2017 (1) TMI 28 - AT - Central Excise

Classificattion of Noscapine B.P. and Papavarine S.R. - Interest - Penalty - Time limitation - it is clear that the Noscapine B.P & Papavarine S.R were non pehnantherene (Antherium) alkaloid and they were non Narcotic products. Therefore both the products are not capable of causing or producing in human beings dependence tolerance and withdrawal syndromes thus they are not covered under Medicinal and Toilet Preparations (Excise Duties) Act 1955 (16 of 1955) and State Excise duties were leviable there on. It is clear that both the products were non-narcotic products and these goods belonging to alkaloids of opium and their derivative salts thereof in the instant case both the products as such did not contain opium . Although they are generated from the opium but do not contain opium and in this view the contention of the noticee is not correct. - to be classified by under Chapter Heading No. 2939.1900 and are liable to payment of duty of Central Excise. Extend period of limitation - It appears that the Revenue has been in the knowledge of the subject issue of classification of the subject products. Further the department has failed to provide any evidence to prove the intention to evade the duty on the part of the appellant - Demand confirmed for one year only - Appeal allowed partly.

Issues Involved:
1. Liability of Central Excise duty on the sale of Nascopine B.P. and Papavarine S.R.
2. Classification of Nascopine B.P. and Papavarine S.R. under Central Excise Tariff.
3. Applicability of Chapter Note 9 of Chapter 29 of Central Excise Tariff.
4. Invocation of extended period clause for duty liability and penalties.

Detailed Analysis:

1. Liability of Central Excise Duty:

The appellant, Govt. Opium and Alkaloid Factories, challenged the Commissioner, Indore's order confirming duties amounting to ?4,75,90,984 and ?32,36,215 along with interest and penalties. The primary contention was that Nascopine B.P. and Papavarine S.R. are derivatives of opium and thus exempted from duty under Chapter Note 9 of Chapter 29 of the Central Excise Tariff.

2. Classification of Nascopine B.P. and Papavarine S.R.:

The appellant argued that these products should not be classified under Chapter 29 of the Central Excise Tariff due to their opium derivative nature. Conversely, the Revenue contended that since these products are non-narcotic, they fall under Chapter Heading No. 2939.1900, which attracts Central Excise duty. The Tribunal examined the definitions and classification criteria under the Medicinal and Toilet Preparations (Excise Duties) Act, 1955, and concluded that the products did not meet the criteria for exclusion from Chapter 29. Therefore, they should be classified under Chapter sub-heading 2939.1900, making them liable for duty.

3. Applicability of Chapter Note 9 of Chapter 29:

Chapter Note 9 excludes products containing alcohol, opium, Indian hemp, or other narcotic drugs. The Tribunal analyzed the definitions provided in the Medicinal and Toilet Preparations (Excise Duties) Act, 1955, and determined that Nascopine B.P. and Papavarine S.R. are not covered under the definitions of opium, derivative of opium, or narcotic drugs. As these products do not contain opium or narcotic drugs, they do not qualify for exclusion under Chapter Note 9 and are appropriately classified under Chapter 29.

4. Invocation of Extended Period Clause:

The appellant asserted that there was no willful misstatement or suppression of facts, arguing that being a government entity, there was no intent to evade duty. The Tribunal found that the Revenue was aware of the classification issue and failed to provide evidence of intent to evade duty. Consequently, the Tribunal ruled that the extended period for duty and penalties could not be invoked. The duty liability was confirmed only for the period of one year preceding the date of the Show Cause Notice.

Conclusion:

The Tribunal sustained the impugned order regarding the classification and excisability of Nascopine B.P. and Papavarine S.R. under Chapter sub-heading 2939.1900, making them liable for Central Excise duty. However, the extended period for duty and penalties was not upheld due to the lack of evidence of intent to evade duty. The matter was remanded to the adjudicating authority for re-quantification of duty liability for the period of one year and determination of any applicable penalty, to be completed within four months.

Result:

The appeal was partly allowed, sustaining the impugned order to the extent of classification and excisability, while remanding the matter for re-quantification of duty liability and penalties for the period of one year. The decision was pronounced in open court on 19.12.2016.

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