1995 (11) TMI 167 - AT - Central Excise

Summary

Issues Involved:
1. Classification of Kesvardhini Concentrate under the Central Excise Tariff.
2. Provisional assessment and time-barred demand of duty.
3. Rate of duty applicable to Small Scale Industries (SSI) units.

Detailed Analysis:

1. Classification of Kesvardhini Concentrate under the Central Excise Tariff:
The primary issue was whether Kesvardhini Concentrate should be classified under Tariff Item 68 or Tariff Item 14F(II). The Assistant Collector initially classified the product under Tariff Item 68 but later reclassified it under Tariff Item 14F(II) and demanded differential duty. The respondents argued that Kesvardhini Concentrate, being a concentrate requiring dilution, did not fall under Tariff Item 14F(II), which covers preparations for hair care like Hair Lotions, Creams, and Perfumed Hair Oils. The Tribunal referenced the case of Veto Products, where a similar product was classified under Tariff Item 14F(II)(b) prior to 1986. The Tribunal concluded that Kesvardhini Concentrate, marketed as a hair oil concentrate, was correctly classifiable under Tariff Item 14F(II).

2. Provisional Assessment and Time-Barred Demand of Duty:
The Collector (Appeals) held that the demand for duty prior to 1-3-1986 was time-barred. However, the department contended that the classification and assessment were provisional, thus not subject to the limitation period. The respondents argued that there was no endorsement indicating provisional assessment after the classification decision dated 13-8-1985. The Tribunal noted that the issue of provisional assessment required further examination by the lower authorities to verify the relevant records and correspondence.

3. Rate of Duty Applicable to Small Scale Industries (SSI) Units:
The respondents claimed that even if the product was classified under Tariff Item 14F(II), the duty should be 10% ad valorem, applicable to SSI units, rather than 52.5%. The Tribunal acknowledged this contention and remanded the matter to the Assistant Collector to determine the correct rate of duty after re-examining the records and providing a personal hearing to the appellants.

Conclusion:
The Tribunal held that Kesvardhini Concentrate was classifiable under Tariff Item 14F(II) during the relevant period. However, the issues regarding the applicable rate of duty for SSI units and whether the assessments were provisional required further examination. The matter was remanded to the Assistant Collector for re-adjudication in accordance with the law, ensuring a personal hearing for the appellants. Both appeals were disposed of in these terms.