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TMI Blog2020 (7) TMI 585X X X X Extracts X X X X X X X X Extracts X X X X ..... s: Appeal No. E/25/12 E/27333/13 E/20088/14 E/20772/14 E/30953/16 E/30952/16 OIA No & Date 33/2013(H-IV)CE dt30.03.2013 70/2013(H-IV)CE dt 11.09.2013 118/2013(H-IV)CE dt 21.11.2013 Hyd.Cex-004-006&007-16-17-CE dt 29.04.2016 Hyd-Cex-004-006&007-16-17-CE dt 29.04.2016 OIO No. & Date 32/2011 dt 11.10.2011 74/2012-C.Ex dt 31.08.2012 77/2013-Adjn(ADC)C.Ex Dt. 31.07.2013 107/2013(ADC) C.Ex dt 31.07.2013 14/2014-Adjn(ADC) C.Ex Dt 31.01.2014 18/2014-15-Adjn(JC) C.Ex Dt 05.02.2015 Period April 2007 to February 2011 March 2011 to January 2012 February 2012 to September 2012 October 2012 to March 2013 April 2013 to October 2013 November 2013 to April 2014 SCN No. & Date 32/2010 dt 09.04.2010 O.R. No. 66/2012-Adjn.CE(ADC) dt 03.04.2012 O.R. No. 318/2012 dt 27.12.2012 O.R. No. 110/2013-Adjn (ADC)CE Dt 05.06.2013 O.R. No. 252/2013- Adjn(ADC) C.Ex dt 16.12.2013 O.R. No 151/2014-Adnj(ADC) CE dt 26.06.2014 Amount involved Rs. 1,83,22,191/- Along with interest and equal penalty Aloevera juice & Powder Rs. 12,05,553/- Amla juice & Powder Rs. 6,18,050/- Along with interest a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion in the demands made under Section 11A in respect of Appeal No. E/25/2012. (iv) Whether interest is chargeable on the duty demanded. (v) Whether penalties are imposable on the appellant under Section 11AC of Central Excise Act, 1944 and Rules 25 of Central Excise Rules 2002. 3. Before proceeding further, it would be profitable to review, in brief, the relevant legal provisions. Central Excise duty is levied and collected as per Section 3 of the Central Excise Act, 1944 on 'excisable goods' manufactured or produced in India at the rates set forth in the Schedule to the Central Excise tariff Act, 1985 (Central Excise Tariff, for brief) in 'such manner as may be prescribed' and this prescription was done by way of Central Excise Rules, 2002. Charge of excise duty and responsibility of the assessee to assess and pay duty and file returns 4. Although the charge of the duty is on the 'goods' and therefore its burden gets passed on along with the goods from manufacturer to distributor, wholesaler, retailer and so on till the last consumer of the goods, but the Central Excise Rules place the onus of assessing the duty and paying it on the manufacturer or producer and penalties h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty was not paid and also not charged by the assessee from the buyer 8. If the tariff prescribes, as it does in most cases, duty on ad valorem basis, the value to be reckoned for calculating the duty shall, as per Section 4 of the Act, be the transaction value where the price is the sole consideration for sale. Special provisions have been made for cases where there is no sale or where price is not the sole consideration for sale or where the transactions are between related persons. In these cases, there is no dispute about the transaction value. Usually, the manufacturer bills the buyer for the sale price of the goods and adds the excise duty payable to it and the sales tax payable on the cost plus excise duty (since sales takes place after the manufacture the same sequence is followed while invoicing). Thus, the buyer of the goods shoulders the burden of the excise duty paid by the manufacturer. A question which arises is where the goods were sold by the manufacturer without paying any excise duty and without billing his buyer for it as well and thereafter a demand is confirmed holding that the manufacturer is liable to pay duty on the goods which were so removed, on what valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s producted or manufactured or stored by him; c) Engages in the manufacture, production or storage of any excisable goods without having applied for registration certificate required under section of the Act; or d) Contravenes any of the provisions of the Rules or notification issued under the rules with an intent to evade payment of duty, then all such goods are liable to confiscation and the assessee is liable to penalty. 13. In the impugned order of Appeal no. 25/2012, penalties have been imposed both under both Section 11AC of the Central Excise Act and under Rule 25 of Central Excise Rules. In the impugned orders pertaining to the remaining appeals, penalty has been imposed under Rule 25 only. CENVAT Credit 14. The last relevant factor to this case is the CENVAT credit which enables the manufacturer, subject to the Cenvat Credit Rules, 2004, to take credit of the excise duty paid on the inputs and service tax paid on the input services which were used in the manufacture of the goods and use it to pay the excise duty. If no duty is payable on the final product, no CENVAT credit is admissible on such inputs and input services but if duty is payable, the manufacturer can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial and to get the clear juice. Step 10: Give carbon treatment to clarified juice to remove the aloin content. Step 11: After carbon treatments filter the ljuice and sent for HPL analysis to analyze the aloin content, if the analysis report is NMT 1.0ppm only will go to RO for concentration. Step 12: The juice [filtrate from the above carbon treatment filtration] is passed through the reverse osmosis filtration (RO) where al the juice and water is separated. Step 13: After removal water we will get concentrated juice. Step 14: Spray dry the concentrated juice to make powder. Step 15: Mill the material to make fine powder, sift the