2019 (1) TMI 248 - AT - Central Excise

Classification of goods - Bilas Pan Sughandh - Department has termed the product as Churan for Pan classifiable under tariff heading 2106 9070, whereas the appellant claimed under 2008 9999 - Held that - It is settled law that classification of goods is based on more of product known in trade parlance then on the basis of its ingredients in the market - Product is sold and purchased with the clear description as Pan Flavour Material - Under chapter heading 2106 9070, there is specific tariff entry in the name of churan pan, therefore, in our considered view the product is pre-dominantly classifiable under 2106 9070 as churan for pan and not under 2008 9999. Penalty u/s 11AC and Rule 25 of CER - Held that - In the present case issue involved is interpretation of classification of goods for this reason penalty is not imposable. The impugned orders are modified to the effect that the demand of duty and classification ordered by the lower authorities are upheld and penalty imposed under section 11AC/ 25 is set aside - appeal allowed in part.

Summary

Issues: Classification of goods under Central Excise Act, 1944; Applicability of specific tariff entries; Imposition of penalty under Section 11AC.

Classification of Goods:
The case involved the classification of the product "Bilas" Pan Sughandh by the appellant under Chapter sub-heading 2008 9999 at nil rate of duty, while the department classified it as 'Churan for Pan' under Tariff Heading 2106 9070. The appellant argued that the product is a ready-to-consume edible mixture of fruits, nuts, and other edible parts, not a pan masala, and not used specifically with pan. The appellant contended that the product does not fall under heading 2008 as it does not lose the essential character of individual ingredients, and heading 2106 for food preparations was not applicable. The Tribunal observed that the product was known in trade parlance as 'Pan Flavour Material' and was predominantly classifiable under 2106 9070 as 'churan for pan', based on its use and trade description.

Imposition of Penalty:
The appellant challenged the penalty imposed under Rule 25 read with Section 11AC, arguing that there was no suppression of fact or mis-declaration. The Tribunal noted that there was no allegation of suppression or fraud in the show-cause notice, and since the issue involved interpretation of goods classification, the penalty under Rule 25 was not justified. Consequently, the penalty under Rule 25 was set aside, and the demand of duty and classification by lower authorities was upheld.

Conclusion:
The Tribunal modified the impugned orders, upholding the demand of duty and classification under 2106 9070 for the product. The penalty imposed under Section 11AC/25 was set aside due to the absence of suppression or fraud allegations and the issue being related to the interpretation of goods classification. Therefore, the appeals were partly allowed based on the above terms.