2005 (10) TMI 96 - SC - Central Excise

Classification of goods - Whether the products manufactured by the appellant, namely, Milk Shake Mix , Soft Serve Mix , Coffee Creamer and Cream Packed are classifiable under Tariff Heading 04.04 (as contended by the appellant) of the Central Excise Tariff Act or Tariff Heading 1901.19 (as contended by the Revenue) - Held that - Tribunal dismissed the appellant s appeal from the order of the Commissioner of Central Excise. The Tribunal has not addressed itself at all to the various arguments raised by the appellant and has merely recorded that before arriving at the conclusion of classification, the Commissioner has considered all the points raised by the learned Counsel before the Tribunal and as such, we do not find any infirmity in the order . This is an inappropriate method of disposing of the appeal by the Tribunal particularly when a Tribunal is the forum which is the ultimate fact finding forum. Therefore, without deciding the issues raised by the appellant we remand the matter back to the Tribunal for the purpose of disposing of the same on merits. The Tribunal is directed to dispose of the matter as far as possible preferably within a period of three months from the date of the receipt of this order - Decided in favour of assessee.

Summary

Issues: Classification of products under Tariff Heading 04.04 or 1901.19, Tribunal's dismissal of appellant's appeal without addressing arguments, Imposition of penalty under Rule 173Q.

Classification Issue: The Supreme Court addressed the classification issue of products like "Milk Shake Mix", "Soft Serve Mix", "Coffee Creamer", and "Cream Packed" under Tariff Heading 04.04 or 1901.19. The appellant contended that the products were essentially dairy products with minute stabilizing agents and should fall under Tariff Heading 04.04. The appellant referred to Chapter Note 4 and argued that the stabilizing agents did not change the classification. Additionally, the appellant cited HSN clarifications that adding stabilizing agents did not alter the classification of dairy products. The Court emphasized the importance of predominant substances in classification and remanded the matter back to the Tribunal for a detailed classification analysis.

Tribunal's Dismissal Issue: The Supreme Court criticized the Tribunal for dismissing the appellant's appeal without addressing the arguments raised. The Court noted that the Tribunal's approach was inappropriate, especially considering the Tribunal's role as the ultimate fact-finding forum. The Court directed the Tribunal to reconsider the matter on its merits within three months, highlighting the necessity of a thorough examination of the classification issues raised by the appellant.

Penalty Imposition Issue: In a separate appeal, the Revenue challenged the Tribunal's decision to set aside the penalty imposed under Rule 173Q of the Central Excise Rules, 1944. The Tribunal ruled in favor of the appellant, stating that the show cause notice and the Commissioner's order did not specify the exact clause of Rule 173Q allegedly contravened by the appellant. The Court agreed with the Tribunal, emphasizing the need for clarity on the nature of the contravention for proper legal proceedings. Consequently, the Court dismissed the Revenue's appeal against the Tribunal's decision, highlighting the importance of providing specific details in legal notices and orders to ensure procedural fairness.