2005 (2) TMI 197 - AT - Central Excise

Summary

Issues Involved:
1. Classification of 'guar dal flour'
2. Demand of duty and imposition of penalty
3. Invocation of extended period of limitation

Detailed Analysis:

1. Classification of 'Guar Dal Flour':
The core issue in the appeal was the classification of 'guar dal flour'. The Commissioner of Central Excise classified it under sub-heading No. 1301.10 of the Central Excise Tariff Act, 1985. The appellants argued that 'guar dal flour' should be classified under Chapter 11, specifically sub-heading 1101.00. The Tribunal examined the nature and process of obtaining 'guar dal flour', noting that it involved milling but no chemical treatment to modify its properties. The Tribunal concluded that 'guar dal flour' should be classified under Chapter 11 as a product of the milling industry, specifically sub-heading 1101.00.

2. Demand of Duty and Imposition of Penalty:
The Commissioner had confirmed the demand of duty for the period from 28-2-1997 to 31-3-2000, along with interest and an equivalent penalty. The Tribunal found that the classification under Chapter 1301 was incorrect and that 'guar dal flour' should be classified under Chapter 11. Therefore, the duty demand, interest, and penalty based on the incorrect classification were set aside.

3. Invocation of Extended Period of Limitation:
The show cause notice dated 11-2-2002 proposed to demand duty for the period from 28-2-1997 to 31-3-2000, invoking the extended period under the proviso to Section 11A(1) of the Central Excise Act. The Tribunal noted that the show cause notice did not adequately allege intent to evade payment of duty. The appellants had maintained regular books of account and had approached the department with a declaration that was not accepted. The Tribunal found no evidence of intent to evade duty, thus ruling the invocation of the extended period of limitation as incorrect and unsustainable.

Conclusion:
The Tribunal upheld the classification of 'guar dal flour' under Chapter Heading 1101.00. Consequently, the duty and interest demands, as well as the penalty imposed by the Commissioner, were set aside. The appeal was allowed, and the order was accordingly issued.