2018 (2) TMI 998 - AT - Central Excise

Classification of goods - Rose Syrup - Sarasaparilla Syrup (Nannari syrup) - whether classified under CETH 2001.00 or under CETH 2108.20? - Extended period of limitation - Held that - the products are made out of rose petals and nannari (roots). They are known as Rose Syrup and Sarasaparilla Syrup . Chapter Note 6 to Chapter 21 of the tariff clearly states that syrup containing not less than 10% fruit juice or flavoured with non-fruit flavours such as rose, khus, kewara fall under 2108.00 - following the decision laid down in Bectors Foods Specialities Pvt. Ltd. 2008 (8) TMI 146 - CESTAT NEW DELHI , it is held that the subject goods merit classification under 2108.20 as Sharbat from 16.3.1995 onwards - the demand prior to 16.3.1995 is unsustainable and requires to be set aside - Consequently, the demand as well as interest raised after 16.3.95 is upheld. Penalty - Held that - aking into consideration the issue being classification and interpretational one, we are of the considered opinion that the penalties imposed are unwarranted and thereby we set aside the same. The matter is remanded to the adjudicating authority for the limited purpose of re-quantification of duty giving the benefit of cum duty price to the appellant.

Summary

Issues: Classification of products under tariff headings 2001.00 and 2108.20, applicability of Chapter Note 6 to Chapter 21 of the tariff, interpretation of the term 'Sharbat', imposition of duty, penalty, and benefit of cum duty price.

The judgment of the Appellate Tribunal CESTAT Chennai concerned the classification of products, specifically 'Rose Syrup' and 'Sarasaparilla Syrup', under tariff headings 2001.00 and 2108.20. The dispute arose when the appellants claimed Nil rate of duty for the products prepared from parts of plants, namely rose flower and Nannari plant. The initial show cause notice alleged misclassification under 2108, leading to a demand for duty. The Commissioner (Appeals) upheld the classification under 2108.20 but restricted the demand to the normal period and set aside the penalty, directing reclassification with the benefit of cum duty price. The appellant argued that prior to the introduction of the new tariff entry in 1995, the goods were correctly classified under 2001.00, supported by historical classification decisions and departmental clarifications.

The Appellate Tribunal analyzed the issue, considering Chapter Note 6 to Chapter 21 of the tariff, which defines 'Sharbat' as a sweetening beverage or syrup with specific characteristics. Referring to a precedent, the Tribunal concluded that products like 'Rose Syrup' and 'Sarasaparilla Syrup', containing rose petals and Nannari roots, fall under 2108.20 as 'Sharbat' from 16.3.1995 onwards. Therefore, the demand before this date was deemed unsustainable and set aside, while the demand and interest post-16.3.1995 were upheld. The Tribunal found the penalties unwarranted due to the interpretational nature of the issue and set them aside. Additionally, the Tribunal granted the benefit of re-quantification based on cum duty price from 16.3.1995 onwards, modifying the impugned orders to classify the goods under Heading 2108.00 and remanding the matter for re-quantification to the adjudicating authority.

In conclusion, the Tribunal disposed of the appeals by classifying the goods under Heading 2108.00 from 16.3.1995, upholding the demand and interest post this date, setting aside penalties, and remanding for re-quantification with the benefit of cum duty price, in line with the interpretation of the term 'Sharbat' and relevant tariff provisions.