1998 (11) TMI 216 - AT - Central Excise

Tribunal upholds product classification, restricts duty demand, revokes penalty for lack of evidence.

The Appellate Tribunal CEGAT, New Delhi, upheld the classification of the product 'Clinsodent - Denture Cleanser' as a dental hygiene preparation under ... Classification - Demand - Limitation Issues:1. Classification of the product 'Clinsodent - Denture Cleanser'2. Limitation period for duty demand3. Imposition of penaltyClassification of the product 'Clinsodent - Denture Cleanser':The appeal involved a dispute over the classification of the product 'Clinsodent - Denture Cleanser' under the Central Excise Tariff Act. The Collector of Central Excise had confirmed a duty demand and imposed a penalty on the appellants, classifying the product under CET sub-heading 3306.00 as a 'preparation for oral and dental hygiene.' The appellants contended that the product should be classified under Chapter Heading 34.05 as a scouring powder, not under Chapter 33 as a cosmetic or toilet preparation. The adjudicating authority upheld the classification under Heading 3306, citing the product's use as a preparation for dental hygiene. The Tribunal agreed with the authority, emphasizing that the product's use did not involve abrasive action typical of scouring powders, supporting the classification under Heading 33.06 as a dental hygiene preparation.Limitation period for duty demand:The issue of the limitation period for the duty demand was also raised in the appeal. The appellants argued that the demand beyond six months prior to the show cause notice was barred by limitation. They had previously informed the Department about the product's classification and ingredients, and the Department had acknowledged the product's exemption from duty. The Tribunal noted the appellants' disclosures to the Department regarding the product's nature and use, which indicated no intent to evade duty. Citing relevant case law, including a decision by the Madras High Court, the Tribunal held that the extended period of limitation was not applicable due to the appellants' full disclosure. Consequently, the duty demand was restricted to a period of six months before the show cause notice, with directions for the reassessment of duty by the Commissioner of Central Excise.Imposition of penalty:Regarding the penalty imposed on the appellants, the Tribunal set it aside as the Department failed to substantiate the charge of suppression. The Tribunal noted that since the Department could not establish suppression of facts by the appellants, the penalty was deemed unjustified. Therefore, the penalty imposed on the appellants was revoked, aligning with the finding that there was no suppression of material facts by the appellants.In conclusion, the Appellate Tribunal CEGAT, New Delhi, in the case involving the classification of the product 'Clinsodent - Denture Cleanser,' addressed issues related to classification, limitation period for duty demand, and imposition of penalty. The Tribunal upheld the classification of the product as a dental hygiene preparation under Chapter 33, restricted the duty demand to a specific period due to the appellants' prior disclosures, and revoked the penalty imposed on the appellants for lack of evidence supporting the charge of suppression.