Customs, Excise and Gold Tribunal - Mumbai
Dilip Gum Inds. vs Commissioner Of Central Excise on 1 September, 2004
Equivalent citations: 2004(174)ELT371(TRI-MUMBAI)
ORDER C. Satapathy, Member (T)
1. Heard both sides. The original authority has held the processes carried out on guar dal to produce guar gum as amounting to manufacture and has classified the same under CET sub-heading No. 1310.10. After allowing the small-scale exemption, he has confirmed a duty demand of Rs. 5,22,866/- and has imposed an equal amount of penalty under Section 11AC, in addition to imposing penalty of Rs. 2 lakhs under Rule 173Q. He has also imposed penalty of Rs. 50/000/- on the second appellant, partner in the appellant-firm on the ground that he was responsible for all omissions and commissions. The lower appellate authority has upheld the order except for setting aside the penalty under Rule 173Q in the light of penalty imposed under Section 11AC. The learned S.D.R, supports the impugned order and relies on the Tribunal's stay order in the case of Kraps Chem Pvt. Ltd. v. C.C.E., Surat-II - 2003 (157) E.L.T. 705 to support classification of the impugned goods under subheading No. 1310.10.
2. The learned C.A. appearing for the appellants claims exemption and classification for the impugned goods as products of milling industry under subheading No. 1101.19. He relies on the decision of the Tribunal in the case of Hindustan Gum and Chemicals Ltd. v. C.C.E., Ahmedabad-II [2004 (163) E.L.T. 196 (T) = 2004 (91) ECC 289] for classification under Chapter 11 and also points out that the entry under HS Chapter 13 is wider than the CET Chapter 13 and that the impugned goods are not classifiable in Chapter 13 of the Central Excise Tariff though the same may get covered under Chapter 13 of HSN.
3. After hearing both sides and perusal of case records, we find that the second appellant in his statement dated 28-9-1999 has admitted that the appellants were engaged in the manufacture of guar gum by grinding guar dal with the aid of power. He also explained the manufacturing process as washing the guar dal by water and sulphuric acid, drying, grinding after mixing formal de-hyde, purifying and then mixing with preservatives before packing in 50 Kg bags. The HDPE bags containing guar gum are also marked with "Dilip gum Industries 50 Kg". The authorities below have held the resultant product to be a manufactured product, namely guar gum and classifiable under CET subheading 1310.10.
4. We find that CET sub-heading No. 1301.10 covers Lac; gums, resins and other vegetable saps and extracts manufactured with the aid of power. It specifically covers gums. On the other hand, CET heading 11.01 covers products of milling industry, including flour, groats, meal and grains of cereals, and flour, meal or flakes of vegetables. The impugned product which is treated chemically is not akin to any of these products. We also find that as against HS heading 13.01 including natural gums, CET heading 13.01 includes all 'gums' without any qualifications. Hence, we are of the view that guar gums, the impugned goods, are classifiable under CET 13.01. The fact that mucilages and thickeners are covered under HS heading No. 13.02 whereas the combined CET heading No. 13.01 does not mention the same does not affect the classification of guar gum under CET sub-heading 1301.01. We also find that the decision in the case of Hindustan Gum and Chemicals (supra) relates to Tamarind Kernel Powder. In that case, tamarind kernel powder itself was purchased from the market as a starting material. In the instant case, the appellants procured guar dal which was processed with the aid of power and chemicals were added to manufacture guar gum. Moreover, in the case of Tamarind Kernel Powder, the Tribunal followed the Board's Circular of 14-8-1986 to classify the same under Chapter 11. No such circular on guar gum has been brought to our notice. As such, we are of the view that the cited decision of the Tribunal has no application to the case at hand relating to classification of guar gum, which according to us has been correctly classified under CET sub-heading 1301.01 by the lower authorities.
5. We note that the benefit of small-scale exemption has already been extended by the original authority and the lower appellate authority has reduced the penalty imposed by Rs. 2 lakhs. However, we find that the penalty imposed on the first appellant is excessive and we reduce the same from Rs. 5,22,866/- to Rs. 1,25,000/-. The penalty on the second appellant is also reduced from Rs. 50,000/- to Rs. 25,000/-.
6. The appeals are otherwise rejected except for reduction in penalties as indicated above.