1994 (10) TMI 161 - AT - Central Excise

Summary

Issues Involved:
1. Classification of Phenyl.
2. Classification of Antiseptic Lotion.
3. Applicability of Time-Bar on the Demand.
4. Entitlement to Notification No. 175/86 Benefits.
5. Imposition of Penalty and Confiscation of Seized Goods.

Issue-Wise Detailed Analysis:

1. Classification of Phenyl:
The appellants contended that Phenyl should be classified under Chapter 30 as a medicinal product or under Heading 3808.10 (formerly 3801.20) as an insecticide. The Collector classified Phenyl under Heading 3808.90 (formerly 3801.90) as a disinfectant. The Tribunal upheld the Collector's classification, citing the case of Ambey Laboratories v. Collector of Central Excise, which determined that Liquid Phenyl is classifiable under Heading 3808.90 after 1-3-1986. The Tribunal reasoned that the tariff schedule after 1-3-1987 included "disinfectants" under Heading 3808.90, and therefore, Phenyl was correctly classified under this heading.

2. Classification of Antiseptic Lotion:
The appellants argued that Antiseptic Lotion should be classified under Chapter 30 as a drug. The Collector classified it under Heading 3808.90. The Tribunal did not find any challenge to this classification in the appeal and thus upheld the Collector's classification under Heading 3808.90.

3. Applicability of Time-Bar on the Demand:
The appellants argued that the demand was time-barred, as the extended period of five years under Proviso to Section 11A of the Central Excises & Salt Act, 1944, was not applicable. They claimed ignorance of the change in excisability due to the introduction of the New Tariff Act w.e.f. 28-2-1986. The Collector rejected this argument, stating that ignorance of law is not an excuse. The Tribunal remanded the matter to the Collector for a reasoned finding on the time-bar issue, as the appellants did not provide sufficient documentary evidence to support their claim of bona fide belief regarding the non-excisability of their product.

4. Entitlement to Notification No. 175/86 Benefits:
The Collector acknowledged that the appellants were entitled to the benefits of Notification No. 175/86 as a small-scale industry. This finding was not contested in the appeal, and thus, the Tribunal upheld the Collector's decision on this matter.

5. Imposition of Penalty and Confiscation of Seized Goods:
The Collector imposed a penalty of Rs. 10,000 on the appellants and ordered the payment of Rs. 10,000 in lieu of the confiscation of the seized goods. The Tribunal did not specifically address the penalty and confiscation in the appeal, implicitly upholding the Collector's decision on these aspects.

Conclusion:
The Tribunal upheld the classification of Phenyl and Antiseptic Lotion under Heading 3808.90, confirmed the entitlement to Notification No. 175/86 benefits, and remanded the matter regarding the time-bar issue to the Collector for a reasoned decision. The appeal was disposed of in these terms.