Settled tariff classification and limitation on corrigendum-enhanced demand determine duty liability for Herbal Shikakai Powder.
Herbal Shikakai Powder was treated as a cosmetic under Heading 3305.99 because prior precedent had already settled that hair-cleaning use brings the product within that tariff entry, not the medicament heading claimed by the assessee. On limitation, duty for the six months preceding the Board circular dated 10.09.1997 was held payable, but the enhanced demand introduced through corrigenda after expiry of the limitation period was struck down as time-barred. The result was that the classification challenge failed, while only the limited pre-10.09.1997 duty liability survived.
Issues: (i) Whether Herbal Shikakai Powder was correctly classifiable under Heading 3305.99 of the Central Excise Tariff Act, 1985 as a cosmetic. (ii) Whether the demand enhanced by corrigendum to the show cause notice was barred by limitation and whether duty was payable for the period prior to 10.09.1997.
Issue (i): Whether Herbal Shikakai Powder was correctly classifiable under Heading 3305.99 of the Central Excise Tariff Act, 1985 as a cosmetic.
Analysis: The product had already been considered in earlier decisions on the same commodity. The settled view relied upon was that Herbal Shikakai Powder used for cleaning hair falls within Heading 3305.99 as a cosmetic under the tariff scheme, and not under the medicament heading claimed by the assessee. In view of that settled classification, the assessee's challenge could not succeed.
Conclusion: The classification under Heading 3305.99 was upheld, against the assessee.
Issue (ii): Whether the demand enhanced by corrigendum to the show cause notice was barred by limitation and whether duty was payable for the period prior to 10.09.1997.
Analysis: The demand for the period prior to 10.09.1997 was held sustainable on the basis that the assessee was liable for duty for six months preceding the Board's circular dated 10.09.1997. At the same time, the enhancement of the demand through corrigenda issuing material changes after the expiry of the limitation period was held to be hit by limitation and unsustainable.
Conclusion: Duty for six months prior to 10.09.1997 was held payable, but the enhanced demand raised by corrigendum was set aside as time-barred.
Final Conclusion: The assessee's challenge to classification failed, while the Revenue succeeded only to the extent of restoring duty liability for the limited prior period, with the time-barred enhancement remaining invalid.
Ratio Decidendi: Where the classification of a product is settled by precedent, that classification will govern the dispute, and a corrigendum that materially enlarges a show cause notice after limitation cannot sustain the enhanced demand.
TaxTMI 
AI Drafter ✕
TaxTMI 
