2004 (9) TMI 166 - AT - Central Excise

Summary

Issues: Classification of goods under Central Excise Tariff - Small-scale exemption - Penalty imposition

Classification of goods under Central Excise Tariff:
The original authority classified the processes on guar dal to produce guar gum under CET sub-heading No. 1310.10, considering it as manufacturing. The appellants claimed exemption and classification under sub-heading No. 1101.19 as products of the milling industry. The Tribunal analyzed the manufacturing process, including grinding guar dal with power, washing with water and sulphuric acid, drying, grinding, purifying, and packing in bags. The Tribunal found that the resultant product, guar gum, falls under CET sub-heading 1310.10, covering gums manufactured with power. It differentiated between CET heading 11.01 for milling industry products and CET heading 13.01 for gums, concluding that guar gum is classifiable under CET 13.01. The Tribunal also distinguished a previous case involving Tamarind Kernel Powder, emphasizing the chemical treatment of guar gum in the current case, leading to its correct classification under CET sub-heading 1301.01.

Small-scale exemption:
The original authority allowed small-scale exemption, which was upheld by the lower appellate authority. The Tribunal noted the reduction in penalties by the lower appellate authority but deemed the penalty on the first appellant excessive. Consequently, the Tribunal reduced the penalty on the first appellant from Rs. 5,22,866 to Rs. 1,25,000 and on the second appellant from Rs. 50,000 to Rs. 25,000. The Tribunal affirmed the benefit of small-scale exemption already granted while adjusting the penalties imposed.

Penalty imposition:
The original authority confirmed a duty demand and imposed penalties under Section 11AC and Rule 173Q, along with a penalty on the second appellant for omissions and commissions. The lower appellate authority upheld the penalties except for setting aside the penalty under Rule 173Q due to the penalty imposed under Section 11AC. The Tribunal reviewed the penalties, finding the first appellant's penalty excessive and reducing it to Rs. 1,25,000 and the second appellant's penalty to Rs. 25,000. The Tribunal rejected the appeals except for the penalty reductions, maintaining the classification under CET sub-heading 1301.01 for guar gum production.