Calcite powder classification and extended limitation fail where coating is unproven and suppression lacks positive evidence.

Classification of calcite powder turned on whether the product had undergone coating or hydrophobic treatment for Heading 3824.90, or remained a mineral substance covered by Chapter 25 after mere crushing or powdering. The evidence, including inconsistent chemical reports, did not prove the additional processing alleged by the Department, so Chapter 25 classification was accepted. On limitation, mere non-registration and non-payment of duty were held insufficient to show suppression or wilful misstatement; positive evidence was required to invoke the extended period. As that basis failed, the linked penalties, interest and confiscation also lacked support.

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Issues: (i) Whether the impugned goods were classifiable under Chapter 25 as mineral calcite powder or under Heading 3824.90 as coated calcite powder; (ii) Whether the extended period could be invoked and penalties and confiscation sustained on the basis of suppression or wilful misstatement.

Issue (i): Whether the impugned goods were classifiable under Chapter 25 as mineral calcite powder or under Heading 3824.90 as coated calcite powder.

Analysis: The classification depended on the actual nature of the product and the manufacturing process. The chemical reports were not consistent: two reports supported classification under Chapter 25, while only one report supported Heading 3824.90. Chapter Note 2 to Chapter 25 covered mineral substances that were merely washed, crushed, ground or powdered, whereas Heading 3824.90 required coated calcite powder having a special hydrophobic treatment. The evidence did not establish that the goods had undergone the coating or roasting process relied upon by the Department, and the assumption of such processing without corroboration was not sustainable.

Conclusion: The goods were not proved to be classifiable under Heading 3824.90 and the classification under Chapter 25 was accepted in substance.

Issue (ii): Whether the extended period could be invoked and penalties and confiscation sustained on the basis of suppression or wilful misstatement.

Analysis: Mere non-registration and non-payment of duty were held insufficient to establish suppression or wilful misstatement. For invoking the extended period, something positive beyond inaction or failure to disclose was required. In the absence of such positive material, the invocation of the larger limitation period could not stand. Once the demand for the extended period failed, the consequential penalties, interest and confiscation also lacked support.

Conclusion: The extended period was not invocable and the penalties and confiscation were unsustainable.

Final Conclusion: The impugned order was set aside and the appeal was allowed, leaving no surviving demand, penalty or confiscation.

Ratio Decidendi: A mineral product remains within Chapter 25 when the Department fails to prove further treatment beyond crushing or powdering, and the extended limitation period cannot be invoked without positive evidence of suppression or wilful misstatement.

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