2017 (3) TMI 607 - AT - Central Excise

Manufacture or not - whether the tablets of Saraswati brand and the powdered camphor which it subjected to manufacture are classifiable not under sub-heading 2914.20 of the Tariff as camphor, but under 3307.41 as preparation similar to agarbatti and dhoop? - it is apparent that appellants were engaged in the repacking of the Saraswati brand tablets thus the claim of the appellant that they were receiving pre-packed material from M/s. Camphor and Allied product Ltd cannot be upheld. Penalty of ₹ 5,00,452/- has been imposed u/s 11AC of the Act and penalty of ₹ 2, 66,315/- has been imposed u/r 173Q. It has been argued that once the penalty u/s 11AC has been imposed, no separate penalty u/r 173Q can be imposed. Perusal of orders shows that penalty of ₹ 5,00,452/- has been imposed with regard to clandestine clearance of the goods and for evasion of duty. Penalty u/r 173Q has been imposed in respect of seized goods and the duty liability thereon. Seized goods were held to be liable to duty of ₹ 2,66,315/-. Had this duty been included in the demand of duty of clandestine clearances then the penalty under Section 11AC would have been inclusive of this duty. In this case penalty u/s 173Q has been imposed in respect of goods which were seized and confiscation, we find no error in imposing penalty under the said rule. Appeal dismissed - decided against appellant.

Issues Involved:
1. Classification of camphor products.
2. Invocation of the extended period of limitation.
3. Repacking and manufacturing activities.
4. Availability of Cenvat Credit.
5. Cum-duty benefits.
6. Correction of calculation errors.
7. Examination of the claim regarding the superintendent's visit and the letter dated 9-4-1997.
8. Imposition of penalties under Section 11AC and Rule 173Q.

Issue-wise Detailed Analysis:

1. Classification of Camphor Products:
The appellant argued that the camphor tablets and powdered camphor should be classified under sub-heading 3307.41 as preparations similar to agarbatti and dhoop, instead of 2914.20 as camphor. The Tribunal rejected this contention, relying on a previous decision in the appellant's case and held that the camphor tablets/pellets made from camphor powder are classifiable under Chapter 29.

2. Invocation of the Extended Period of Limitation:
The appellant contended that the extended period of limitation could not be invoked as the superintendent visited the factory on 3-4-1997, and they had informed the department via a letter dated 9-4-1997. The Commissioner dismissed this claim, finding no evidence of the letter being received by the department and considering it an afterthought since it was not mentioned in earlier proceedings.

3. Repacking and Manufacturing Activities:
The appellant claimed that they sold the camphor received from M/s. Camphor and Allied Products Ltd. as it was, without any repacking, thus not liable for duty. However, evidence showed that the appellant repacked the camphor, which, as per Note 11 of Chapter 29 of the Central Excise Tariff, amounts to manufacture. Statements from the appellant's representatives confirmed the repacking and labeling activities, leading to the conclusion that the appellant was engaged in manufacturing activities.

4. Availability of Cenvat Credit:
The Tribunal found that the appellant's claim for Cenvat Credit on inputs was considered and allowed by the Commissioner, leading to a revision of the demand.

5. Cum-duty Benefits:
The appellant's claim for cum-duty benefits was also considered and allowed, resulting in a reduced duty liability.

6. Correction of Calculation Errors:
The Commissioner accepted the arithmetic mistakes pointed out by the appellant, leading to a corrected and reduced duty demand of ?5,00,452/- from the initial ?19,90,107/-.

7. Examination of the Claim Regarding the Superintendent's Visit and the Letter Dated 9-4-1997:
The Commissioner thoroughly examined the claim about the superintendent's visit and the letter dated 9-4-1997. It was found that no such letter was received by the department, and there was no evidence of the superintendent's visit. The claim was considered an afterthought and was discarded.

8. Imposition of Penalties Under Section 11AC and Rule 173Q:
The appellant argued against the imposition of separate penalties under Section 11AC and Rule 173Q. The Tribunal found that the penalty under Section 11AC was for the clandestine clearance of goods and duty evasion, while the penalty under Rule 173Q was for seized goods liable to duty. Since the penalties were for different aspects, both were upheld. The appeal was consequently dismissed.

Conclusion:
The Tribunal upheld the revised duty demand of ?5,00,452/-, confirmed the repacking activities as manufacturing, and dismissed the appellant's claims regarding the superintendent's visit and the letter dated 9-4-1997. Both penalties under Section 11AC and Rule 173Q were upheld, leading to the dismissal of the appeal.

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