2024 (2) TMI 75 - AT - Central Excise

Classification of goods - ball point pen ink - clandestine removal. Classification of ball point pen ink - HELD THAT - Hon ble Supreme Court of India has held that when the entries in the HSN and the said Tariff are not aligned, reliance cannot be placed upon HSN for the purpose of classification of goods under the said Tariff, in the case of Camlin Ltd. 2008 (9) TMI 1 - SUPREME COURT - It was held that it is settled law that when the entries in the HSN and the said Tariff are not aligned, reliance cannot be placed upon HSN for the purpose of classification of goods under the said Tariff. One of the factors on which the Tribunal based its conclusion is the entries in the HSN. The said conclusion in the Order of the Tribunal is, therefore, vitiated and, accordingly, set aside - Once it is established that ball point pen ink attracts nil rate of duty, the confirmation of demand of clearance without payment on ball point pen ink and allegation of clearance of ball point pen ink by resorting to undervaluation does not sustain. Clandestine removal - HELD THAT - The show cause notice that Revenue has compared total goods manufactured as reflected in balance sheet to the clearances effected on payment of duty by Thane unit and Revenue did not take into consideration goods cleared by Goa unit of the appellant whereas the balance sheet is common for both the units. Further, it is found that no investigation was carried out in respect of the balance amount on which duty is demanded such as dispatch particulars from the regular transporters, realization of sale proceeds and details from the regular dealers and buyers about receipt of finished goods. Therefore, relying on the ruling by Hon ble Allahabad High Court in the case of Continental Cement Company 2014 (9) TMI 243 - ALLAHABAD HIGH COURT , it is held that the allegations of clandestine removal are not established - Once it is established that there was no requirement of payment of duty on ball point pen ink and there was no clandestine removal, the question of imposition of penalty on the appellant and the other appellants does not arise. The impugned order set aside - appeal allowed.

Summary

Issues involved:
The issues involved in the judgment are the classification of ball point pen ink under the Central Excise Tariff and the allegation of clandestine removal.

Classification of ball point pen ink:
The appellant, a manufacturing company, was accused of misclassifying ball point pen ink under Central Excise Tariff Sub-heading No.3215.10 instead of 3215.90, resulting in non-payment of central excise duty. The original authority confirmed a demand of around Rs.25 lakhs on ball point pen ink, citing classification under 3215.90. However, the appellant argued that ball point pen ink should be classified under 3215.10 as writing ink, attracting nil rate of duty. The Tribunal noted that the entries in the Harmonized System of Nomenclature (HSN) and the Central Excise Tariff were not aligned. As per the ruling in the case of Camlin Ltd., reliance cannot be placed upon HSN for classification under the Tariff. Therefore, the Tribunal concluded that ball point pen ink is classifiable under 3215.10, attracting nil rate of duty, and dismissed the demand for payment.

Allegation of clandestine removal:
The show cause notice alleged clandestine removal of various inks by the appellant. However, the Tribunal found discrepancies in the comparison of total goods manufactured as reflected in the balance sheet and the clearances effected on payment of duty by the Thane unit, without considering the goods cleared by the Goa unit. No investigation was conducted regarding the balance amount on which duty was demanded. Citing the ruling of the Hon'ble Allahabad High Court, the Tribunal held that the allegations of clandestine removal were not substantiated. Consequently, the imposition of penalties on the appellant and other appellants was deemed unnecessary.

Conclusion:
In conclusion, the Tribunal set aside the impugned order and allowed all the appeals, ruling in favor of the appellant on both the classification of ball point pen ink and the allegation of clandestine removal.