1991 (2) TMI 223 - AT - Income Tax

Summary

Issues Involved:
1. Correct classification and rate of duty for the product "Adhesive Plaster BPC/USP."
2. Jurisdiction and applicability of Section 11(A) and Section 35E(4) for erroneous refunds.
3. Eligibility for exemption under various notifications, particularly Notification 55/75.

Detailed Analysis:

1. Correct Classification and Rate of Duty:
The primary issue was the classification of "Adhesive Plaster BPC/USP." Initially, the product was classified under T.I. 68 by the Collector (Appeals) and confirmed by the Tribunal. However, the Tribunal's order dated 27-11-1986 did not explicitly state that the product was non-excisable during the pre-1-3-1975 period. It was also noted that the Tribunal's order did not discuss the eligibility for exemption under Notification 55/75. The product was later considered as a surgical dressing without medicinal or therapeutic properties, which affected its classification and eligibility for exemption.

2. Jurisdiction and Applicability of Section 11(A) and Section 35E(4):
The appellant argued that erroneous refunds should be addressed under Section 11(A) and not Section 35E(4). The Tribunal noted that both sections are independent of each other and can be invoked separately. However, in cases of 'consequential refund,' neither Section 11(A)/(B) nor Section 35E applied. The Assistant Collector's action was deemed implemental, merely executing the orders of higher authorities. The Tribunal held that the Assistant Collector erred in treating the refunds as 'consequential,' as the periods involved were not covered by the earlier orders of the Collector (Appeals) and the Tribunal.

3. Eligibility for Exemption under Various Notifications:
The appellant contended that the product was non-excisable before 1-2-1975 and exempt from duty under Notification 55/75 as amended by subsequent notifications. However, the Tribunal found that the Assistant Collector's orders did not flow from the Tribunal's orders, and the exemption was not claimed under Notification 55/75 but under 54/75. The Tribunal observed that the product did not qualify for exemption as it did not possess medicinal or therapeutic properties. The Tribunal also noted that the classification issue had been previously settled in the case of J.L. Morrison, Sons and Jones, where the product was classified as a Patent and Proprietary medicine under Tariff Item 14E.

Conclusion:
The Tribunal concluded that the Assistant Collector's orders were erroneous and not based on the Tribunal's earlier orders. The matter was remanded to the Assistant Collector for de novo consideration. The Tribunal also decided to refer the classification issue and eligibility for exemption to a Larger Bench due to conflicting decisions in previous cases.