2017 (11) TMI 285 - AT - Central Excise

Classification of goods - solvents and turpentine oil - classified under CTH 3814 or under CTH 3805.19? - scope of SCN - Held that - it would not be proper to say that the original adjudicating authority has gone beyond the show-cause notice. The original adjudicating authority has given his reasoning for classifying the product under 3814. In these circumstances, we find that the impugned order wrongly holds that the original adjudicating authority has gone beyond the scope of show-cause notice. Since the original adjudicating authority has given his reasoning for classifying the product under 3814 it was for Commissioner (Appeals) to decide if the said claim is correct or not. The Commissioner (Appeals) has not examined the finding on classification given by the original adjudicating authority on the ground that the said findings are beyond the scope of show-cause notice. We find that the said assertion is not proper as the show-cause notice had indeed sought to classify certain solvents under 3814 also. Matter remanded to Commissioner (Appeals) to decide the issue of classification of the product on merit - appeal allowed by way of remand.

Issues:
1. Classification of products under central excise headings.
2. Exclusion of Turpentine oil value for duty calculation.
3. Interpretation of show-cause notice and original adjudicating authority's decision.

Analysis:
1. Classification of products under central excise headings:
The appeal involved a dispute regarding the classification of products manufactured by the appellant under central excise headings. The revenue contended that the products should be classified under heading 3814 as solvents chargeable to duty, while the respondents argued that Turpentine oil under heading 3805.19 attracts nil rate of duty. The original adjudicating authority classified the product as a solvent under 3814, differing from the respondents' claim. The Commissioner (Appeals) remanded the matter to the original adjudicating authority for further examination. The Tribunal found that the original adjudicating authority's classification was based on reasoning and did not exceed the scope of the show-cause notice. The Commissioner (Appeals) was directed to decide the classification issue on merit before reaching a final conclusion.

2. Exclusion of Turpentine oil value for duty calculation:
The Commissioner (Appeals) directed the adjudicating authority to exclude the value of Turpentine oil, falling under Chapter 3805.19 and attracting nil rate of duty, from the total amount during the disputed period. The Tribunal noted that the show-cause notice did not specifically identify the products manufactured by the respondents, leading to confusion regarding the classification of Turpentine oil. The original adjudicating authority's decision to classify the product under 3814 was upheld, emphasizing the need for a proper examination of the classification issue.

3. Interpretation of show-cause notice and original adjudicating authority's decision:
The show-cause notice alleged that the respondents were manufacturing solvents under 3814 and Turpentine oil under 3805.19. The original adjudicating authority justified the classification under 3814 based on detailed reasoning. The Tribunal found that the original adjudicating authority's decision was within the scope of the show-cause notice, contrary to the Commissioner (Appeals)' view. The matter was remanded to the Commissioner (Appeals) for a thorough examination of the classification issue before making a final determination.

In conclusion, the Tribunal allowed the appeal by remanding the matter to the Commissioner (Appeals) for a comprehensive review of the classification of products under central excise headings and the exclusion of Turpentine oil value for duty calculation, emphasizing the importance of proper examination and merit-based decisions in such cases.

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