TaxTMI 
TaxTMI 
2025 (3) TMI 624
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....sed primarily as a bathing substitute for in-patients at various medical facilities, and were classifying the products under Chapter Heading 3402 9091. The Department proposed to re-classify the product under CTH 3307 3090 as "Other Bath Preparations" and issued Show Cause Notice accordingly. After due process of adjudication, the demand in the Show Cause Notice along with interest and penalty were confirmed except the penalty under Rule 25 of the Central Excise Rules, 2002. The relevant Headings of disputed classifications are: - "3307- pre-shave, shaving or after-shave preparations, personal deodorants, bath preparations, depilatories and other perfumery, cosmetic or toilet preparations, not elsewhere specified or included, prepared room deodorisers, whether or not perfumed or having disinfectant properties. 3402- organic surface-active agents (other than soap), surface-active preparations, washing preparations (including auxiliary washing preparations) and cleaning preparations, whether or not containing soap, other than those of heading 3401." A perusal of the above two Headings would reveal that, while Heading 3307 covers bath preparations, Heading 3402 co....
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....be appropriate. 3.2 During the hearing before the Tribunal, apart from the classification, they would vehemently contend the invocation of larger period in the instant case by submitting the following: - i. The Show Cause Notice has invoked the extended period of limitation under Section 11A(4) of the Act and its consequential penalty under Sec. 11AC of the Act which was duly confirmed in the impugned order. ii. Section 11A(4) of the Act is a draconian provision and has to be exercised with utmost caution and diligence only in cases involving fraud, collusion, wilful misstatement, or suppression of facts with intent to evade duty. iii. It is evident that, the present case is primarily an issue on technical classification, even the Department has to depend on technical reports of various testing laboratories. In other words, by no stretch of imagination, either the issue involved, or the consequential duty demand can be attributed to any of the ingredients that would warrant invocation of the above Section against the Appellant. iv. Further, as it could be seen from the records, there are test reports both in the favour of the Department as wel....
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....on 11 AC cannot be imposed. 4. The Ld. Authorised Representative Shri Anoop Singh for the Department would support the findings of the Ld. Adjudicating Authority in the Order-in-Original No. 02/2020-Pr.Commr. dated 30.12.2020. He has placed reliance on the decision of the Tribunal Mumbai in the case of Tata Motors Ltd., Pune Vs. Commissioner of Central Excise, Pune [2014 (6) TMI 162-CESTAT MUMBAI] to justify invocation of larger period. 5. We have carefully considered the submissions made by both sides and also evidences available on records. 6. The main issues involved in this appeal are :- i. Whether the classification of "Eco Bath Towelette" is under Chapter Heading 3402 9091 as classified by the Appellant or as "Other Bath Preparations" under Chapter Heading 3307 3090 as contended by the Department? and, ii. Whether any suppression is involved for invocation of extended period for the demand and imposition of penalty? 7. The facts as evidenced in this appeal indicate that the testing and retesting of the samples of the product viz., Eco Bath Towelette throws up contradictions as far as the classification is concerned. As per the directions of the H....
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....ied conditions are to be satisfied. 8. The appellant has submitted that the impugned product is based on the organic surface-active agents whereas the Department's contention appears to be that the provisions of Chapter Note 3 are not complied with as per the test report of CRCL cited above. As such, though the appellant was all along contending that its products are also based on organic surface-active agents, but the CRCL report clearly indicate that provisions of Chapter Note 3 are not satisfied. As such, its classification under Chapter 34 is ruled out. Further, examination of the test reports by the IIT, Madras and PSGTECHS could not throw any light as to the satisfaction of the conditions specified in Chapter Note 3 of Chapter 34. The CRCL report is very categorical that the product had not satisfied the conditions of Chapter Note 3 of Chapter 34. The product is to be classified under CETH 3307 in terms of the above test report. As such, there is nothing much left for us to dwell upon the classification dispute and accordingly, we uphold the classification of the impugned goods under CTH 3307 as proposed by the Department. 9. Now the only issue is to be decided is regar....
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....asis of their belief of the interpretation of the provisions of the law that the exempted goods were not required to be included and these did not include the value of the exempted goods which they manufactured at the relevant time. The Tribunal found that the explanation was plausible, and also noted that the Department had full knowledge of the facts about manufacture of all the goods manufactured by the respondent when the declaration was filed by the respondent. The respondent did not include the value of the product other than those falling under Tariff Item 14E manufactured by the respondent and this was in the knowledge, according to the Tribunal, of the authorities. These findings of the Tribunal have not been challenged before us or before the Tribunal itself as being based on no evidence." ii. The Hon'ble Supreme Court in the case of Pushpam Pharmaceuticals Company [1995 (3) TMI 100-SC] held as follows: - "4. Section 11A empowers the Department to re-open proceedings if the levy has been short-levied or not levied within six months from the relevant date. But the proviso carves out an exception and permits the authority to exercise this power within five....
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....(2013) 9 SCC 753 where it was observed that "the conclusion that mere non-payment of duties is equivalent to collusion or willful misstatement or suppression of facts" is "untenable". This view was also followed in Escorts v. Commissioner of Central Excise (2015) 9 SCC 109, Commissioner of Customs v. Magus Metals (2017) 16 SCC 491 and other judgments." Further, it has been a well settled law, that in matters relating to technical interpretation and classifications, suppression of fact / wilful misstatement has to be used with utmost caution and justification. iv. In the case of K.B. Autosys India Pvt. Ltd. [2024 (10) TMI 17-CESTAT CHENNAI], it has been held: - "18. .... ...... ..... We also find that the Hon'ble Supreme Court's decision in the case of Northern Plastic Ltd. Vs. Collector of Customs & Central Excise [1998 (101) ELT 549 (SC)] held that merely claiming the benefit of exemption or a particular classification under the Bill of Entry does not amount to mis-declaration under Section 111(m) of the Customs Act, 1962. The Hon'ble High Court of Bombay in the case of Commissioner of Customs Vs. Gaurav Enterprises [2006 (193)....
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....ent in the current GST regime with regard to the classification of bath wipes, where the Government has taken due cognisance of the varied classifications under CTHs 33 and 34, which reveals that there are still varied classifications between the competing CTHs 33 and 34 prevalent with regard to the products. In this connection the reliance placed in the case of Siddhartha Tubes Ltd. [2006 (193) ΕLΤ 6 (S.C.)] and Jaiprakash Industries Ltd. [2002 (11) TMI 92-SUPREME COURT] wherein the Hon'ble Supreme Court was of the view that, if the assessee has an arguable case or if divergent views are possible then the penalty cannot be imposed and extended period cannot be invoked. 15. In view of the foregoing, we uphold the classification of the goods under CTH on 3307 and so ordered accordingly. For the reasons above, we also hold that there are no grounds for the Department to invoke larger period of limitation and hence, the demand shall be restricted to the normal period of limitation under Sec. 11A of the Act. Accordingly, all the penalties including the one imposed under Sec 11AC of the Act stands vacated. 16. Thus, the Appeal is partly allowed on above terms with ....