2014 (11) TMI 828 - AT - Central Excise

Classification of goods - Classification of Herbal Shikakai Powder under the name of Ragaa - Classification under sub-heading 3003.39 as other medicaments or under Chapter Heading 3305.99 as per Note 2 to Chapter 33 read with Chapter Note 1 (d) to Chapter 30 of the Schedule to the Central Excise Tariff Act, 1985 attracting 30% adv - Held that - issue relates to classification of Herbal Shikakai Powder is no longer res integra in view of the decision of the Tribunal in the case of Commissioner of Central Excise, Trichirapalli Vs Medi Herbs - 2006 (7) TMI 25 - CESTAT, CHENNAI . It has been held that Herbal Shikakai Powder is classifiable as cosmetic under sub-heading 3305.99 of the CETA 85 during the period September 1996 to December 1997 and September 1996 to March 1997. The Hon ble Karnataka High Court in the case of Shri Ramakrishna Soapnut Works Vs Superintendent - 2001 (7) TMI 153 - HIGH COURT OF KARNATAKA AT BANGALORE held that Shikakai Powder (used as a shampoo for cleaning hair) would fall under Heading 33.05 of the CETA under the residuary item others . Tribunal in the case of CCE Tiruchirapalli Vs Medi Herbs (2006 (7) TMI 25 - CESTAT, CHENNAI) on the same product in the context of Board s Circular No.333/49/97-CX dt. 10.9.97 held that assessee was bound to pay duty on the goods in question for six months prior to 10.9.1997 by following the judgement of the Hon ble Supreme Court in the case of ITW Signode India Ltd. Vs Collector - 2003 (11) TMI 114 - SUPREME COURT OF INDIA . Hence, the demand of duty for the period prior to 10.9.97 is sustainable and the findings of the Commissioner (Appeals) to that extent is liable to be set aside. However, we agree with the finding of the Commissioner (Appeals) that demand increased by way of corrigendum to SCN is hit by limitation - assessee is liable to pay demand of duty for six months prior to 10.9.1997 - Decided partly in favour of Revenue.

Summary

Issues: Classification of Herbal Shikakai Powder, Demand of duty, Limitation period

Classification of Herbal Shikakai Powder:
The case involved the classification of Herbal Shikakai Powder manufactured by the assessee. The Revenue contended that the product should be classified under Chapter Heading 3305.99 as a preparation for use on hair, attracting 30% adv. The Superintendent of Central Excise issued show cause notices, leading to an adjudication order classifying the product under sub-heading 3305.99 and demanding duty. The Commissioner (Appeals) modified the order, upholding the classification but partly dropping the duty demand on limitation grounds. The Tribunal referred to precedents and held that Herbal Shikakai Powder is classifiable as a cosmetic under sub-heading 3305.99, dismissing the appeal by the assessee.

Demand of Duty:
The Revenue filed an appeal against the dropping of a portion of the duty demand on limitation grounds. The Commissioner (Appeals) considered the issue in detail, noting the demand was based on a circular and the limitation aspect. Citing legal precedents, the Commissioner ruled that the demand made before a certain date failed and that corrigendum increasing the demand was hit by limitation. The Tribunal upheld the demand for duty for six months prior to a specific date but agreed with the Commissioner that the demand increased by corrigendum was time-barred. Consequently, the appeal by the Revenue was partly allowed, with the assessee required to pay duty for the specified period.

Limitation Period:
The issue of limitation was crucial in the case, with the Commissioner (Appeals) and the Tribunal analyzing the timeline of demands and corrigendum. Legal principles were applied, including judgments on the validity of corrigendum to show cause notices and the impact of time limitations on such amendments. The Tribunal concurred with the Commissioner's findings on the limitation aspect, ruling that the demand increased by corrigendum was not sustainable due to being barred by limitation. This aspect influenced the decision on the Revenue's appeal and the final outcome of the case.

In conclusion, the judgment addressed the classification of Herbal Shikakai Powder, the demand of duty, and the limitation period concerning the duty demand. Legal precedents, circulars, and case laws played a significant role in determining the classification and the validity of the duty demand, ultimately resulting in the dismissal of the assessee's appeal and the partial allowance of the Revenue's appeal based on the specified time frame for duty payment.