2001 (5) TMI 74 - AT - Central Excise

Summary

Issues Involved:
1. Classification of the product "Dhanzyme."
2. Demand of Central Excise duty and extended period of limitation.
3. Imposition of interest and penalties.

Summary:

1. Classification of the product "Dhanzyme":
The primary issue was whether "Dhanzyme" should be classified under Chapter Sub-heading (CSH) No. 3808.20 as a plant growth regulator or under CSH 3101.00 as a bio-fertilizer. The appellants argued that "Dhanzyme," obtained by repacking "Biozyme" from bulk quantities into smaller packings, did not amount to manufacture as per Chapter 31 of the Central Excise Tariff Schedule. The Tribunal noted that the bulk products "Sampdazyme" and "Wokazim" were classified under CSH 3101.00 and the Department had not proposed to revise this classification. Therefore, repacking did not constitute manufacture, and liquid "Dhanzyme" was not excisable. For granular "Dhanzyme," the Tribunal found that the product emerged from a manufacturing process and was excisable. However, it held that granular "Dhanzyme" was a bio-fertilizer classifiable under CSH 3101.00, chargeable to Nil rate of duty, and not as a plant growth regulator under CSH 3808.20.

2. Demand of Central Excise duty and extended period of limitation:
The demand of Rs. 37,58,560.00 for the period 1995-96 to September 1998 was challenged on the grounds of limitation. The appellants contended that there was no suppression of material facts or intent to evade duty, as they had declared the classification of "Dhanzyme" as a bio-fertilizer in 1995. The Tribunal agreed, noting that the Department had approved the classification of the bulk product by Samruddhi and Wockhardt under CSH 3101.00. Therefore, the extended period of limitation u/s 11A(1) was not invokable.

3. Imposition of interest and penalties:
The Tribunal found that the provisions of Section 11AC and Section 11AB of the Central Excise Act were not applicable, as there was no intent to evade duty. Consequently, the penalties imposed on the company and its directors, as well as the interest on the duty amount, were not sustainable.

Conclusion:
The Tribunal set aside the impugned order, holding that "Dhanzyme" in both liquid and granular forms was classifiable under CSH 3101.00 as a bio-fertilizer, chargeable to Nil rate of duty. The appeals were allowed, and no duty, interest, or penalties were upheld.