Customs, Excise and Gold Tribunal - Tamil Nadu
Crane Betelnut Powder Works vs Commr. Of C. Ex. And Customs on 7 March, 2001
Equivalent citations: 2001(131)ELT479(TRI-CHENNAI)
ORDER C.N.B. Nair, Member (T)
1. This appeal is directed against the Order-in-Original No. 38/94, dated 29-11-1997 whereunder the Commissioner of Central Excise & Customs, Guntur demanded duty of about Rs. 26 lakhs from the appellants and imposed penalty of Rs. 5 lakhs on them. Appellants are manufacturers of betel nut powder. Duty demand took place on the basis that betel nut powder is liable to Central Excise duty under tariff item No. 2106.90 of the CET.
2. Learned Counsel representing the appellants submitted that the action taken in the impugned order is entirely illegal. He submits that tariff Heading 2106.90 related to "Pan masala". Appellants' product "betel nut powder" is not Pan masala. Therefore, there was no liability on the appellants to pay duty as fixed for the products falling under tariff item 2106.90. He submitted that this issue was no more res integra inasmuch as the Madras High Court in judgment dated 12-4-1999 in Writ Petition No. 4265 to 4267 of 1994 in the case of A.R. Saifulla and Others had held that betel nut powder and Pan masala are different products and that betel nut powder cannot be classified for Central Excise purpose as Pan masala. He also drew our attention to Order No. 88/95, dated 20-12-1995 passed by the Commissioner of Central Excise & Customs (Appeals) in the appellants' own case where he had held that the appellants' product i.e. betel nut powder cannot be classified under tariff item 2106.90. The learned Counsel submitted that the period involved in the present dispute is between 1-3-1994 and 31-3-1994 during which time, betel nut powder was not included as item liable to Central Excise duty in the Tariff Act. Betel nut powder became excisable only with effect from 16-3-1995 on account of inclusion of chapter sub-heading 2107.
3. We have heard the learned DR who submitted that the Commissioner had not gone into the correctness or otherwise of the classification of the product betel nut under tariff item 2106.90. The order has been passed on assumption that there was no dispute about the classification. He, therefore, submits that the case may be sent back to the Commissioner for giving a finding on classification.
4. We have perused the records and considered the submissions of both the sides. The records show that show cause notice had been issued alleging that appellants' product was liable to classification under tariff Heading 2106.90 as Pan masala. Appellants had contested the proposed classification in their reply to the show cause notice. Thus, the proceedings in the present case revolved around the issue of correct classification of Betel nut powder, though no finding has been recorded by the Commissioner in this regard. It is now clear from the decision of the Hon'ble Madras High Court (supra) as well as the decision of the Commissioner (Appeals) in the appellants' own case that betel nut powder was not liable for classification under tariff Heading 2106.90 as Pan Masala. In fact, it became dutiable only subsequent to the period involved in the present dispute i.e. after 16-3-1995. The issue remains covered in favour of the appellants. Since the product was not liable to classification under the tariff during the relevant period, duty demand on the same did not arise. Accordingly, the duty demand is required to be set aside as untenable. We do so. As there was no duty liability, the question of penalty also does not arise and the penalty is also required to be set aside and we order accordingly.
5. In view of what has been stated above, the appeal is allowed and the impugned order is set aside in its entirety with consequential relief. We are informed that the appellants had deposited 4 lakhs pursuant to the order on the stay petition passed by the Tribunal earlier. In view of our present order that no duty or penalty is due from the appellants, the Revenue shall return the said deposit without any delay to the appellants.