2018 (1) TMI 204 - AT - Central Excise

Classification of goods - food preparations, namely, wheat flour, rice flour, corn crunch, rice crunch, etc. - Whether the goods in question are classifiable under chapter heading 1901.11 or under chapter heading 1901.19 or not? - Extended period of limitation - Difference of opinion on merit i.e. issue of classification but concurrent decision on the issue of period of limitation while setting aside the demand. Held that - Per Ashok Jindal - The intent of the legislature is not that the said goods were strictly used by the infant from the manufacturer or cannot be used by other industrial unit for further manufacture of the said goods for use of infant. The entry is quite clearly shows that the goods should be the food preparations put into unit container for infant use. Therefore the goods qualify for classification under chapter heading 1901.11 Therefore, on merits, we hold that the appellant has correctly classified the goods under chapter heading 1901.11. Per Devender Singh - Admittedly, the products made by the appellant is an intermediate products which are not capable of being used by the infants as such nor are they marketed for infants. They are supplied to the industrial consumers to make it fit for infants. The impugned products are not fit for use of infants as such - capability of use of the products, marketability of the products and the actual supply of the products to industrial user show that the impugned products are not fit for infant use - the products in question, namely, extruded wheat/rice, flour wheat crunch, rice crunch, etc. would be correctly classifiable under tariff sub heading 1901.19. Time limitation - Held that - the appellant has been filing regular declaration under Rule 173B of the Central Excise Act, 1944 - as the fact of declaration made by the appellant was in the knowledge of the Revenue in support of this evidence produced by the appellant which shows name of the buyer is an industrial consumer. In that circumstance, the extended period of limitation is not invokable as all the facts were in the knowledge of the department that the classification/declaration filed by the appellant is in respect of the goods under chapter heading 1901.11 - extended period not invocable. Since the entire period is beyond the normal period, I agree with the learned brother Member (J) in his conclusion that the appeal is to be allowed on limitation.

Summary

Issues:
1. Classification of goods under chapter heading 1901.11 or 1901.19.
2. Invocability of extended period of limitation.

Issue No. (a):
The case involved determining the appropriate classification of goods under chapter heading 1901.11 or 1901.19. The appellant, engaged in manufacturing food preparations, argued that their products were rightfully classified under chapter heading 1901.11 for infant use, as they supplied cereal products used by infants, regardless of whether the goods were supplied to industrial consumers. The Revenue contended that since the goods were not directly used by infants and were supplied to industrial consumers, they should be classified under chapter heading 1901.19. The tribunal analyzed the entries and concluded that the goods were indeed for infant use, qualifying for classification under chapter heading 1901.11, as the intent was for food preparations in unit containers for infant use, irrespective of the intermediary industrial use.

Issue No. (b):
Regarding the invocability of the extended period of limitation, the appellant had been regularly filing declarations under Rule 173B of the Central Excise Act, 1944. The appellant's classification declaration was affirmed by the Revenue after due verification, indicating that all relevant facts were known to the department. The tribunal found that the appellant's regular filing of declarations and the Revenue's awareness of the classification supported the appellant's argument that the extended period of limitation was not applicable. Therefore, the tribunal held that the extended period of limitation was not invocable in this case, leading to the conclusion that the appellant succeeded both on merits and limitation. As a result, the impugned order was set aside, and the appeal was allowed with any consequential relief.

Separate Judgments:
While one member of the tribunal held in favor of the appellant on both the issues of classification and limitation, another member sided with the Revenue on the classification issue. The dissenting member argued that the goods in question were not fit for infant use as they were intermediate products supplied to industrial consumers for further processing before being suitable for infants. Consequently, the dissenting member concluded that the goods should be classified under tariff subheading 1901.19. However, agreeing with the other member on the limitation issue, the dissenting member also supported allowing the appeal solely based on the limitation exceeding the normal period.