1995 (9) TMI 198 - AT - Central Excise

Summary

Issues Involved:

1. Classification of Lip Salve
2. Eligibility for Notification Benefits
3. Abatement of Duty
4. Prospective Demand of Duty

Summary:

1. Classification of Lip Salve:

M/s. Alpine Industries classified Lip Salve u/s 3003.20 of the Central Excise Tariff as a medicament. The Department contended it should be under Heading 3304.00, subject to duty @ 105% ad valorem. The Principal Collector agreed with the Department's classification but extended the benefit of Notification No. 339, dated 22-8-1986. The Tribunal upheld the classification under Heading 3304.00, stating the product did not meet the requirements of Note 2 of Chapter 33 and lacked therapeutic or prophylactic properties.

2. Eligibility for Notification Benefits:

The manufacturer later claimed the benefit of Notification 27-C.E., dated 20-3-1990, under Heading 3304.00. The Assistant Collector denied this benefit, and the decision was upheld by the Collector, Central Excise (Appeals). The Tribunal confirmed that after the amendment of Notification 27 in 1990, the benefit was not available.

3. Abatement of Duty:

The Tribunal agreed with the appellant that in arriving at the assessable value, the duty element should be excluded, referencing the Supreme Court judgment in Bata Shoe Co. v. Collector of Central Excise. This matter was remanded to the Assistant Collector for recalculating the duty after allowing abatement.

4. Prospective Demand of Duty:

The Tribunal ruled that the demand should be prospective from the date of the show cause notice, following the Supreme Court judgment in Rainbow Industries v. Union of India. The Principal Collector's order to demand duty for a period prior to the show cause notice was modified accordingly.

Separate Judgment by Member (J):

Member (J) S.L. Peeran concurred with the classification under Heading 3304.00 but differed on the duty confirmation for six months, referencing the Supreme Court ruling in Ballarpur Industries Ltd. v. Collector of Central Excise. He upheld the duty confirmation for six months and the penalty imposed.

Vice President's Opinion:

Vice President S.K. Bhatnagar disagreed with the majority, classifying the product under Heading 30.03 as a medicament. He remanded the matter to the Assistant Collector for reclassification and determination of the sub-classification and effective rate of duty.

Final Order:

The majority opinion confirmed the classification and rate of duty under Heading 3304.00, with duty demand limited to six months prior to the show cause notice, pending recalculation of assessable value. The penalty imposed was also confirmed.