2002 (7) TMI 175 - AT - Central Excise

Summary

Issues Involved:
1. Classification of 'Dant Manjan Lal' (DML).
2. Invocation of the extended period for demanding duty under the proviso to Section 11A(1) of the Central Excise Act.
3. Demand for past six months' period.
4. Imposition of penalties on the appellants.

Issue-Wise Detailed Analysis:

1. Classification of 'Dant Manjan Lal' (DML):
The Larger Bench of the Tribunal classified DML as Tooth Powder under heading 33.06 of the Schedule to the Central Excise Tariff Act. This classification was upheld in all connected appeals.

2. Invocation of the Extended Period for Demanding Duty:
The primary issue was whether the extended period for demanding duty under the proviso to Section 11A(1) of the Central Excise Act could be invoked. The appellants argued that the department was aware of the manufacture and classification of DML and that there was no suppression of facts or intent to evade duty. The Tribunal found that the department had knowledge of the manufacture of DML and that the appellants had filed classification lists and declarations. Therefore, the Tribunal concluded that the extended period of limitation was not invokable, setting aside the demand of duty and penalties for the extended period.

3. Demand for Past Six Months' Period:
The Tribunal addressed whether the demand for the past six months could be confirmed. The appellants contended that even the demand for six months could not be sustained due to the Board's Circular dated 27-5-97, which classified DML as an Ayurvedic medicine. The Tribunal, however, held that the Supreme Court's decision in the appellant's own case (1996 (83) E.L.T. 492 (S.C.)) was the law of the land, and the product was not classifiable as Ayurvedic medicine. Consequently, the demand for the six months' period was upheld, but the duty was to be recalculated treating the price as cum-duty price, in line with the decision in Sri Chakra Tyres Ltd. v. CCE, Madras, 1999 (108) E.L.T. 361 (Tribunal).

4. Imposition of Penalties:
The Tribunal found that no penalties were imposable on the appellants. The reasoning was that there was no suppression of facts or intent to evade payment of duty. The penalties imposed under Rule 173Q of the Central Excise Rules were set aside.

Conclusion:
The appeals were disposed of as follows:
- Appeal No. E/547/98 and appeal Nos. 552-553/98: Demand of duty and penalty set aside.
- Appeal No. E/546/98-C: Demand for the period from June, 1993 to November, 1995 set aside. Demand for the period from December, 1995 to March, 1996 upheld but to be recalculated. Penalty set aside.
- Appeal Nos. E/1095 & 1252/98-C and appeal No. 514/2000-C: Duty payable subject to recalculation.
- Appeal No. E/2717/99-C: Rejected.