1998 (5) TMI 114 - AT - Central Excise

Summary

Issues:
1. Waiver of pre-deposit of duty on vegetable extracts manufactured for ayurvedic medicines.
2. Classification of extracts under Central Excise Rules.
3. Bar on limitation for demand.
4. Justification for penalty imposition.

Analysis:
1. The application sought waiver of pre-deposit of duty on vegetable extracts used for ayurvedic medicines. The Central Excise authorities classified the extracts under CET sub-heading 1301.90, leading to a duty demand and penalty imposition. The applicants argued that the extracts, obtained from medicinal plants without preservatives, were not marketable goods under Central Excise Law. They also claimed that the extracts qualified as medicaments under Chapter 30, hence exempt from duty. Citing a Circular by CBEC, they contended that liquid vegetable extracts not subjected to preservative processes were not excisable goods. The demand was challenged as time-barred, supported by a communication from an Additional Commissioner. The applicants requested waiver of pre-deposit and stay on recovery pending appeal.

2. The Respondent opposed the waiver, emphasizing the marketability of the extracts as goods attracting excise duty. They disputed the classification under Chapter 30, asserting that only products directly usable for therapeutic purposes qualified as medicaments. The Respondent argued for an extended limitation period due to non-declaration of products, alleging willful suppression to evade duty. Penalty imposition was justified for violating Central Excise Rules, urging full deposit of duty and penalty.

3. The Tribunal clarified that duty liability on simple vegetable extracts was acknowledged by the applicants, who agreed to deposit the amount within a specified period. Regarding compound extracts, HSN Explanatory Notes indicated that mixtures for therapeutic use fell under Chapter 30, exempt from Chapter 13. Referring to the CBEC Circular, the Tribunal concluded that liquid vegetable extracts not subjected to preservative processes were not excisable goods. Consequently, waiver of duty demand on compound vegetable extracts was granted, along with the stay on penalty recovery pending appeal.

4. The judgment highlighted the distinction between simple and compound vegetable extracts, aligning with the CBEC Circular and HSN Explanatory Notes. The Tribunal's decision favored the applicants' interpretation, exempting compound extracts from duty pre-deposit and penalty recovery. Compliance for duty on simple extracts was mandated within a specified timeframe, emphasizing adherence to the Circular's guidelines and relevant tariff entries.