1999 (10) TMI 408 - AT - Central Excise

Summary

Issues: Classification of products under Central Excise Act, 1944; Invocation of extended period of limitation under Section 11A(1); Violation of principles of natural justice in denying cross-examination; Applicability of SSI exemption under Notification; Classification of products as Fungicides or Disinfectants; Opportunity of cross-examination of Chemical Examiner; Interpretation of term "Disinfectant" in relation to Fungicides.

In this case, the appellants challenged the order by the Collector of Central Excise classifying their products Aldekol and Quatovet under sub-heading 3808.90 and invoking the extended period of limitation under Section 11A(1) of the Central Excise Act, 1944. The appellants contended that the products should be classified under heading 3808.10 as Fungicides. The learned Counsel argued that the extended period should not apply as the matter was previously presented to the department in 1989. They also raised concerns about the denial of cross-examination of the Chemical Examiner, which they believed was crucial for establishing the truth regarding the classification of the products.

The appellants further argued that the products, labeled as disinfectants, were primarily used for anti-fungi treatment, making them eligible for classification as Fungicides. They also claimed that the brand name used by them, obtained through technology transfer from a German company, belonged to them due to continuous usage. On the other hand, the Respondent emphasized that the department had not conducted a chemical examination before responding to the appellants' submission in 1989, indicating that the true nature of the products was not known at that time. The Respondent also highlighted the use of the German company's brand name on the products as a basis for denying the SSI exemption under the Notification.

Regarding the classification issue, the Respondent argued that the products were not solely Fungicides but also served as general disinfectants, as indicated by their use in various applications beyond fungal control. The learned DR explained that disinfectants encompass a broader range of microorganisms beyond fungi, distinguishing them from Fungicides. The appellants countered this argument by citing a Supreme Court decision and technical reports demonstrating the products' efficacy as anti-fungi agents.

Upon considering the submissions, the Tribunal found shortcomings in the original order, particularly the denial of cross-examination and failure to seek technical opinions on conflicting reports. The Tribunal ruled in favor of the appellants, setting aside the original order and remanding the matter for a fresh consideration. The Collector was instructed to allow cross-examination, consider technical opinions and test reports submitted by the appellants, and review relevant case laws. The appeal succeeded on the grounds of remand for further examination.