1997 (9) TMI 332 - AT - Central Excise

Summary

Issues:
Classification of product under different tariff sub-headings, validity of test report dated 22-7-1993, remand for re-testing and reclassification, demand of duty for a certain period, principles of natural justice.

Classification of product under different tariff sub-headings:
The appellants initially classified their product as aromax under Tariff sub-heading 3402.90 but later filed another classification list claiming classification under Tariff sub-heading 3808.90. The Assistant Commissioner agreed to the new classification, but a subsequent show cause notice proposed re-classification under sub-heading 3402.04. The Assistant Commissioner then classified the product under sub-heading 3808.90, which was later reviewed and reclassified under sub-heading 3402.90 by the Collector of Central Excise. The Commissioner (Appeals) upheld the reclassification under sub-heading 3402.90, leading to an appeal before the Tribunal by the appellants.

Validity of test report dated 22-7-1993:
The Commissioner of Central Excise referred to a test report dated 22-7-1993 for the first time in his order dated 25-11-1994. The report mentioned the lack of facilities for biological testing in the laboratory, raising doubts about its adequacy for determining the classification of the product. The appellants' advocate argued that relying on this ambiguous report for classification would be fallacious and requested a re-test of the goods by the Chemical Examiner or Chief Chemist.

Remand for re-testing and reclassification:
The Tribunal agreed with the appellants' advocate that the case should not solely rely on the ambiguous test report dated 22-7-1993 due to the lack of facilities for certain tests. As a result, the Tribunal remanded the matters to the Commissioner of Central Excise for de novo proceedings, allowing the Commissioner to seek opinions from experts and conduct re-testing based on available records and materials. The reclassification process was deemed necessary, not only for classification purposes but also for addressing the demand of duty for a period longer than six months.

Demand of duty for a certain period:
A show cause notice dated 22-7-1994 was issued for the demand of duty alleging suppression of facts, leading to an order confirming the duty demand against the appellants. The notice referred to the test report dated 22-7-1993 and other materials as the basis for confirming the duty demand. This issue was also part of the appeal filed by the appellants before the Tribunal.

Principles of natural justice:
The Tribunal emphasized that the de novo proceedings for reclassification and demand of duty should adhere to the principles of natural justice, ensuring that the appellants are given a fair opportunity to present their case and be heard. The Commissioner of Central Excise was directed to conduct the readjudication in accordance with these principles and consider all relevant materials and expert opinions before making a final decision.