2013 (9) TMI 166 - AT - Central Excise

Classification of Calcium Gluconate I.P. - The appellants claimed classification of the product under Chapter sub-heading 3003.30 (medicament) of schedule to the Central Excise Tariff Act, 1985 whereas the Department proposed to classify the same under CETH 2918.00 (organic chemical) - The product Calcium Gluconate IP manufactured by the appellants was classifiable under CETH 291800 only - Held that - The chapter note of 29 clearly provided that separate chemically defined organic chemicals were to be classified under CETH 29 - the tariff heading 2918 when read with HSN and also the subsequent elaboration when introducing 8 digit tariff clearly shows that Calcium Gluconate comes under CETH 2918 only - In terms of the heading and the relevant chapter note of Chapter 29, Calcium Gluconate was classifiable under CETH 2918 only - Since we are not talking of Calcium Gluconate in unfinished or semi-finished form or we are not considering mixture or combination of Calcium Gluconate with something else Rule 2 would not be relevant - Rule 3 of Interpretative Rules would apply only when the goods prima facie classifiable under 2 or more headings - Once a specific headings for a product was found, the question of considering another classification or another heading does not arise and therefore Rule 3 of Interpretative Rules was not required to be applied at all. - Decided against the assessee. Invocation of Extended Period - Imposition of penalty - The Commissioner had gone beyond the remand order and appellants could not have been visited with the demand for extended period and penalty when the Department had not even appealed against the Order-in-Original limiting the demand to the period of limitation and not imposing any penalty Therefore the penalty imposed on the appellants was set aside and also the demand for extended period. The demand as confirmed by the Commissioner in the earlier Order-in-Original dated 16-10-1998 for the period as applicable u/s 11A of Central Excise Act, 1944 was confirmed - The appellants shall also be liable to pay interest as applicable under Section 11AB of Central Excise Act, 1944 - penalties imposed on all the appellants were set aside.

Summary

Issues Involved:
1. Classification of Calcium Gluconate I.P.
2. Invocation of the extended period for demand and imposition of penalties.

Detailed Analysis:

1. Classification of Calcium Gluconate I.P.:

The primary issue is whether Calcium Gluconate I.P. should be classified under Chapter sub-heading 3003.30 (medicament) or under CETH 2918.00 (organic chemical) of the Central Excise Tariff Act, 1985. The appellants argued for classification under CETH 3003.30, citing Chapter Note 2 to Chapter 30, which defines medicaments as products comprising two or more constituents mixed or compounded for therapeutic or prophylactic uses. They contended that their product fits this definition and should be classified as a medicament, relying on several Tribunal decisions and a circular that supports classifying such products under Chapter 30.

The Department, however, maintained that Calcium Gluconate I.P. is an organic chemical, classifiable under CETH 2918.00, citing statements from various industry professionals and the common parlance test, which suggests that Calcium Gluconate is recognized as an organic chemical.

The Tribunal examined the relevant tariff headings and chapter notes, noting that Chapter 29 covers separate chemically defined organic compounds. Calcium Gluconate, being a salt of Gluconic acid, falls under this category. The Tribunal also referred to the Harmonized System of Nomenclature (HSN) notes, which classify Gluconic acid and its salts under heading 2918. The Tribunal concluded that Calcium Gluconate is specifically covered under Chapter 29 and should be classified under CETH 2918.00.

The Tribunal dismissed the appellants' reliance on previous decisions and circulars, stating that these did not apply to the specific issue of whether a separate chemically defined organic compound should be classified as a medicament. The Tribunal emphasized that the product's packaging and labeling indicated it was for industrial use, not therapeutic or prophylactic use, further supporting its classification under Chapter 29.

2. Invocation of the Extended Period for Demand and Imposition of Penalties:

The Tribunal addressed the appellants' argument that the Commissioner exceeded his jurisdiction by invoking the extended period and imposing penalties in the impugned Order-in-Original. The appellants contended that since the Department did not appeal the previous Order-in-Original, which limited the demand to the normal period, the Commissioner could not impose a higher demand on appeal.

The Tribunal agreed with the appellants, noting that the Commissioner had indeed gone beyond the remand order. Since the Department had not appealed against the original order limiting the demand to the normal period and not imposing any penalty, the appellants could not be subjected to a higher demand or penalties. Consequently, the Tribunal set aside the penalties and the demand for the extended period.

Conclusion:

The Tribunal ruled that Calcium Gluconate I.P. is classifiable under CETH 2918.00 as an organic chemical. The demand was limited to Rs. 9,61,495/- as confirmed in the earlier Order-in-Original for the applicable period under Section 11A of the Central Excise Act, 1944, with interest payable under Section 11AB. The penalties imposed on the appellants were set aside.