2024 (7) TMI 685 - AT - Central Excise

Classification of goods - Suncros UVA Lotion/Gel/Hyclean Cream - to be classified as medicaments under Chapter Sub-Heading No. 3004 of the First Schedule to the Central Excise Tariff Act, 1985 or whether the same is classifiable as cosmetics under Chapter Sub-Heading No. 3304 of the First Schedule to the Central Excise Tariff Act, 1985? - invocation of extended period of limitation. Classification of goods - HELD THAT - The appellant have produced ample evidences such as the ingredients used in the manufacture of the product namely UVA Lotion/Gel/Hyclean Cream, the package of the product and label states that product is to be sold by retail on the prescription of registered medical practitioner only. In such case the product can be administered by licensed cosmetologist, dermatologist or a qualified healthcare professional. It also states that the product is to provide comprehensive protection against UV rays that can cause skin damage, sun burn and skin cancer. As per the above facts the product prima facie classifiable under 3004 as medicaments - as per the nature of the product since the same being highly technical, a non technical person cannot be expected to arrive at conclusion about the classification of a product contains various drugs and chemicals. The adjudicating authority was suppose to either get the product tested or at least obtain an expert opinion from authorized and recognized independent pharma/chemical authority before deciding the classification. Therefore the observation of the learned Commissioner in the impugned order is based on incomplete/ premature material which needs to be reconsidered. Therefore on merit the matter should be remanded to the adjudicating authority. Extended period of limitation - HELD THAT - There is absolutely no intention of the appellant to evade the payment of duty. Having said so we find that the objection was raised during EA-2000 Audit of the appellant s record, the appellant have been filing the ER1 return regularly wherein they have declared their product and also claimed the exemption notification under the classification 3004. In this position there are nothing which suggests that there is suppression of fact on the part of the appellant with intent to evade the payment of excise duty. Therefore the demand for the extended period is not sustainable on the ground of limitation. Therefore, the demand for the extended period is set aside without going into merit of the case in such demand. However the merit needs to be reconsidered by the adjudicating authority for normal period. The impugned order set aside - the demand for the extended period is set aside and for the demand under normal period, the matter is remanded to the adjudicating authority.

Summary

Issues Involved:
1. Classification of the product Suncros UVA Lotion/Gel/Hyclean Cream as medicaments or cosmetics under the Central Excise Tariff Act, 1985.
2. Invocability of the extended period of limitation in the case of a show cause notice dated 06.03.2013.

Analysis:
1. Classification Issue:
The appellant contended that the product should be classified under heading No. 30049099 as "Medicaments" and be eligible for a concessional rate under a specific notification. They argued that the product, made of various drugs and chemicals, was for protection against UV rays and required administration by licensed professionals. The product label indicated it should be sold on a medical practitioner's prescription, aligning with Rule 96 of the Drugs and Cosmetics Rules, 1945. The Tribunal found the product prima facie classifiable as medicaments due to its composition and intended use. It criticized the adjudicating authority for presuming the product as cosmetics without expert verification, recommending a reevaluation.

2. Extended Period of Limitation Issue:
Regarding the extended period demand, the Tribunal noted the complexity of classifying goods as medicaments or cosmetics, citing previous litigations. The appellant's regular filing of ER1 returns, declaring the product under the medicament classification, indicated no intent to evade duty. The objection raised during an audit did not imply suppression of facts to evade duty payment. Consequently, the demand for the extended period was set aside, while the matter was remanded to the adjudicating authority for reconsideration during the normal period. The Tribunal emphasized that the demand's sustainability was not based on limitation grounds.

In conclusion, the Tribunal set aside the impugned order, nullified the demand for the extended period, and remanded the case for reevaluation under the normal period. The judgment highlighted the importance of expert verification in classifying technical products and emphasized the lack of evidence suggesting duty evasion by the appellant.