2022 (1) TMI 358 - AT - Central Excise

Classification of goods - Biozyme - classifiable under tariff entry 31051000 or under tariff entry 31010099 - suppression of facts - intent to evade duty or not - penalty - extended period of limitation - HELD THAT - The fact remains that the appellant is clearing Biozyme in the packages of less than 10 litres or more than 10 litre cleared under chapter heading 31051000 was accepted by the department. With regard to the goods which are less than 10 litres, the Revenue wants to classify under chapter 31051000 of chapter heading of the tariff which described he goods should be in tablet form or similar form or packages or packages goods weight not exceeding 10 kgs. Therefore, intent of the said entry is clear that the goods should be in solid form i.e. in the form of tablet or powder and not in weight. Admittedly, kilogram and kilo litre have defined in kilo it should be sold in the form of kilo it should be in liquid form under chapter 3101000 of the tariff talks about the tablet or similar form of packages less than 10 kgs - the classification of the product under chaper 31051000 of the Act is not applicable and the product is correctly classifiable under chapter 310510099 of the tariff. If the commodity is sold, semi-sold, viscous or a mixture of sold and liquid and volume means, if the commodity is liquid or is sold by cubic measure. Admittedly, in this case, the goods have been sold by the appellant in kilo litre. Therefore, as per Legal Metrology (Packaged Commodities) Rules, 2011, the goods are appropriately classifiable under chapter 310510099 of the Tariff Act. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Classification of goods under Central Excise Tariff Act, 1985 for the period 1.6.2013 to 30.4.2016.

Detailed Analysis:

1. Classification Dispute:
The appellant, engaged in manufacturing Animal or Vegetable Fertilizers under chapter 31 of the Central Excise Tariff Act, cleared the product "Biozyme" claiming nil rate of duty under sub-heading 31010099. The Revenue disputed this classification, arguing that "Biozyme" should be classified under tariff entry 31051000. The dispute arose due to the interpretation of goods in tablet or liquid form under different tariff headings.

2. Appellant's Argument:
The appellant contended that heading 3105 excludes goods in liquid form and applies only to goods in tablet form or packages not exceeding 10 kg. They relied on the principle of noscitur a sociis to interpret the relevant chapter headings. Additionally, they cited precedents to support their interpretation of the classification.

3. Revenue's Argument:
The Revenue argued that changes in the Tariff Act post-2005 expanded the scope of heading 3105 to include goods in tablet or liquid form in packages not exceeding 10 kg. They emphasized the specific description provided in the tariff entry and the changes in the wording of the relevant chapters after the amendment.

4. Judgment on Classification:
The Tribunal analyzed the definitions of kilogram and kilolitre to determine the form of goods covered under different tariff headings. They applied the principle of noscitur a sociis to interpret the chapter headings and concluded that "Biozyme" in liquid form should be classified under sub-heading 31010099, not 31051000. The Tribunal also referred to the Legal Metrology Rules to support their classification decision based on the unit of volume in which the goods were sold.

5. Decision and Relief:
The Tribunal set aside the impugned order and allowed the appeal in favor of the appellant. The classification of "Biozyme" under chapter 31051000 was deemed incorrect, and the product was held to be correctly classifiable under chapter 31010099 of the Tariff Act. The appellant was granted consequential relief as per the judgment.

In conclusion, the judgment resolved the classification dispute by interpreting the relevant tariff entries, applying legal principles, and considering precedents to determine the appropriate classification of the product "Biozyme" under the Central Excise Tariff Act, 1985.