2006 (7) TMI 25 - AT - Central Excise

Central Excise In term of circular dated 10-9-1997 respondent classified shikakai powder under sub-heading 3305.99 in the disputed period SCN issued to reclassification of product and demanded duty for 6 months prior to 10-9-1997 A.O. to assess product in particular manner not upheld

Summary

Issues: Classification of "Herbal Shikakai Powder" under Central Excise Tariff Act, retrospective demand of duty, applicability of Section 11A of the Central Excise Act, interpretation of Board's circulars.

In this judgment by the Appellate Tribunal CESTAT, Chennai, the issues revolve around the classification of "Herbal Shikakai Powder" under the Central Excise Tariff Act, the retrospective demand of duty, the applicability of Section 11A of the Central Excise Act, and the interpretation of Board's circulars. The department's appeals were against a common order passed by the Commissioner (Appeals) Trichy, upholding the classification of the product as 'cosmetic' under SH 3305.99 and demanding duty. The first appellate authority restricted the duty demand to the period from 10-9-97 based on a Board's Circular. The department contended that duty could be demanded for a period of 6 months prior to 10-9-97 as per Section 11A, supported by a Supreme Court judgment.

The Senior Advocate referred to a letter issued by CBEC classifying a similar product under SH 3003.30 till 9-9-97, arguing that duty demand prior to this date was not valid based on a Supreme Court judgment. The dispute for the period from 10-9-97 had been settled under the Kar Vivad Samadhan Scheme between the department and the manufacturer. The Tribunal considered these submissions, noting that the Board's direction in the letter was non est in law due to Section 37B's proviso, which prohibits requiring a specific assessment. The product was classified as 'cosmetic' under SH 3305.99, and the duty demand was upheld retrospectively based on the revised classification.

The Tribunal referred to the Supreme Court's judgment in ITW Signode India Ltd., upholding the validity of demanding duty retrospectively under Section 11A. The SCNs issued to the respondents were within the validated category of actions under Section 11A, requiring duty payment for 6 months prior to the date of the SCN. As the revised classification date was 10-9-1997, duty was to be paid for 6 months prior to this date. The impugned order was set aside, and the appeals were allowed, with a clarification regarding settlements under the KVS Scheme. The operative part of the order was pronounced on 12-7-2006.