2018 (12) TMI 493 - AT - Central Excise

Method of Valuation - classification of goods - fragrances (Perfumery compound) - products mainly supplied to industrial consumers - appellant are classifying their goods under CETH 3302 9011 and clearing the same to industrial customers as well as to the traders by adopting the value under Section 4 of Central Excise Act, 1944 - case of the department is that the goods is classifiable under CETH 3303 0040 which is notified to be assessed under Section 4A of Central Excise Act, 1944. Held that - In the present case, there are ample of evidence such as nature of product, product does not contain alcohol, product label clearly indicate that it is meant only for industrial use, the package of product is such that the same is not for individual human consumption, therefore, without any evidence contrary to these evidences, the department failed to challenge the classification of the product supplied by the appellant. The product perfumery compound manufactured by the appellant is correctly classifiable under 3302 and not under 3303 as claimed by the Revenue - appeal allowed - decided in favor of appellant.

Summary

Issues: Classification of goods under CETH 3302 9011 or 3303 0040, differential duty demand, evidence supporting classification, relevance of product usage, consistency in classification for industrial consumers and traders.

Classification of Goods:
The case involved the classification of fragrances manufactured by the appellant under CETH 3302 9011 or 3303 0040. The appellant classified the goods under 3302 9011 and cleared them to industrial customers and traders. The department contended that the goods should be classified under 3303 0040. This discrepancy led to a differential duty demand and subsequent adjudication orders.

Evidence and Submissions:
The appellant argued that the fragrances were perfumery compounds used as raw material by industries like soap, shampoo, and agarbatti, thus correctly falling under 3302. The appellant provided evidence, including customer letters and product labels indicating industrial use only and being free from alcohol. The appellant highlighted that the product was not for personal use but solely as raw material. They also emphasized that the goods supplied to industrial consumers and traders were the same, supporting a consistent classification.

Department's Position:
The Revenue reiterated the findings of the impugned order, maintaining the classification under 3303 0040. However, the Tribunal carefully considered both sides' submissions and examined the records.

Judgment and Analysis:
After reviewing the evidence and submissions, the Tribunal observed that the product was mainly supplied to industrial consumers, with some supplies to traders for industrial consumers. The Tribunal noted that both sets of products were the same in nature and use, indicating a single classification. The appellant presented documents proving the consistency in the product supplied to industrial consumers and traders. The Tribunal emphasized that the burden to prove correct classification rested on the Revenue, which failed to provide contrary evidence. Due to the lack of evidence challenging the appellant's classification, the Tribunal ruled in favor of the appellant, classifying the perfumery compound under 3302 and setting aside the impugned orders.

Conclusion:
The Tribunal's decision highlighted the importance of evidence in determining the correct classification of goods. By considering the product's nature, labeling, and consistent supply to industrial consumers and traders, the Tribunal concluded that the fragrances were rightly classified under 3302. The judgment emphasized the need for the Revenue to provide substantial evidence to challenge a classification and upheld the appellant's classification based on the evidence presented.