus penalty and interest were not imposable. The remaining demand for the period from January 2016 to January 2017 was also set aside. Conclusion: The Tribunal concluded that the classification of "dant mukta" under Chapter Heading 33061010 was correct, and it was eligible for the benefit under Notification No. 02/2011-CE. The extended period of limitation was not applicable, and penalties and interest were not warranted. The appeal was allowed, and the order under challenge was set aside.
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