Customs, Excise and Gold Tribunal - Mumbai
Kraps Chem Pvt. Ltd. And R.P. Gupta vs Commissioner Of Customs And Central ... on 18 September, 2003
ORDER Jyoti Balasundaram, Member (J)
1. The applications for waiver of pre-deposit duty of Rs. 92,53,196/- confirmed against the manufacturing company and penalty of equal amount imposed upon it and penalty of Rs. 10 lakhs imposed upon its Director arise out of the order of the Commissioner of Central Excise, Surat. The demand has been confirmed on the ground that the process carried out by the assessees of blending bought out guar dal powder with additives such as saw dust and tamarind kernel powder using glyxol and methanol for dispersion of powder from the sides of blender in which the mixing took place, is a process amounting to manufacture of guar gum falling for classification under CETA sub-heading 1301.10, rejecting the contention of the assessee that the process carried out does not amount to manufacture. The extended period of limitation has been invoked, holding that they were guilty of suppression.
2. We have heard both sides. We find that the Commissioner has given a detailed finding that the process carried out by the assessees results in the emergence of a new product with different characteristics and uses, that the properties of the product, namely, viscosity and solubility are changed so as to make the product marketable for different industries such as, paper industry, explosive industry, etc., that the product has a different commercial name, namely, gaur gum; that the product is also commercially known as gaur gum as stated by the purchasers of the product; that the product was a type of gum manufactured from vegetable product and therefore falls for classification under Chapter heading 13 which includes, gums, resins and other vegetables saps and extracts; that the product has sticking/binding properties. He has also relied upon chemical examiner's reports that the sample qualifies the tests for guar gum. In view of these the applicants contention that the process do as not amount to manufacture as the properties of the product remained the same even after the addition of additives by blending and that even if it is held that the process amounts to manufacture, classification under chapter heading 13 is not correct as the product in dispute is not a gum as the HSN Explanatory Notes to Chapter 13 relied upon by the Commissioner for the purpose of determining the classification are not applicable as the Chapter 13 of HSN and Chapter 13 of the CETA, 1985 are not aligned, that reliance upon Explanatory Notes at page 109 "for mucilages and thickeners whether or not modified, derived from vegetable product" is not correct; that if the product is held to be sort of manufacture it would fall under CETA sub-heading 1101.10 is a product of the milling industry - as flour of vegetables; cannot be accepted prima facie, and can be considered only when the appeal is taken up for hearing. The issue as to whether a particular process is one of manufacture and the issue of correct classification of product cannot be determined at this prima facie stage, particularly when there is no, prima facie, perversity in the order of classification under Chapter 13 of the Central Excise Tariff. The applicant therefore cannot be said to have made out a strong prima facie case for waiver on the merits of the case. However, we see prima facie, force in the plea that the demand for the period 1997-98 up to December, 1999 is barred by limitation as they had stated their process of manufacture in detail in the declarations filed annually under Rule 174 of the Central Excise Rules, 1944 and such description has not been found to be incorrect. The demand for the months January to June, 2000 alone will fall within the normal period of limitation. According to the applicants the duty demand for the months of January, February and March would be approximately Rs. 15 lakhs and no demand would be payable for the period April to June, 2000 as the applicants would be entitled to SSI exemption as their clearance value as noted by the Commissioner, is approximately 79 lakhs and they are within the ceiling limit of value of clearances. Keeping these facts in view, we direct pre-deposit of Rs. 25 lakhs towards duty within a period of 8 weeks from today and on such deposit, pre-deposit of balance duty and penalties shall stand waived and recovery thereof stayed pending the appeals. Failure to comply with this direction shall result in vacation of stay and dismissal of appeals without prior notice.
3. Compliance to be reported on 3rd December, 2003.