1999 (10) TMI 228 - AT - Central Excise

Summary

Issues: Classification of products under Central Excise Act, 1944; Extended period for demand of duty; Misdeclaration and suppression of facts; Pre-deposit of sums and stay of recovery.

Classification of products under Central Excise Act, 1944:
The case involved the classification of medicaments manufactured by the applicants. Initially, the Jurisdictional Assistant Collector approved the classification lists for certain products without objection. However, a Show Cause Notice was later issued alleging that the applicants wrongly claimed approved classification to evade duty. The correct classification of products like Alphadine Scrub and Alphadine Topical Solution was disputed, leading to a demand for duty amounting to Rs. 32,15,610 for clearances made during a specific period. Allegations of misdeclaration and suppression of facts were also raised.

Extended period for demand of duty:
The Commissioner upheld the demand and imposed a penalty under Section 11AC of the Central Excise Act, 1944. The Commissioner also confiscated property but allowed redemption upon payment of a fine. The applicants contended that the extended period for demand could not be invoked as the department was aware of the products and their classification all along. The Tribunal, considering previous judgments, found a prima facie case in favor of the applicants regarding the point of limitation. Consequently, the Tribunal granted unconditional stay and waiver of the duty demanded and penalty imposed, allowing the applicants to continue utilizing their assets during the appeal proceedings.

Misdeclaration and suppression of facts:
The applicants argued that the department had approved the classification of certain products initially, indicating satisfaction with the classification. They claimed that misrepresentation and suppression could not be alleged merely because the department changed its opinion on the correct classification later. The Tribunal referred to precedents emphasizing the department's responsibility once the Assistant Collector approved the classification, suggesting a favorable view towards the applicants on the issue of limitation.

Pre-deposit of sums and stay of recovery:
The applicants filed an appeal against the Commissioner's order and sought waiver of the pre-deposit of sums and a stay on the recovery of penalties. The Tribunal, after considering the arguments presented, granted the waiver and stay, allowing the applicants to retain possession of their assets subject to specific conditions during the appeal proceedings.

This detailed analysis of the judgment highlights the key issues of classification under the Central Excise Act, the applicability of the extended period for duty demand, allegations of misdeclaration and suppression of facts, and the decision regarding pre-deposit of sums and stay of recovery.