TaxTMI 
TaxTMI 
2009 (11) TMI 371
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....der SH 3215.90 (other) as claimed by the Revenue for the period from 1999 to March, 2004. The assessee had filed a classification declaration for the year 1999-2000, wherein they had described their product as writing ink and classified the same under SH 3215.10 attracting 'nil' rate of duty. In that declaration, they specified the inputs as (i) dyes, (ii) solvent, and (iii) water. The manufacturing process was indicated as 'mixing by stirrer'. The end use was mentioned as "writing use". Accordingly, the assessee went on manufacturing and clearing their product at 'nil' rate of duty. While so, the Department on 16-4-2004 issued a show-cause notice demanding duty of over Rs. 2 lakhs for the period from September, 1999 to March, 2003 and prop....
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....hat the assessee was engaged in the manufacture of inks and allied products as an SSI unit. The classification declaration was filed in that capacity. Arguing in support of that declaration, the learned Consultant has submitted that the assessee has ever believed that their product is an aqueous preparation of one or the other dye and therefore, in terms of HSN Explanatory Notes, it would be classifiable as writing ink. In this connection, learned Consultant has particularly referred to Explanatory Note B under HSN Heading 32.15. This Note reads as under : "(B) Ordinary writing or drawing inks are solutions or suspensions of a black or coloured material in water, usually with the addition of gum and other products (e.g., preservatives). Th....
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....is case and that the penalties were also rightly imposed on the assessee. 5. Both sides have argued on the reliability of HSN Notes in this case. According to Learned Consultant, HSN Notes have a persuasive effect on classification of goods under the Central Excise Tariff Act. In this connection, he has relied the Delhi High Court's in Manisha Pharma Plasto Pvt. Ltd. v. Union of India, 1999 (112) E.L.T. 22 (Del.) and the Supreme Courts' judgment in Collector v. Business Foams Pvt. Ltd., 2002 (142) E.L.T. 18 (S.C.). On the other hand, according to SDR, HSN Notes can be looked into only where the Tariff Headings/Sub Headings are perfectly aligned with HSN Headings/Sub Headings. It is pointed out that the Sub Headings under Tariff Heading 32.....
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....ested by the chemical examiner, who reported that it was composed of organic colouring matter (black), glycolic compound, water, binder and additives. The total solid content was reported to be 16.7% by weight. The chemical examiner further opined that, as the "jet ink" was to be used in printers, it might not be considered as writing ink. It appears from the chemical report that the sample was described on its label as 'jet ink'. Consultant has argued that, as the solid content was only 16.7% by weight, water should account for the rest. This argument has no scientific basis. It appears from the chemical report that water was one of the minor ingredients of the sample. The main ingredient was organic colouring matter (dye). The second comp....
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....n a different manner would certainly attract the proviso to Section 11A(1) of the Act. Suppression of fact is evident from the above conduct of the assessee. Consultant's plea of bona fide belief is not supported by the conduct of the party. By all means, therefore, the extended period of limitation was invocable, in this case, on the ground of suppression of fact by the assessee. 10. Insofar as penalty is concerned, it goes without saying that Section 11AC has been rightly invoked against the assessee in relation to the first show-cause notice inasmuch as suppression of facts with intent to evade payment of duty stands established in this case. Consultant has relied on the Apex Court's case in Denson's case (supra) wherein, on the facts o....