1997 (7) TMI 417 - AT - Central Excise

Summary

Issues:
- Determination of whether a new excisable product emerged due to the mixing of ingredients.
- Classification of the product under the appropriate Tariff Heading.

Analysis:

1. The appellants claimed to be manufacturers of a product named REGAUL and cleared goods without paying duty. However, authorities discovered that another entity was the principal manufacturer, and the appellants were only dummies. The authorities clubbed all units' clearances to demand duty, allowing the benefit of Notification 175/86 but denying abatement of duty under Section 4(4)(ii)(d).

2. The lower authority assessed the product under Tariff Heading 32.12, considering the mixing of ingredients as creating a new product for excise duty. The appellants argued that no new product emerged and contended that the goods should be classified under Tariff Heading 32.04.

3. The appellants' advocate cited a previous Tribunal decision where a similar product mixing scenario resulted in no new product for excise levy purposes. The chemical examiner's opinion supported this stance. However, the lower authority concluded that a new product emerged due to the chemical reaction from mixing the ingredients.

4. The Tribunal discussed a case involving the product "Ujala" and highlighted that the mixing process did not amount to manufacturing. The chemical examiner's report emphasized that the product was a physical mixture, not a new formulation, aligning with Chapter Note 6 to Chapter 32 regarding synthetic organic dyes.

5. The Tribunal acknowledged the difference in ingredient ratios between the appellants' product and the previous case but agreed that the principle from the earlier decision was relevant. The issue of whether the product's character changed due to different ingredient percentages was raised for further consideration.

6. Due to the fundamental question of whether a new product emerged from the ingredient mixing, the Tribunal set aside the lower authority's order and remanded the matter for fresh examination. The classification under Tariff Headings 32.04 and 32.12 needed reevaluation based on the Tribunal's previous decision and relevant tariff rules.

7. The Tribunal clarified that no opinion on the merits was given, leaving all issues open for reconsideration during the new adjudication process. The appeals were remanded for a comprehensive review, ensuring the appellants' right to a personal hearing and maintaining the pre-deposit until final adjudication.