2018 (6) TMI 993 - AT - Central Excise

Time Limitation - Valuation - Zafrani Zarda Flavoured Chewing Tobacco - whether Valuation to be done on the basis of Section 4A of CEA or Secion 4 of CEA? - Held that - The case made out against the appellant was only when the N/N. 2/2006-CE (N.T.) dated 01.03.2006 was issued. However, the appellant have been manufacturing the same goods right from 2005 onwards and they had declared the product under tariff heading number 24039910 as chewing tobacco and under the same heading and description they have been declaring through out, even after the issuance of N/N. 2/2006-CE (N.T.). Therefore, it clearly shows that since the appellant have maintained the claim under tariff heading no. 24039910 even prior to the disputed period, the bonafide is clearly established. It can be conveniently understood that the appellant s product is the Zarda Scented Tobacco . With this disclosure of the information, no suppression of fact can be alleged against the appellant. The demand is clearly time barred - appeal allowed - decided in favor of appellant.

Issues:
1. Classification of the product under Central Excise Tariff Act.
2. Valuation of the product under Section 4A of the Act.
3. Time-barred nature of the show cause notice.
4. Allegations of suppression of facts by the appellant.

Analysis:
1. Classification of the Product:
The case involved the classification of the product manufactured by the appellant as either Chewing Tobacco or Zarda Scented Tobacco under the Central Excise Tariff Act. The appellant contended that both products were not specifically notified under Notification No. 13/2002-CE (N.T.) and were subject to MRP-based valuation under Section 4A. The Tribunal examined the historical context of tariff headings and amendments, ultimately determining that the product in question should be considered as per Section 4A for valuation purposes.

2. Valuation under Section 4A:
The appellant argued that despite a temporary omission of the specific tariff heading for Zarda Scented Tobacco, subsequent amendments rectified this error, ensuring that the product remained covered under Section 4A for valuation. The Tribunal relied on precedents, such as Urmin Products Ltd. case, to support the appellant's position regarding the valuation method. The appellant further contended that the Adjudicating Authority had erred in quantifying the duty demand, presenting a revised duty liability calculation for consideration.

3. Time-Barred Show Cause Notice:
The appellant raised the issue of the show cause notice being time-barred, citing the invocation of the extended period beyond one year from the relevant period. They argued that they had a bona fide belief in the correct classification and valuation of their product, supported by consistent declarations in their registration applications and monthly returns. The Tribunal agreed with the appellant, emphasizing that no suppression of facts or intent to evade duty was evident, leading to the conclusion that the demand was time-barred.

4. Allegations of Suppression of Facts:
The appellant vehemently denied any malafide intention or suppression of facts, asserting that they had transparently disclosed all relevant information regarding the product and its classification. The Tribunal concurred with the appellant's position, noting the consistent declarations made by the appellant and the absence of any deliberate evasion tactics. The judgments cited by the appellant further supported their argument against allegations of suppression.

In conclusion, the Tribunal ruled in favor of the appellant, setting aside the impugned order on the grounds of the show cause notice being time-barred due to the absence of suppression of facts or intent to evade duty. The judgment highlighted the importance of clear disclosure and consistent declarations by the appellant in determining the time-barred nature of the demand, without delving into other issues raised during the appeal proceedings.

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