1999 (8) TMI 75 - SC - Central Excise

Appeal allowed; reclassification of tablets under Heading 17.04 set aside; Ayurvedic classification under Heading 3003.30 stands pending factual inquiry

WARNER HINDUSTAN LTD. Versus COLLECTOR OF CENTRAL EXCISE, HYDERABAD

SC allowed the appeal, set aside the Tribunal's order that had reclassified the tablets as confectionery under Heading 17.04, and dismissed the Excise ... Classification of 'Halls Ice Mint tablets' - 'Ayurvedic medicines' under Heading 3003.30, but the Excise authorities contended they should be classified under Heading 3003.19 as 'patent or proprietary medicines.' - Appellate Tribunal's powers - HELD THAT:- In our opinion, the Tribunal was quite wrong in these circumstances in allowing the appeal of the Excise authorities and classifying the mint tablets as items of confectionery under Heading 17.04. The correct course for the Tribunal to have followed was to have dismissed the appeal of the Excise authorities making it clear that it was open to the Excise authorities to issue a fresh show cause notice to the appellant on the basis that the tablets were classifiable under Heading 17.04 as items of confectionery. This would have given the appellant the opportunity to place on record such material as was available to it to establish the contrary. It is impermissible for the Tribunal to consider a case that is laid for the first time in appeal because the stage for setting out the factual matrix is before the authorities below. In the result, the appeal is allowed. The judgement and order of the Tribunal under appeal is set aside and the appeal filed by the Excise authorities before the Tribunal is dismissed. It shall be open to the Excise authorities to issue to the appellant a notice to show cause why the tablets should not be classified as items of confectionery under Heading 17.04, provided it is open to the Excise authorities to do so in law. Issues involved: Classification of 'Halls Ice Mint tablets' under Central Excise Tariff headings 3003.30, 3003.19, and 17.04.In this case, the appellant classified the tablets as 'Ayurvedic medicines' under Heading 3003.30, but the Excise authorities contended they should be classified under Heading 3003.19 as 'patent or proprietary medicines.' The Assistant Collector initially agreed with the Excise authorities, while the Collector of Central Excise (Appeals) sided with the appellant, classifying the tablets as Ayurvedic medicines under Heading 3003.30. However, the Excise authorities, in their appeal to the Tribunal, argued for classification under Heading 17.04 as 'confectionery,' a stance not previously taken. The Tribunal erred in allowing this new argument and classifying the tablets as confectionery. The Supreme Court held that the correct approach would have been for the Tribunal to dismiss the appeal, allowing the Excise authorities to issue a fresh show cause notice under Heading 17.04, giving the appellant a chance to present evidence to the contrary. The appeal was allowed, the Tribunal's decision was set aside, and the Excise authorities were given the option to issue a new notice for classification under Heading 17.04, subject to legal constraints.