2000 (8) TMI 835 - AT - Central Excise

Issues:
1. Classification of goods under Tariff Heading 3003.30 or Heading 3301.00
2. Demand of duty and penalty imposed by the Additional Commissioner
3. Setting aside of the order by the Commissioner (Appeals) on grounds of limitation
4. Invocation of extended period of five years for duty demand
5. Allegation of suppression of facts by the respondents
6. Interpretation of law regarding the invocation of extended period of limitation
7. Approval of Classification List by the proper officer
8. Justifiability of invoking longer period for duty demand

Classification of goods under Tariff Heading 3003.30 or Heading 3301.00:
The case involved the classification of 'Gulabari' (commonly known as Rose Water) manufactured by M/s. Dabur (I) Ltd. The Revenue sought to classify the goods under Heading 3301.00 instead of the earlier classification under Tariff Heading 3003.30 as 'Medicaments'. The dispute arose when a show cause notice was issued demanding duty for a specific period.

Demand of duty and penalty imposed by the Additional Commissioner:
The Additional Commissioner confirmed the duty demand and imposed a personal penalty of Rs. 10.00 lakh. However, the Commissioner (Appeals) later set aside this order on the grounds of limitation, citing the approval of a Classification List dated 1-3-1989, which classified 'Gulabari' under Chapter 30 with nil rate of duty.

Setting aside of the order by the Commissioner (Appeals) on grounds of limitation:
The Commissioner (Appeals) overturned the Additional Commissioner's decision based on the approval of the Classification List and the continuous clearance of 'Gulabari' at nil duty rate for seven years. The Commissioner held that the extended period of five years for duty demand could not be invoked.

Allegation of suppression of facts by the respondents:
The Revenue alleged that the respondents suppressed crucial facts regarding the product being an aqueous distillate/solution of essential oil derived from rose petals with other preservatives. The Revenue argued that this suppression justified invoking the extended period of limitation due to intentional concealment by the respondents.

Interpretation of law regarding the invocation of extended period of limitation:
The Tribunal reiterated the principle that once a Classification List is approved by the proper officer without any suppression or misstatement by the assessee, the longer period for duty demand cannot be invoked. The Tribunal emphasized that the onus is on the proper officer to verify all relevant aspects before granting approval to the Classification List.

Approval of Classification List by the proper officer:
The Tribunal highlighted the significance of the proper officer's approval of the Classification List, which included details about the product such as the label 'Rose Water'. It was noted that the proper officer should have sought additional information if needed during the approval process, and there was no requirement to disclose the manufacturing process in the Classification List.

Justifiability of invoking longer period for duty demand:
Considering the continuous clearance of the product at nil duty rate for seven years and the absence of any intent to evade duty, the Tribunal upheld the Commissioner (Appeals) decision to reject the Revenue's appeal. The Tribunal found no merit in invoking the extended period for duty demand and upheld the decision in favor of the respondents.

This judgment primarily dealt with the classification of goods, the imposition of duty and penalty, the invocation of extended period for duty demand, and the alleged suppression of facts by the respondents. The Tribunal emphasized the importance of proper officer's approval of the Classification List, the absence of suppression by the assessee, and the need for the Revenue to justify invoking a longer period for duty demand. Ultimately, the Tribunal rejected the Revenue's appeal, upholding the decision that the demand was barred by limitation.

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