2014 (4) TMI 377 - AT - Central Excise

Classification of the product Di Calcium Phosphate - Animal Feed Grade - chapter 23 or chapter 28 - Held that - prima facie, the product would fall under Chapter 28. The claim of the learned counsel that the product manufactured by them is covered by the IS specification would not carry the case any further at least at the stage of hearing of waiver of the predeposit of the amounts involved. We find from the balance sheet that the appellant is not having any severe financial hardships inasmuch as, there is a profit of ₹ 51 lakhs after all the taxes have been paid and there is also an ample reserve and cash in hand. - stay granted partly.

Summary

Issues:
1. Classification of 'Di Calcium Phosphate - Animal Feed Grade' under Chapter 23 or Chapter 28.
2. Invocation of extended period for Central Excise duty.
3. Financial hardship of the appellant.
4. Conditions for waiver of predeposit.

Analysis:
1. The primary issue in this case revolves around the classification of 'Di Calcium Phosphate - Animal Feed Grade' under Chapter 23 or Chapter 28 of the Central Excise Tariff Act, 1985. The appellant contends that the product should be classified under Chapter 23 based on historical practices and conformity to IS standards. However, the Departmental Representative argues that the chemical process involved in manufacturing aligns it with Chapter 28. The Tribunal notes the debatable nature of the issue and leans towards Chapter 28 due to the acidulation method used in production. The appellant is directed to deposit a significant amount pending further proceedings.

2. The second issue concerns the invocation of the extended period for Central Excise duty. The appellant challenges this, claiming that the department was aware of their manufacturing activities. However, the Tribunal finds insufficient evidence to support this claim. The decision references a previous case to support the correct classification under Heading 28.35, emphasizing the lack of communication regarding the manufacturing process.

3. Addressing the financial hardship of the appellant, the Tribunal examines the balance sheet and notes a profit of Rs.51 lakhs with adequate reserves and cash on hand. Despite the appellant's assertion of financial difficulties, the Tribunal finds the financial situation not severe. This assessment influences the decision on the deposit amount and conditions imposed on the appellant.

4. In determining the conditions for waiver of predeposit, the Tribunal directs the appellant to deposit Rs.1,00,00,000/- within eight weeks and report compliance by a specified date. The compliance report will be reviewed for further orders, with the application for waiver granted subject to the specified deposit and compliance. The recovery of the balance amounts is stayed pending the appeal's disposal, providing relief to the appellant during the ongoing legal proceedings.

This comprehensive analysis highlights the key legal and factual considerations addressed in the judgment, encompassing the classification dispute, procedural aspects, financial evaluation, and conditions for relief granted to the appellant.