2003 (10) TMI 136 - AT - Central Excise

TPT-12 (treated Tamarind Kernel powder) - Demand - Limitation - Whether TPT-12 (treated Tamarind Kernel Powder) is classifiable under Heading 11.01 of the Schedule to the Central Excise Tariff Act as product of milling industry or under Heading 13.01 as a gum - HELD THAT - It is apparent from Board's Circular F. No. 10/18/86-CX.I, dated 14-8-86 that except for tamarind powder which is in packings for retail sale for prophylactic or therapeutic purposes, tamarind seed powder or TKP would be correctly classifiable under sub-heading 1101.90 of the Tariff. Accordingly the product in question is classifiable under Heading 11.01 only. We also agree with the learned Advocate that extended period of limitation for demanding the duty is not invocable in the present matter inasmuch as it has not been controverted by the Revenue that they had filed the classification declaration along with the process of manufacture for their Bhiwani unit. If they had filed the process of manufacture for one of their unit, it cannot be alleged that in not filing the process of manufacture in Viramgam unit they had suppressed the fact with an intent to evade payment of duty. The learned Advocate has relied upon the judgment in Cadila Laboratories Pvt. Ltd. v. CCE, 2003 (2) TMI 65 - SUPREME COURT wherein the extended period was held to be not invocable by the Supreme Court as no duty was sought to be levied on the same products manufactured by the sister concern and therefore it could not be said that the belief of the appellants was not bona fide. The appeal is thus allowed.

Summary

Issues Involved:
1. Classification of TPT-12 (treated Tamarind Kernel Powder).
2. Whether the process of treating TKP amounts to manufacture.
3. Applicability of the extended period of limitation for demanding duty.

Summary:

1. Classification of TPT-12 (treated Tamarind Kernel Powder):
The primary issue was whether TPT-12 is classifiable under Heading 11.01 of the Central Excise Tariff Act as a product of the milling industry or under Heading 13.01 as a gum. The appellants argued that TPT-12 should be classified under Heading 11.01, supported by the Central Board of Excise and Customs' Circular No. 5/86, which states that tamarind seed powder is a product of the milling industry. The Department contended that the product should be classified under Heading 13.01 based on the HSN Explanatory Notes. However, the Tribunal concluded that TPT-12 is classifiable under Heading 11.01, as Chapter 13 of the Central Excise Tariff has not been aligned with HSN to cover derived vegetable products like mucilages and thickeners.

2. Whether the process of treating TKP amounts to manufacture:
The appellants argued that the process of treating TKP to make it soluble in cold water does not amount to manufacture, as TKP continues to be TKP and is sold as such in the market. They cited the decision in National Tar Products v. CCE, Vadodara, which held that not all chemical changes amount to manufacture. The Department argued that the process results in a new product with a new name, character, and use, known as printing gum. The Tribunal found that the process undertaken by the appellants does not amount to manufacture, as the product remains TKP and is sold as such in the market.

3. Applicability of the extended period of limitation for demanding duty:
The appellants contended that the demand for duty cannot be made for the extended period of limitation, as they had filed classification declarations and the process of manufacture for their Bhiwani unit. The Department argued that the extended period is invocable due to misdeclaration and suppression of the manufacturing process. The Tribunal agreed with the appellants, stating that the extended period of limitation is not applicable, as the classification declaration was filed for one unit, and the non-filing for the other unit was a bona fide clerical mistake. The Tribunal relied on the judgment in Cadila Laboratories Pvt. Ltd. v. CCE, where the extended period was not invocable due to the bona fide belief of the appellants.

Conclusion:
The appeal was allowed, classifying TPT-12 under Heading 11.01 and ruling that the process does not amount to manufacture. The extended period of limitation for demanding duty was also found to be not invocable.