2009 (1) TMI 376 - AT - Central Excise

Classification and dutiability of the product Attar Hina - it is the Revenue s contention that the product Attar Hina is classifiable under CSH 3302.10 and liable to duty the appellants have contended that the product Attar Hina is classifiable under CSH 33.01 and was thus exempt from payment of duty during the relevant period by virtue of exemption Notification No. 167/86 - Attar Hina was not a perfume base but a perfume in the nature of Attar containing no alcohol and HSN not reliable to classify under Heading 3302 ibid test report stated that the samples were composed of concentrates of essential oil absorbed in sandalwood oil as fixative and not mixture of odoriferous substances Attar Hina is calassifiable under 3301 ibid in 8 digit Tariff i.e. 3301 90 31 and such heading applicable under earlier tariff also - Appellant having bona fide belief that Attars not chargeable to excise duty so we hold that extended period of limitation is not invocable

Issues Involved:
1. Classification and dutiability of the product 'Attar Hina'.
2. Invocation of the extended period of limitation.
3. Determination of the manufacturer of 'Attar Hina' - the appellants or the job worker.

Detailed Analysis:

1. Classification and Dutiability of 'Attar Hina':
The primary issue revolves around whether 'Attar Hina' should be classified under CSH 3302.10, as contended by the Revenue, or under CSH 33.01, as argued by the appellants. The Revenue's stance was that 'Attar Hina' is a mixture of odoriferous substances and thus falls under CSH 3302.10, making it liable for duty. The appellants, however, claimed that 'Attar Hina' is a concentrate of essential oil in a sandalwood oil base and should be classified under CSH 33.01, which was exempt from duty under Notification No. 167/86.

The Tribunal found that 'Attar Hina' is traditionally made by hydro-distillation of herbs in sandalwood oil, and the process does not involve heating of the mixture of vapors and sandalwood oil, contradicting the Revenue's claim. The Tribunal also noted that sandalwood oil acts as a fixative and is not a mixture of odoriferous substances. The Chief Chemist's report dated 18-5-95 confirmed that 'Attar Hina' is a concentrate of essential oil in sandalwood oil base and not a mixture of odoriferous substances. Hence, 'Attar Hina' was rightly classified under CSH 33.01.

2. Invocation of the Extended Period of Limitation:
The Show Cause Notice was issued in June 2003 for the period 5-9-98 to 23-9-02, invoking the extended period of limitation on grounds of willful suppression of facts by the appellants. The appellants argued that they had a bona fide belief that no duty was payable on 'Attar Hina', supported by the fact that other manufacturers were not paying duty on similar products.

The Tribunal found that the appellants had declared the product to the Sales Tax and Income Tax Departments and cleared 'Attar Hina' under invoices, indicating no intent to evade duty. The belief was further justified by the Chief Chemist's report and the Assistant Commissioner's letter, which indicated that 'Attar Hina' was not classifiable under Chapter 3302.90. Thus, the extended period of limitation was not applicable.

3. Determination of the Manufacturer:
In Appeal No. E/3961/05, the appellants contended that the actual manufacturer of 'Attar Hina' was the job worker, M/s. Mohammad Suffian & Brothers, and not the appellants themselves. The Tribunal refrained from recording any findings on this issue since the demands of duty were set aside on other grounds.

Conclusion:
The Tribunal concluded that 'Attar Hina' is classifiable under CSH 33.01 and is exempt from duty under Notification No. 167/86. The extended period of limitation was not applicable due to the appellants' bona fide belief and lack of willful suppression. Consequently, the demands of duty, penalties, and interest were set aside, and the appeals were allowed. The cross-objection filed by the department was dismissed.

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