1993 (8) TMI 196 - AT - Central Excise

Summary

Issues involved:
1. Whether the impugned product 'Ujala' arises out of a process of manufacture and an excisable product.
2. Correct classification of the product 'Ujala'.
3. Validity of the show cause notice dated 31-5-1991 and whether the demands are time-barred.
4. Outcome of the appeal.

Summary:

1. Whether the impugned product 'Ujala' arises out of a process of manufacture and an excisable product:
The appellants argued that the product 'Ujala' does not result in the manufacture of a new product as it merely involves mixing ingredients in hot water, which does not change the essential characteristics of the acid violet dye. The Chemical Examiner and technical experts supported this view, stating that no new product emerged from the process. The Tribunal majority agreed, concluding that no process of manufacture took place as per Chapter Note 6 of Chapter 32, which defines what constitutes manufacture in the dye industry.

2. Correct classification of the product 'Ujala':
The appellants contended that 'Ujala' should be classified under sub-heading 3204.29 of CET, 1985, as it is a preparation based on acid violet dye. The Revenue initially proposed classification under sub-heading 3204.30 and later under 3204.90. The Tribunal majority held that since no new product emerged, the product should be classified under sub-heading 3204.29.

3. Validity of the show cause notice dated 31-5-1991 and whether the demands are time-barred:
The appellants argued that the second show cause notice constituted a new claim and new proceedings, making the demands time-barred. The Tribunal majority agreed, stating that the second notice was not a corrigendum but a fresh notice, and thus, the demands were time-barred. The Tribunal referenced several rulings supporting the view that a fresh notice cannot revive time-barred demands.

4. Outcome of the appeal:
The Tribunal, by majority, allowed the appeal, concluding that no new product was manufactured, and the product 'Ujala' should be classified under sub-heading 3204.29. The demands were also found to be time-barred due to the issuance of a fresh show cause notice.

Final Order:
In terms of the majority order, the appeal is allowed.