2016 (9) TMI 229 - AT - Central Excise

Double taxation - Taxability under Additional Duties of Excise in lieu of sales tax - branded ghutka manufactured and cleared - both the lower authorities have held that the goods manufactured by the appellant would fall under Chapter 24 while the respondent has classified the products under Chapter 21 - Held that - it is seen from the records that if the products are classified under Chapter 24, the respondent has to discharge the additional duty of excise in lieu of sales tax, while if the products are classified under Chapter 21, there is no requirement of discharging additional duties of excise in lie of sales tax. Since the classification of the product has been settled by the judgment of the Tribunal in the case of Gahoi Foods Pvt. Ltd. Vs. CCE, Indore 2010 (8) TMI 241 - CESTAT, NEW DELHI nothing survives in this appeal as the respondent had classified the products under Chapter 21 and paid the applicable sales tax. The requirement of paying 10% additional duty of excise would arise only if the products are classified under Chapter 24. - Decided against the Revenue

Summary

Issues Involved:
Classification of goods under Central Excise Tariff Act, 1985 - Differential duty demand - Taxability under Additional Duties of Excise in lieu of sales tax - Proper classification of products under Chapter Heading 21 or 24.

Analysis:

The appeal filed by the Revenue concerns the demand of differential duty on the respondent due to an alleged improper availment of ineligible benefits by claiming that the products manufactured by them fall under Chapter Heading 24.06 of the Central Excise Tariff Act, 1985. The Revenue issued a show cause notice directing the respondent to justify why the branded Gutka manufactured by them should not be classified under Chapter Heading 21.06. The adjudicating authority confirmed the demands raised, holding that the products should be classified under Chapter 24, imposing interest and penalties. However, the first appellate authority set aside the demands, stating that even if the products fall under Chapter 24, the appellant, having paid sales tax under Chapter 21, need not pay additional duty of excise under Chapter 24.

The learned departmental representative argued that the product's intentional misclassification under Chapter 21, whereas it belongs to Chapter 24, makes the products liable for additional duties of excise in lieu of sales tax. The learned counsel referred to a similar case where the Tribunal held that the product should be classified under Chapter 21, supporting the respondent's position. The main issue before the Tribunal was the taxability under Additional Duties of Excise in lieu of sales tax on the branded ghutka manufactured and cleared by the respondent during the relevant period, with conflicting classifications under Chapter 21 and Chapter 24.

The Tribunal, after considering both sides' submissions, focused on the classification issue. Referring to a previous judgment involving a similar matter, the Tribunal found that the product should be classified under Chapter 21, as decided in the case of Gahoi Foods Pvt. Ltd. The Tribunal concluded that since the classification issue had been settled by a previous judgment, there was no merit in the Revenue's appeal. The respondent had correctly classified the products under Chapter 21, paying the applicable sales tax, thus dismissing the appeal filed by the Revenue.

In conclusion, the Tribunal upheld the decision of the first appellate authority, emphasizing the importance of correct classification under the Central Excise Tariff Act, 1985. The judgment highlighted the significance of paying the appropriate duties based on the accurate classification of goods, as determined by relevant case law and precedents.