2002 (8) TMI 194 - AT - Central Excise

Tribunal Upholds Commissioner's Decision on Pharmaceutical Classification Dispute

The Tribunal upheld the decision of the Commissioner (Appeals) in a case involving the classification of pharmaceutical products for Central Excise Duty. ... Penalty Issues:- Dispute regarding classification of pharmaceutical products under Central Excise Duty.- Imposition of penalty for alleged misdeclaration or wrong statements.Analysis:Issue 1: Dispute regarding classification of pharmaceutical products under Central Excise DutyThe case involved the classification of pharmaceutical products by the respondent under Chapter sub-heading 3003.39, attracting Central Excise Duty at 8%. The Department alleged that the goods should be classified under Chapter sub-heading 3003.10, attracting a higher duty of 15%. The Deputy Commissioner adjudicated the case in favor of the Department, confirming the demand of duty and imposing penalties for different periods. However, the Commissioner (Appeals) set aside the penalties, noting that the respondents had not suppressed any information and there was no charge of misdeclaration. The Commissioner observed that the dispute was a simple case of classification, and the penalties were not sustainable. The Tribunal upheld the Commissioner's decision, stating that in cases of genuine dispute in classification matters, penalties were not warranted, as differences of opinion may arise genuinely.Issue 2: Imposition of penalty for alleged misdeclaration or wrong statementsThe Revenue argued that the penalties should have been upheld as the respondent intentionally did not declare the pharmacopoeia or publication under which the products were classifiable under sub-heading 3003.20. The Revenue contended that since the medicines were not manufactured as per the monograph in the pharmacopoeia, they should be classified as Patent or proprietary medicines under Chapter heading 3003.10, attracting higher duty. The Revenue cited various judgments to support the imposition of penalties in cases of misdeclaration or wrong statements, emphasizing that mens rea did not need to be established in fiscal matters. However, the Tribunal disagreed with the Revenue's argument, stating that the facts of the present case were different from those cited by the Revenue. The Tribunal held that in the case of a dispute in classification matters, where the dispute was settled against the assessee, the appropriate action would be to demand duty only, not impose penalties. Therefore, the Tribunal rejected the appeals and upheld the decision of the Commissioner (Appeals) to set aside the penalties.This detailed analysis covers the issues involved in the legal judgment, providing a comprehensive overview of the classification dispute and the imposition of penalties for alleged misdeclaration or wrong statements.