2021 (10) TMI 231 - AT - Central Excise

Classification of goods - Autoclave - Glass bead Sterilizer - Steam Clave - Hot Air Sterilizer - Autoclaves classifiable under Central Excise Tariff Heading 841910 (up to February 2005) and 84192010 (from March 2005) as held in the impugned order or under 901800 (up to February, 2005) and 90184900 (from March, 2005) or not - Glass Bead Sterilizer, Steam Clave and Hot Air Sterilizer classifiable under 841910 (up to February, 2005) and 84192010 (from March, 2005); or under 9018 - extended period of limitation - penalty - HELD THAT - Rule 2 deals with incomplete and unfinished articles and articles mixed with other articles and is not relevant to this case. Rule 3(a) states that a specific description prevails over the general description. According to the appellant, this Rule is in its favour because Dental equipment is a more specific description over autoclaves and sterilizing equipment . According to the Revenue, Sterilizing equipment is a more specific description of the nature of the goods and not Dental equipment . This Rule does not resolve the issue in favour of either side. Rule 3(b) deals with composite articles and hence is irrelevant to this case. Rule 3(c) states that if there are two or more equally valid classification, the last of such headings shall prevail. Rules 4 and 5 are not relevant to this case. None of the Rules of Interpretation satisfactorily resolve the dispute at hand. While the Central Excise Tariff has only Rules of Interpretation, the Harmonized System of Nomenclature based on which the Tariff is drafted, also has detailed explanatory notes explaining the scope of each heading - The Harmonised System of Nomenclature explains that 8419 includes not only autoclaves for industrial purposes but also those used for installation and operation theatres, etc. - the four goods manufactured by the appellant are classifiable under 8419 as asserted by the Revenue and are chargeable to appropriate duty. Therefore, on merits, the contention of the Revenue should be accepted. Extended period of limitation - HELD THAT - The allegation of suppression of facts by the appellant in the show cause notice is completely unfounded. The other elements such as fraud, collusion and wilful mis-statement have not even been alleged in the show cause notice. Therefore, the demand cannot be raised by invoking the extended period of limitation - As far as the normal period of limitation is concerned, the appellant submits that although they have been contesting that classification on merits they have already paid the differential duty for the normal period of limitation from September 2006 to March 2007 along with interest. Imposition of penalty - HELD THAT - The elements required for imposing penalty under Section 11AC is the same as those required for invoking the extended period of limitation under proviso to section 11A which is already found to be non-existent in this case. In view of the above, the penalty under Section 11AC needs to be set aside. The impugned order is modified to the extent it upholds the demand and interest as applicable within the normal period of limitation but set aside the demand for the extended period of limitation. The penalty imposed under section 11AC read with Rule 24 is also set aside - Appeal allowed in part.

Issues Involved:
1. Classification of Autoclaves under Central Excise Tariff.
2. Classification of Glass Bead Sterilizer, Steam Clave, and Hot Air Sterilizer under Central Excise Tariff.
3. Invocation of the extended period of limitation under Section 11A for raising the demand and imposition of penalty under Section 11AC.

Issue-wise Detailed Analysis:

1. Classification of Autoclaves:
The appellant classified Autoclaves under Central Excise Tariff Heading 9018.00 (up to February 2005) and 90184900 (from March 2005), claiming them as medical equipment. The Revenue argued that these should be classified under Heading 841910 (up to February 2005) and 84192010 (from March 2005) as sterilizing equipment. The Tribunal noted that the Harmonized System of Nomenclature (HSN) includes sterilizers under Heading 8419, covering medical, surgical, or laboratory sterilizers. The Tribunal concluded that Autoclaves, being sterilizing equipment, fall under Heading 8419 as asserted by the Revenue.

2. Classification of Glass Bead Sterilizer, Steam Clave, and Hot Air Sterilizer:
Similar to the Autoclaves, the appellant classified these items under Heading 9018, while the Revenue classified them under Heading 8419. The Tribunal referred to the HSN explanatory notes, which include sterilizers used in medical or dental settings under Heading 8419. The Tribunal determined that these items are not medical equipment but sterilizing equipment and should be classified under Heading 8419.

3. Invocation of the Extended Period of Limitation:
The Tribunal examined the invocation of the extended period of limitation under the proviso to Section 11A. The show cause notice alleged suppression of facts by the appellant. However, the appellant provided evidence of a declaration made under Rule 173B, acknowledged by the department, and argued that the excise returns format did not require detailed product declarations. The Tribunal found the allegation of suppression unfounded and noted that the other elements (fraud, collusion, willful mis-statement) were not alleged. Consequently, the Tribunal held that the extended period of limitation could not be invoked, and the demand for the extended period was set aside.

Penalty Under Section 11AC:
Since the elements required for imposing a penalty under Section 11AC are the same as those for invoking the extended period of limitation, the Tribunal found no basis for the penalty. The penalty under Section 11AC was set aside.

Conclusion:
The appeal was partly allowed, upholding the demand and interest within the normal period of limitation but setting aside the demand for the extended period. The penalty imposed under Section 11AC was also set aside. The Tribunal provided consequential relief to the appellant as indicated.

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