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Issues: (i) Whether the extended period of limitation could be invoked for the demand of duty; (ii) Whether the product was correctly classified under Heading 3305.99 of the Central Excise Tariff Act, 1985.
Issue (i): Whether the extended period of limitation could be invoked for the demand of duty.
Analysis: The demand was founded on the allegation that the appellants had not informed the department and had not obtained registration. The record did not establish wilful suppression or a positive intent to evade duty. In the absence of such ingredients, the longer limitation period could not be sustained.
Conclusion: The extended period of limitation was not invocable and the demand was time-barred beyond the normal period.
Issue (ii): Whether the product was correctly classified under Heading 3305.99 of the Central Excise Tariff Act, 1985.
Analysis: The product contained medicinal herbs, but the base ingredients served only as a dispersing agent and had no therapeutic or curative value. On that reasoning, the product was treated as herbal shampoo rather than an Ayurvedic medicine.
Conclusion: The classification under Heading 3305.99 was upheld.
Final Conclusion: The duty demand was set aside on limitation, while the classification of the product was sustained.
Ratio Decidendi: Mere failure to inform the department or obtain registration, without proof of wilful suppression or intent to evade duty, does not justify invocation of the extended period of limitation under excise law.
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