2018 (12) TMI 1576 - AT - Central Excise

Validity of SCN - Classification of the product - Hajmola Candy - prospective applicability of reclassification - whether the show cause notice dated 10.10.2005 can be issued to the appellant for the period September 2004 to August 2005 or not? - Held that - Similar issue came up before the Hon ble High Court of Bombay in the case of Eco Valley Farms & Foods Ltd. 2013 (1) TMI 51 - BOMBAY HIGH COURT wherein the Hon ble High Court has held that the re-classification will operate only prospectively from the date of issuance of show cause notice and no demand for the earlier period can be raised. In the present case, Revenue themselves has accepted the merit classification under chapter heading 1704.90 as sugar confectionary, in that circumstances, the show cause notice cannot be issued for the earlier period and the show cause notice can be issued for prospective period. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Classification of product Hajmola Candy under Central Excise Tariff Act, 1985.

Analysis:
The appellant, engaged in manufacturing various products, faced a dispute regarding the classification of Hajmola Candy under the Central Excise Tariff Act, 1985. Initially classified under chapter 30 as Ayurvedic Medicine, the classification was later challenged by the Revenue seeking re-classification under chapter heading 2108.90 as miscellaneous edible preparations. The matter was adjudicated, and the re-classification was vacated. Another show cause notice was issued proposing classification under different chapters for different periods. The appellant argued that re-classification should only operate prospectively from the date of the notice, citing legal precedents. The key issue was whether the show cause notice dated 10.10.2005 could be issued for the period September 2004 to August 2005.

The Tribunal noted that the classification under chapter heading 1704.90 as sugar confectionary, approved by the Commissioner(Appeals) in 2003, was not challenged and had attained finality. Citing a judgment by the Hon’ble High Court of Bombay, the Tribunal held that the show cause notice could not be issued for the earlier period as the Revenue had accepted the classification under chapter heading 1704.90. Additionally, relying on a decision of the Hon’ble High Court of Gauhati, the Tribunal deemed the show cause notice unsustainable due to the finality of the approved classification. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief.

In summary, the judgment revolved around the classification of Hajmola Candy under the Central Excise Tariff Act, 1985, with a focus on the retrospective application of re-classification and the validity of a show cause notice issued for a previous period. The Tribunal emphasized the importance of finality in approved classifications and legal precedents in determining the sustainability of the show cause notice.