2002 (6) TMI 70 - AT - Central Excise

Classification of Lal Tail and Janam Ghunti, Duty Calculation, Time Barred Demands

The final order in the case determined that Lal Tail and Janam Ghunti were not classifiable as medicaments under Chapter 30. Lal Tail was classified under ... Medicaments - Demand - Limitation Issues Involved:1. Correct Central Excise classification of Lal Tail and Janam Ghunti.2. Valuation of the goods.3. Time bar for the purpose of recovery of duty short levied.Summary:1. Classification of Lal Tail:The primary issue is whether Lal Tail is a medicament or a cosmetic/toilet preparation. The appellants contended that Lal Tail is an Ayurvedic medicine made from herbal and natural items, used for external application on infants and babies. The Commissioner, however, classified it under Chapter 33 as a baby massage oil, relying on the Apex Court's judgment in Shree Baidyanath Ayurved Bhavan Ltd. v. Collector of Central Excise and Note 1(d) of Chapter 30. The Commissioner emphasized that medicines are typically prescribed by a medical practitioner and used for a limited time, which was not the case for Lal Tail.2. Classification of Janam Ghunti:The appellants argued that Janam Ghunti is an Ayurvedic medicine for infants' growth and stomach ailments. The Commissioner classified it under Chapter Heading 3301 as aqueous distillates and solutions of essential oils, noting that its claims of remedy for stomach ailments were incidental. The appellants contended that Janam Ghunti is not manufactured by distillation and contains concentrated extracts of herbs and fruits, not fitting the classification under 3301. The Tribunal found merit in the appellants' arguments and remanded the issue for reconsideration by the Commissioner.3. Valuation of Goods:The appellants argued that the amount realized as the price should be treated as cum-duty. The Tribunal agreed, citing settled law that the price should be treated as cum-duty for computing short levy.4. Time Bar for Recovery of Duty:The appellants contended that the duty demand beyond the normal period of six months was time-barred, as the classification had been approved by Central Excise authorities and there was no suppression of facts. The Tribunal agreed, stating that the duty demands raised beyond six months were time-barred and only the differential duty within the normal period of six months prior to the show cause notice was payable.Final Order:1. Lal Tail and Janam Ghunti are not classifiable as medicaments under Chapter 30.2. Classification of Lal Tail under sub-heading 3304 is confirmed.3. The issue regarding the classification of Janam Ghunti is remanded for fresh decision.4. Short levy shall be computed treating the price of the goods as cum-duty.5. Duty demand is restricted to the normal period of six months u/s 11A of the Central Excise Act.