material, blend the powder and pack the material. Thus they are not extracting only the latex part of the plant but are extracting juice from the entire leaf which can be consumed as aloe juice. They also spray dry the concentrated juice to make it into aloevera power. As per the explanatory notes to HSN of Chapter 13, the saps and extracts under Chapter Heading 1302 include interalia, aloes, a thickened sap with a very bitter taste, obtained from several varieties of plants with the same name (lillace family). The learned counsel would argue that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eemed appropriate at that time and paid duty accordingly. No element of fraud or collision or wilful misstatement or suppression of facts wasbrought out in the show-cause notice or established in the impugned order to justify the invocation of extended period of limitation. He would draw the attention of the Bench to para 19 of the order-in-original 32/2011 passed by the learned Commissioner in which he records "the assesses have submitted in their reply that extended period of limitation is not invokable as all facts were in the knowledge of the department and that they have filed the returns regularly. The contention of the assessee is not acceptable inasmuch as they failed to correctly assessee the duty payable on the impugned goods and have wrongly assessed the goods to 'Nil' rate of duty under Chapter 6 of the Central Excise Tariff Act 1985 whereas they attract duty and rightly merit classification under Chapter 13 of the Central Excise Tariff Act 1983 and as such the extended period of demand of duty is rightly invokable". He would submit that from the above, it is evident that the only ground on which extended period of limitation has been invoked in the impugned order is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant is not excluded from this Chapter. A perusal of the process of manufacture of the products presented by the appellant themselves shows that their products are manufactured by extracting from plants and fruit, thus cannot be treated as fruit juices and vegetable juices meant for consumption which are classifiable under 2009. Regarding the case law of Forever Living Health (supra) relied upon by the appellant, he would submit that the products in that case were different and the issue in question was different as well. The department in that case wanted to classify the products as food supplements under Chapter 16 while the appellant claimed the classification under Chapter 20. Therefore, the Tribunal had only to decide as to which is a better classification between the two and it was decided that aloevera products manufactured by that appellant in that case were not food supplements. Therefore, the ratio of that classification should not apply to the present case as neither the products are identical nor is the question of classification. As regards the case law of Commissioner of Commercial Taxes Vs Forever Living (supra) decided by the Hon'ble High Court of Allahabad and up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agar agar and other mucilages and thickeners, whether or not modified, derived from vegetable products. Evidently, this chapter covers products which are either in liquid form or otherwise. There cannot be any dispute that both amla and aloevera are plants and the juices and powders which are extracted from them can therefore be clearly covered under Chapter Heading 1302. On the other hand, Chapter Notes to Chapter 20 also do not exclude any products which may fall under Chapter 13. Chapter Heading 2009 clearly covers fruit juices and vegetable juices, unfermented and not containing added spirit whether or not containing added sugar or sweetening matter. Therefore, it is equally logical to classify the aloe vera juice and amla juice under Chapter Heading 2009 as claimed by the appellant. However, we find no ground to call the powders manufactured by the appellant as juices as powder is a solid and the juice is a liquid. There is nothing in the description of Chapter Heading 2009 to suggest that it also includes powders. Therefore, we find that the aloe vera powder and amla powder manufactured by the appellant cannot be classified under Chapter Heading 2009. 23.1 Learned cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alty can be imposed under Section 11AC as there is no element of fraud, collusion wilful misstatement or suppression of facts or violation of the provisions of the Act or Rules with an intent to evade payment of duty. No penalty is imposable upon the appellant under Rule 25 also as the assessee has not violated any Rules and it is only a matter of difference of opinion regarding classification by the assessee and by the department. Therefore all penalties need to be set aside and we do so. 30. In view of the above, all appeals are disposed of as below:- 1) Aloe vera juice and amla juice are classifiable under 2009 being the later entry of the two headings equally meriting consideration. 2) Aloe vera powder and amla powder are classifiable under 1309. 3) Extended period of limitation cannot be invoked and the demand beyond the normal period is set aside. 4) The demand shall be recomputed taking the sale price as cum-duty price and extending the benefit of CENVAT credit on inputs and input services if any, available to the appellant as per CENVAT Credit Rules. 5) Interest, as applicable, on the demands is upheld. 6) All penalties are set aside as the issue is only one of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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