2013 (8) TMI 773 - AT - Central Excise

Classification of goods under sub-heading 1704.90 of Central Excise Tariff and claiming concessional rate of duty of 8% vide Sl. No. 247 of Notification No. 6/2002-CE dated 1.3.2002 or classifiable under sub-heading 1704.10 in which case they were to pay duty at the rate of 16% instead of 8% as paid by them Held that - Strong merit in the contention of the appellant that a small percentage of gum in sugar confectionary may not be sufficient to consider the product as gum, though not examining the merits of the issue. Extended period of limitation Held that - Appellant were manufacturing the same product even during the period when the system of filing classification list and getting it approved was in vogue. Revenue has not brought out any change in manufacturing process or the contents used after self-assessment is introduced. No suppression of information during the earlier period is brought out much less any mis-declaration - No justification to invoke extended period of five years provided in Section 11A for issuing demand notice - Demand is tie-barred Decided in favor of Assessee.

Summary

Issues: Classification of sugar confectionary products under Central Excise Tariff, applicability of duty rates, time bar for demanding duty payment.

Classification of Products:
The appellant, a manufacturer of sugar confectionary products, including Mentos mint, Fruittella Orange, and others, classified their products under sub-heading 1704.90 of the Central Excise Tariff to claim a concessional duty rate of 8%. However, the Revenue contended that due to the use of guar gum in manufacturing, the products should be classified under sub-heading 1704.10, attracting a duty rate of 16%. A show-cause notice was issued for demanding duty short-paid for a specific period, leading to an adjudication where a substantial amount was confirmed against the appellant along with penalties.

Appellant's Argument:
The appellant argued that the products were not similar to chewing gum or bubble gum, emphasizing that guar gum was used as a stabilizer and thickener, not for chewable characteristics. They highlighted the absence of residue gum after consumption, unlike typical chewing gums. Referring to a Tribunal decision, they contended that products not resulting in residue gum should not be classified under 1704.10. The appellant also asserted that the demand was time-barred, as they had regularly filed declarations mentioning the use of guar gum, which was known to the Department.

Revenue's Argument:
The Revenue maintained that the presence of gum in the products was admitted by key personnel and argued that sub-heading 1704.10 covered all sugar confectionary containing gum, not limited to chewing gum or bubble gum types. They pointed out marketing descriptions indicating the chewable nature of the products, suggesting the addition of gum for chewable properties.

Decision on Time Bar:
The Tribunal ruled in favor of the appellant on the issue of time bar, noting that no suppression or mis-declaration was evident during the earlier period when self-assessment was in place. As the manufacturing process remained unchanged and no information suppression was established, the extended period for raising demands was deemed unjustified. Consequently, the demand was held to be time-barred, leading to the setting aside of the impugned order and allowing the appeal.

In conclusion, the judgment primarily focused on the classification of sugar confectionary products under the Central Excise Tariff, considering the presence of guar gum and its implications on duty rates. The decision on the time bar for demanding duty payment played a crucial role in the final outcome of the case, favoring the appellant based on the lack of evidence of suppression or mis-declaration during the relevant period.