1988 (5) TMI 271 - AT - Customs

Summary

Issues: Classification under Central Excise Tariff for additional duty of customs of TPP Powder, eligibility for exemption under Notification 234/82-C.E.

In this case, the primary issue was the classification of TPP Powder under the Central Excise Tariff for the purpose of additional duty of customs. The importer claimed classification under T.I. 14E CET Patent or Proprietary Medicines, while the lower authorities classified it under the residuary Tariff Item 68. The question was whether the importer could claim exemption under Notification 234/82-C.E., dated 1-11-1982 if classified under Tariff Item 68.

The importer had imported TPP Powder, a bulk drug, and claimed classification under T.I. 14E for additional duty. The Assistant Collector, however, classified it under T.I. 68, which would not allow the importer to claim set-off of duty under Rule 56A of the Central Excise Rules, 1944. The importer approached the High Court, which directed clearance under Tariff Item 14E and allowed the importer to avail of departmental remedy for the classification dispute.

The advocate for the importer argued that TPP Powder met the definition of Patent or Proprietary Medicines under Explanation I to Tariff Item 14E, as it was used for the prevention of ailments and not mentioned in any official publication. Alternatively, if classified under T.I. 68, the importer should be granted exemption under Notification 234/82-C.E., dated 1-11-1982 for bulk drugs not elsewhere specified.

The respondent contended that the classification under T.I. 68 was correct. Regarding the alternative claim for exemption under the notification, it was argued that the claim was not made earlier and could not be raised as an additional ground, citing precedents where such claims were not allowed at later stages.

The Tribunal held that TPP Powder, being a bulk drug, did not qualify as Patent or Proprietary Medicines under Tariff Item 14E, as it did not meet the specific requirements outlined in Explanation I. Therefore, it was properly classifiable under Tariff Item 68. However, on the issue of exemption under Notification 234/82-C.E., the Tribunal ruled in favor of the importer. The Tribunal reasoned that the benefit of exemption should not be denied based on the classification claimed by the importer, as the Revenue's acceptance of classification under T.I. 68 made the importer eligible for the exemption. Additionally, it was noted that the Revenue could not take contradictory positions on classification and exemption, and the benefit of exemption flowed from the Revenue's classification decision.

In conclusion, the Tribunal allowed the appeal, disposing of the case in favor of the importer and granting the benefit of exemption under Notification 234/82-C.E., dated 1-11-1982.