1997 (8) TMI 247 - AT - Central Excise

Summary

Issues: Classification of product under Central Excise, Invocation of extended period of limitation, Re-calculation of value, Eligibility for Modvat credit, Imposition of penalty

Classification of product under Central Excise:
The appeal concerns the classification of the product "Honeyrex" under Central Excise. The appellants argued that no new product emerged as they only mixed natural honey with sucrose and glucose, maintaining the characteristics of honey. However, the tribunal found that the addition of ingredients resulted in a new product, distinct from natural honey, classified as artificial honey under Tariff Heading 1702.30. The tribunal rejected the appellants' plea for classification under Heading 2101.01, stating it applies only when the item is not otherwise specified.

Invocation of extended period of limitation:
The appellants contended that the longer period of limitation should not apply as they believed Honeyrex was not excisable. However, the tribunal held that the appellants suppressed material facts by not seeking clarification from the department and evading duty, justifying the invocation of the extended period of limitation.

Re-calculation of value:
Regarding the re-calculation of value, the tribunal remanded the matter to the adjudicating authority for a fresh decision based on the CEGAT decision in the case of Pawan Tyres. It emphasized that the appellants may be entitled to the benefit of Modvat credit despite not filing a declaration, subject to meeting other conditions.

Eligibility for Modvat credit:
The tribunal directed the adjudicating authority to review the appellants' claim for Modvat credit, stating that despite the duty demand, the appellants could be eligible for the credit if all necessary conditions were met, even without filing a declaration under Rule 57G.

Imposition of penalty:
The tribunal deferred the decision on the imposition of penalties pending the outcome of the fresh adjudication proceedings. It highlighted the need for a reasoned finding by the adjudicating authority and referred to the importance of considering the CEGAT decision in such matters. The appeal was decided in favor of the above terms, addressing each issue comprehensively.