2004 (3) TMI 212 - AT - Central Excise

Summary

Issues:
Classification of the product under Heading No. 3402.90 or 3808.90, demand confirmation, penalty imposition, limitation period.

Classification Issue:
The dispute involved the classification of the product "Domex" manufactured by the appellant under Heading No. 3402.90 as claimed by the departmental authorities or under Heading No. 3808.90 as a disinfectant preparation. The product was labeled as an "All purpose disinfectant cleaner" with active ingredients including Sodium Hypochlorite. The chemical examiner's report only considered the cleaning properties of the product, neglecting its disinfectant properties. The tribunal noted that the disinfectant properties were prominently displayed on the label, and there was no evidence to suggest that these properties were subsidiary to the cleaning function. The caution on the label warned against using the product with certain substances due to potential harm from released chlorine. Relying on HS explanatory notes and technical data, the tribunal concluded that the product should be classified as a disinfectant, as claimed by the appellant.

Demand Confirmation and Penalty Issue:
The demand of Rs. 74,39,895/- on the manufacturer with a penalty under Section 11AC of the Central Excise Act was confirmed, along with a separate penalty imposed on the managing partner. The appellant contested the demand, citing limitation for a portion of the amount. The tribunal considered the evidence regarding the product's properties and classification, ultimately ruling in favor of the appellant. As the product was classified as a disinfectant, the tribunal set aside the impugned order, allowing the appeal and relieving the appellant of the confirmed demand and penalties.

Conclusion:
The appellate tribunal, in its judgment delivered by the members, resolved the classification issue by determining the product as a disinfectant based on the prominent display of disinfectant properties on the label and the absence of evidence showing these properties as subsidiary to cleaning. This decision led to the allowance of the appeal, setting aside the demand confirmation and penalties imposed on the manufacturer and the managing partner.