2001 (8) TMI 490 - AT - Central Excise

Issues Involved:
1. Classification of "Dant Manjan Lal" (DML) under the Central Excise Tariff Schedule.
2. Applicability of Exemption Notifications for the period June 1991 to May 1997.
3. Invocation of the extended period of limitation under Section 11A(1) of the Central Excise Act.
4. Imposition of penalties on the company and its functionaries.
5. Rejection of refund claims for duty paid under protest.

Issue-wise Detailed Analysis:

1. Classification of "Dant Manjan Lal" (DML):
The primary issue in these appeals is the classification of "Dant Manjan Lal" (DML) for the period June 1991 to May 1997. The lower authorities classified the product under CH 33.06, following the Hon'ble Supreme Court's decision in Shree Baidyanath Ayurved Bhavan Ltd. v. C.C.E., Nagpur [1996 (83) E.L.T. 492 (S.C.)]. The appellants argued that the product should be classified under CSH 3003.30/3003.31 as an Ayurvedic medicament, as it was manufactured according to the formula prescribed in "Ayurved Sar Sangrah" and sold under the name specified in the said book. The product was claimed to be used for therapeutic/prophylactic purposes and manufactured under a Drug Licence. The appellants relied on the Board's circular dated 27-5-1997, which held DML as an Ayurvedic medicine under the new Tariff. However, the Revenue contended that the Supreme Court's decision still holds good, and DML, being a tooth powder, should be classified under Heading 33.06. The Tribunal observed that the popular meaning of tooth powder during the old Tariff period has attained statutory recognition under the new Tariff through Heading 33.06. The Tribunal disagreed with the WRB's decision and held that the product should be classified under Heading 33.06, as it is specifically covered and excluded from Chapter 30 by Note 1(d) of Chapter 30.

2. Applicability of Exemption Notifications:
The appellants claimed the benefit of Exemption Notifications for the period June 1991 to December 1993, arguing that DML was classified under CSH 3003.30 and later under CSH 3003.31, which were eligible for total exemption from duty during 1994 to 1996. The Tribunal noted that the product was classified under Heading 33.06, and thus, the benefit of Exemption Notifications applicable to Ayurvedic medicaments under CSH 3003.30/3003.31 could not be extended to DML.

3. Invocation of the Extended Period of Limitation:
The department invoked the extended period of limitation under the proviso to Section 11A(1) of the Central Excise Act in 1996, issuing show cause notices (SCNs) to the company for the period June 1991 to December 1993 and June 1993 to March 1996. The Tribunal did not specifically address the issue of the extended period of limitation in detail, as the primary focus was on the classification of the product.

4. Imposition of Penalties:
The jurisdictional Commissioner imposed penalties on the company and its functionaries for the disputed clearances of DML. The Tribunal's decision on classification under Heading 33.06 indirectly upheld the penalties imposed by the lower authorities, as the product was not classified as an Ayurvedic medicament eligible for exemption.

5. Rejection of Refund Claims:
The company had paid duty under protest for the period January 1997 to May 1997 and later claimed a refund, which was rejected by the Assistant Commissioner. The Tribunal's decision on classification under Heading 33.06 implied that the rejection of the refund claim was justified, as the product did not qualify for exemption as an Ayurvedic medicament.

Conclusion:
The Tribunal concluded that "Dant Manjan Lal" should be classified under Heading 33.06 as a tooth powder, following the Hon'ble Supreme Court's decision and the statutory recognition of the popular meaning of tooth powder under the new Tariff. The Tribunal disagreed with the WRB's decision and directed the Registry to place the papers before the Hon'ble President for constituting a Larger Bench to resolve the classification issue.

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