2015 (2) TMI 1049 - HC - Customs

Classification of goods - Export of Menthol Crystals - Whether in the facts and circumstances of the case the Appellate Tribunal is right in holding that Menthol Crystals are spices within the meaning of Section 2(n) of the Spices Board Act, 1986 - Held that - If one peruses the show cause notice, it is apparent that the allegations therein proceed on the footing that the appellants are exporting what is styled as spice . However if the show cause notice allegations are perused they would reveal that the assessee has exported various consignments of the product described as menthol BP / USP and as menthol crystals BP / USP in the shipping bills. The Ministry of Commerce Notification is relied upon so as to claim the export cess. That is on the footing that the goods mint are one of the spices on which export cess is leviable. All types of menthols are covered within the expression mint and export cess leviable has also been paid on the export of the goods by the exporters . The show cause notice proceeds on the footing that the assessee does not seem to dispute this position because it made several representations to the Ministry. However, we do not find that the matter has proceeded on any admitted position and particularly by the assessee . Had it been the position, there was no need for the adjudicating authority to have rendered a specific finding and which is to be found in the order in original. There are extensive conclusions and which have been rendered. In the circumstances, the correctness of these findings and founded on the conclusion that menthol BP / USP and menthol crystals BP / USP can be assessed as spice ought to have been considered by the Tribunal in appropriate details. In the circumstances instead of this Court being required to go into all the details and depriving parties of a valuable right of appeal, that we are of the opinion that the impugned order deserves to be quashed and set aside and the matter remitted and restored to the file of the Tribunal for a decision afresh on merits and in accordance with law. - Decided in favour of assessee.

Summary

Issues:
1. Applicability of spice cess on Menthol Crystals under the Spices Cess Act, 1986.
2. Classification of Menthol Crystals as spices under the Spices Board Act, 1986.
3. Liability for interest under Section 28AB of the Customs Act, 1962 on spice cess.
4. Barred demand for spice cess under Section 28 of the Customs Act, 1962.

Analysis:

Issue 1: Applicability of spice cess on Menthol Crystals under the Spices Cess Act, 1986
The appeal challenged the order by the Customs, Excise, and Service Tax Appellate Tribunal regarding the levy of export cess on Menthol Crystals under the Spices Cess Act, 1986. The Tribunal concluded that Menthol Crystals are subject to spice cess as per the Act. The appellants disputed this, arguing that their product does not qualify as a spice under the Act and thus should not be subject to the cess. The Tribunal's brief reasoning was deemed unsatisfactory, leading to the appeal.

Issue 2: Classification of Menthol Crystals as spices under the Spices Board Act, 1986
The Tribunal noted that the term "spice" includes mint, and the Revenue argued that Menthol Crystals manufactured by the appellants, predominantly mint, fall under this classification. The show cause notice alleged that the exported product, described as menthol BP/USP and menthol crystals BP/USP, falls under the category of mint subject to export cess. The Tribunal's failure to address all contentions raised by the appellants regarding the classification of their product as a spice was highlighted as a deficiency in their decision.

Issue 3: Liability for interest under Section 28AB of the Customs Act, 1962 on spice cess
The show cause notice also proposed the levy of interest and penalty along with the export cess. The question arose whether interest under Section 28AB of the Customs Act, 1962 is payable on the spice cess under the Spices Cess Act, 1986. This issue was part of the broader challenge to the Tribunal's order and its implications on the appellants' liability.

Issue 4: Barred demand for spice cess under Section 28 of the Customs Act, 1962
Another contention raised was whether the demand for spice cess was time-barred under Section 28 of the Customs Act, 1962. The appellants argued against the demand for export cess based on the timing and validity of the demand notice. The Tribunal's dismissal of the appeal raised concerns about the adequacy of addressing this issue in their decision.

In conclusion, the High Court allowed the appeal, quashed the Tribunal's order, and remitted the matter for fresh consideration. The Court emphasized the need for a detailed examination of all aspects of the controversy, including the applicability of export cess on the product in question and the impact of the repeal of relevant enactments. The judgment highlighted the importance of thorough reasoning in judicial decisions to serve the ends of justice effectively.