2019 (4) TMI 1587 - AT - Central Excise

Classification of goods - absorbent cotton wool (non medicated) - whether classifiable under Chapter Heading CETH 5601 2110 or under CETH 3005 9090? - HELD THAT - On an identical issue in the case of M/S SHANTI SURGICAL PVT. LTD., SHANKET KHERIA DIRECTOR, SUBHASH CHANDRA KHERIA. GM VERSUS COMMISSIONER OF CENTRAL EXCISE, KANPUR 2017 (7) TMI 50 - CESTAT ALLAHABAD , the Bench of the Tribunal at Allahabad has held that absorbent cotton wool is correctly classified under CETH 5601 2110 it being a more specific entry. Absorbent cotton wool manufactured by the appellant falls under CETH 5601 2110 being a more specific classification as well as a later entry in the Central Excise tariff - demand do not sustain - appeal allowed - decided in favor of appellant.

Summary

Issues:
Classification of absorbent cotton wool under CETH 5601 2110 or CETH 3005 9090.

Analysis:
The appellant, engaged in the manufacture of absorbent cotton wool, contested the classification of their product under Chapter Heading CETH 5601 2110, while the Department argued for classification under CETH 3005 9090. The dispute arose from a Show Cause Notice demanding duty payment of &8377; 65,33,079. The appellant claimed their product attracted nil duty under CETH 5601 2110. Following a visit by the Office of DGCEI and subsequent investigations, the appellant started paying duty under protest from October 2010. The Tribunal remanded the matter back to the original authority, which confirmed the demand, leading to the current appeal.

The appellant argued that the issue of classification had been settled in previous cases like Shanti Surgical Pvt. Ltd., CCE Jodhpur vs. Cotton Products India, and Jajoo Surgicals Pvt. Ltd., where absorbent cotton wool was classified under CETH 5601 2110. They requested a similar classification for their product to avoid central excise duty liability.

The Department, represented by the Ld. DR, maintained that the goods should be classified under CETH 3005 9090 and duty should be levied accordingly, urging the rejection of the appeal.

After considering both sides' arguments and reviewing the records, the Tribunal found that absorbent cotton wool falls under CETH 5601 2110, as decided in previous cases. The Tribunal emphasized that this classification was more specific and a later entry in the Central Excise tariff. Therefore, the demand for differential duty, interest, and penalties was deemed unsustainable. Consequently, the impugned order was set aside, and the appeal was allowed.

In conclusion, the Tribunal ruled in favor of the appellant, holding that their absorbent cotton wool product should be classified under CETH 5601 2110, leading to the setting aside of the demand for duty, interest, and penalties.