2001 (4) TMI 132 - AT - Central Excise

Summary

Issues Involved:
1. Classification of the product 'jaljira' under the Central Excise Tariff Act (CETA).
2. Validity of the duty demand and penalty imposed on the appellants.

Summary:

Issue 1: Classification of the Product 'Jaljira'

The appellants contested the classification of their product 'jaljira' under Chapter 21 of the CETA, arguing it should be classified under Chapter 9 as a spice/masala. The Tribunal examined Chapter Note 3 of Chapter 9, which requires products to be mainly used as condiments, retain the essential character of spices, and be commonly known as masalas. The Tribunal found that 'jaljira' did not satisfy these conditions as it is primarily used as a drink after mixing with water and is not commonly known as a masala. The Tribunal cited various Supreme Court judgments emphasizing that goods should be classified based on their popular meaning and trade understanding. The Tribunal also referred to Board's Circular No. 9/1/99-CX. 1, dated 21-12-2000, which clarified that 'jaljira' is classifiable under Heading 21.08 of the CETA. Consequently, the Tribunal upheld the Commissioner (Appeals)'s order classifying 'jaljira' under Chapter 21 sub-heading 2108.99 (branded) and 2108.91 (unbranded) of the CETA.

Issue 2: Validity of Duty Demand and Penalty

The duty demand and penalty related to the period 1995-96 to 1997-98 were contested on the grounds of limitation. The show cause notice for recovery was issued on 9-11-1999, which the appellants argued was time-barred. The Tribunal noted that the extended period of limitation u/s 11-A of the Act requires proof of fraud, collusion, wilful mis-statement, or suppression of facts. The appellants had informed the Excise Department about their production of 'jaljira' through a letter dated 3-3-1994, which was duly received by the Department. The Tribunal found no evidence of suppression of material facts by the appellants. The show cause notice did not specifically allege suppression regarding the production of 'jaljira'. Citing Supreme Court precedents, the Tribunal held that mere failure to pay duty does not attract the extended period of limitation without intent to evade duty. Consequently, the Tribunal set aside the duty demand and penalty imposed by the Commissioner as time-barred.

Conclusion:

The Tribunal dismissed Appeal No. E/2521/2000-D, upholding the classification of 'jaljira' under Chapter 21 of the CETA. However, it allowed Appeal No. E/2541/2000-D, setting aside the duty demand and penalty as time-barred.