2014 (2) TMI 406 - AT - Central Excise

Classification of the product Bleach-9 made by the appellant during the period 15.04.1999 to 23.08.1999 - Whether the same should be classified under CETH 38.02 as activated earth as claimed by Revenue or as a product of CETH 25.05 as claimed by the appellant - Held that - It is clear from the earlier order dt. 12.07.2006 passed by the first appellate authority that it was directed that the lower authorities will send two conflicting test reports to Chief Chemist, Central Revenue Laboratory, New Delhi for his opinion alongwith the defence of the appellant and that any adverse report of the Chief Chemist received should also be made available to the appellant. This order dt. 12.07.2006 has not been appealed against by the Revenue and has become final. However lower authorities at this stage cannot say that opinion of Chief Chemist is not necessary or required when specific directions were given by the first appellate authority. The matter is, therefore, again remanded back to the adjudicating authority to strictly follow the directions given by the first appellate authority in para 8 of the OIA dt. 12.07.2006 and give proper opportunity of personal hearing to the appellant at the appropriate time after getting report from the Chief Chemist, New Delhi - Decided in favour of assessee.

Summary

Issues involved:
Classification of the product 'Bleach-9' under CETH 38.02 or CETH 25.05.

Comprehensive Analysis:

Issue 1: Classification of the product 'Bleach-9'

The appellant filed a stay application and appeal against OIA No. 143/2012(Ahd-III)/SKS/Commr.(A)/Ahd., regarding the classification of the product 'Bleach-9' manufactured between 15.04.1999 to 23.08.1999. The dispute arose due to conflicting claims by the Revenue, classifying it under CETH 38.02 as activated earth, and the appellant, classifying it under CETH 25.05. The matter originated from CESTAT's order remanding it to the original adjudicating authority based on directions from the Commissioner (Appeals), Ahmedabad. The appellant argued that the directions given in the Commissioner's order of 12.07.2006 were not followed, which required testing parameters to be sent to the Chief Chemist, Central Revenue Laboratory, New Delhi for an opinion on the activation of 'Bleach-9'. The first appellate authority's order directed the lower authorities to send conflicting test reports to the Chief Chemist for an opinion, emphasizing the importance of following these directions. As the Revenue did not appeal against this order, it became final. Therefore, the matter was remanded back to the adjudicating authority to strictly adhere to the directions given by the first appellate authority and provide a proper opportunity for a personal hearing to the appellant after receiving the Chief Chemist's report.

Issue 2: Compliance with Directions and Procedural Fairness

The first appellate authority's order highlighted the appellant's change in the manufacturing process of 'Bleach-9' after 17.11.1998, which was intimated to the Department. The order emphasized the need for fresh samples to be drawn post the process change and for opinions from the Chief Chemist. It also noted the conflicting test reports from different Chemical Examiners and the importance of allowing the appellant to cross-examine them. The order stressed the necessity of providing all relevant reports and parameters to substantiate claims, ensuring procedural fairness. The Circular No.362/78/97-CX dated 9.12.97 was cited to emphasize that all show cause notices on the same issue should be adjudicated by a single competent authority following natural justice principles. The judgment underscored the importance of obtaining the Chief Chemist's opinion and providing any adverse reports to the appellant before making a decision on the classification and demand of 'Bleach-9'.

In conclusion, the judgment focused on the classification dispute of 'Bleach-9', emphasizing the need for procedural fairness, compliance with directions, and adherence to natural justice principles. The matter was remanded back to the adjudicating authority to follow the directions given by the first appellate authority, ensuring a thorough examination of conflicting test reports and opinions from the Chief Chemist for a fair resolution of the classification issue.