2000 (5) TMI 361 - AT - Central Excise

Summary

Issues Involved:
1. Classification of products under Central Excise Tariff.
2. Invocation of extended period of limitation.
3. Imposition of penalties and fines.
4. Confiscation of properties and recovery of interest.

Issue-Wise Detailed Analysis:

1. Classification of Products:
The core issue was the classification of five products: Coxistac, TM Egg Formula, Bifuran, Neftin, and Stafac. The appellant classified these products under Heading 23.02 of the Central Excise Tariff Act, 1995, as preparations used in animal feeding, attracting a Nil rate of duty. However, the revenue contended that these should be classified as veterinary medicaments under sub-heading 3003.10, attracting a 15% ad valorem duty. The appellant relied on HSN Notes to Heading 23.09 and CBEC clarification dated 23-6-1996, which stated that preparations containing active substances like vitamins, antibiotics, etc., used in animal feeding fall under Heading 2302. The appellant also presented affidavits from veterinary doctors and technical literature to demonstrate how the products were understood in the market.

2. Invocation of Extended Period of Limitation:
The appellant argued against the invocation of the extended period of limitation, pointing out that the classification lists had been approved, samples were repeatedly drawn, and the Chemical Examiner's reports endorsed the appellant's view. The appellant contended that all details were known to the Department, and hence, invoking the larger period of limitation was not justified. The tribunal agreed, noting that there was no contumacious conduct on the part of the assessee and the classification list had been approved.

3. Imposition of Penalties and Fines:
The Commissioner had imposed a penalty equivalent to the duty amount under Section 11AC of the Central Excise Act and Rule 173Q(1) of the Central Excise rules, along with additional penalties on the appellant's directors and officials. The appellant argued that since the action was not contumacious, the imposition of penalties was not justified. The tribunal agreed, citing that Section 11AC could not have retrospective effect and that the appellant's actions did not warrant such penalties.

4. Confiscation of Properties and Recovery of Interest:
The Commissioner had ordered the confiscation of properties but allowed redemption on payment of a fine. The tribunal found that the confiscation and the imposition of interest under Section 11AB were not justified, given the approved classification lists and the lack of contumacious conduct.

Conclusion:
The appeals were allowed in favor of the appellants. The tribunal concluded that the products in question were correctly classified under Heading 2302 of the Central Excise Tariff Act, 1995, as preparations used in animal feeding. The invocation of the extended period of limitation was not justified, and the imposition of penalties, fines, and confiscation orders were set aside. The tribunal's decision was based on the detailed technical literature, affidavits, and previous judgments, including the Tetragon Chemie case, which supported the appellant's classification.