2017 (9) TMI 1489 - AT - Central Excise

Classification of goods - Refined Palm oil, Refined Palm Stearin etc - whether classified under CETH 3823 1900 or under CETH 1511 9090? - Held that - Since impugned Palm Stearin is Refined, Bleached and Deodorised (RBD) and sold for industrial use, it will then be classified under specific sub heading in 3823 11 12 - RBD Palm oil stearin when used as an industrial monocarboxolic fatty acid/acid oil, sold for industrial use, would then necessitate their classification under 3823 1112 - demand upheld. Penalty - Held that - there was some amount of confusion which led to considerable litigation on the issue. Even in respect of imported Palm Stearin, there was a debate on classification - imposition of penalties is a overkill and is set aside. Appeal allowed - decided partly in favor of appellant.

Summary

Issues:
Classification of goods under Central Excise Tariff Act, 1975 - Whether RBD Palm Stearin should be classified under CETH 1511 or CETH 3823.

Analysis:
1. The case involved a manufacturing unit availing exemption from Central Excise Duty for Refined Palm oil under Notification No. 03/2006-CE. The Department alleged misclassification of Palm Stearin under CETH 1511 9090 instead of CETH 3823 1900. A Show Cause Notice was issued, resulting in a demand for differential excise duty and penalty.

2. The Commissioner (Appeals) upheld the original authority's decision, leading to the appeal before the Appellate Tribunal. The core issue was the classification of the goods - whether under CETH 1511 or CETH 3823.

3. The Appellant argued that RBD Palm Stearin should be classified under CETH 1511 as it is not chemically modified. They highlighted the distinction between esters of glycerol with fatty acids (CETH 1511) and industrial monocarboxylic fatty acids obtained by saponification or hydrolysis (CETH 3823).

4. The Department supported classification under CETH 3823, citing a specific entry for RBD Palm Stearin. They referred to a Supreme Court judgment supporting this classification.

5. The Tribunal considered the arguments and examined the nature of RBD Palm Stearin. The flow charts of the refining processes were analyzed to understand the distinction between RBD Palm oil and RBD Palm Stearin.

6. After reviewing the facts and submissions, the Tribunal concluded that RBD Palm Stearin, when used as an industrial monocarboxolic fatty acid/acid oil, should be classified under CETH 3823 1112. This decision aligned with a CBEC circular referencing a Supreme Court judgment.

7. The Tribunal upheld the demand for differential duty but rejected the appeal on penalty imposition, considering the confusion and legal developments in similar cases.

8. Ultimately, the Tribunal sustained the decision on duty liability but set aside the penalty imposition, disposing of the appeal accordingly.