Customs, Excise and Gold Tribunal - Bangalore
M/S. Kemwll Ltd., Bangalore vs Commissioner Of Central Excise, ... on 11 April, 2001
Equivalent citations: 2001(75)ECC764
ORDER Shri S.S. Sekhon, Member (T)
1. The issue involved in this appeal is classification of the products-
(i) VIMERAL LIQUID
(ii) VITABLEND WM FORTE
(iii) OSTO CALCIUM which are being manufactured by the appellants, claimed as animal feeds, classified under 23.02 being as Tariff, manufactured for M/s GLAXO INDIA Ltd. The department's contention is that the goods are classifiable under heading 29.36 of the Tariff as 'Pro-vitamins, Vitamins and Hormones natural or re-produced by synthesis. The demand of Rs2,22,84,805 under Section 11 A (ii) proviso was confirmed and demand and a penalty of Rs 1,00,000/- under Rule 173 Q (ii) imposed on the appellant.
2. We have heard both sides and considered the submissions and find-
(a) The Collector has held-
(i) Though the classification lists were approved, the ingredients of the products were with held, therefore, the proviso to Section 11A was rightly invoked.
(ii) Products have a predominant mixture of vitamin and chapter 23.02 covers only products which can be traced to animal or vegetable origin and not synthetic preparations.
(iii) Classification made on the basis of active ingredients which are VITAMINS as per Rule 3 the last heading will have to be applied and the products would be classified under heading 29.36 of the Central Excise Tariff Act, 1985.
(iv) The case of M/s Glaxo India Ltd., & Tribunal decision thereon was being contested by the department and the findings on M/s Ranbaxy's case will be applicable.
(b) The following facts have been admitted as seen in para 3 of order.
(i) Technical Affidavits from experts and users have been placed on record.
(ii) Classification Lists approved since 1992, but the same was contested by the department from 1994 and the department has lost the case before Commissioner (Appeals) but has gone further in appeal.
(c) During the course of hearing the learned C.A. stressed on the bar limitation to be operating in the facts of this case and wanted a decision on the same. Therefore, we examine, the issue of applicability of the proviso to Section 11A (1). Examining the same, it is found-
(i) A chart prepared by the appellants, which the DR is not contesting indicates-
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S.No. Particulars Date
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A. Ostocalcium Vet
1. Classification List 3/92-93 (Ostocalcium Vet) 15.5.92
2. Details of raw materials/packing materials to 1 above alongwith product profile 07.10.92
3. Classification list approved on 02.11.92
4. Classification List 17/92-93 (Ostocalcium vet) 02.03.93
5. Letter from Range dt.8.3.93 asking for details/ constituents of Ostocalcium vet. 08.03.93
6. Reply by Appellant specifying constituents 09.03.93
7. Letter from Range asking for further details 16.10.93
8. Appellant giving samples of product, method of analysis. 29.10.93
9. Classification list 6/93-94 filed 28.10.93
10. Classification list 6/93-94 approved 23.02.94
11. Classification List 9/93-94 approved 04.09.94
12. Letter from Department as reply to our letter dated 28.10.93 to send more samples of ostocalcium vet. 29.09.94
13. Further samples of product submitted 10.10.94
14. Appeal 280/95 filed by Department against 11 above to Commissioner Appeals 15.06.95
15. Commissioner passes order in terms of CBEC Circular classifying ostocalcium vet under 23.02 16.05.96
16. Commissioner Appeals Order no.252/96 dismissing department appeal. 10.12.96
17. Department coming up in appeal E/V535/97 21.02.97 B.Vimeral and Vitablend
1. Classification List 1/94-95 filed for Vimeral Vitablend WM Forte and approved 25.05.94
2. Classification List 2/94-95 for Vimeral and Vitablend approved. 22.08.94
3. Appeals No.372/95 and 373/95 filed by Dept. 01.08.95
4. Commissioner Appeals dismisses appeal in order no.53/97 dt.21.3.97 21.03.97 C. Proceedings before Asst.Commissioner in respect of all three products
1. Show cause notices issued for the period July 1994 to June 1995
2. Asst. Commissioner passes order 7/96 03.01.96
3. Commissioner Appeals allows appeal vide order 77/97 17.03.97 from the above, it is apparent that the product OSTOCALCIUM VET was tested and the Assistant Collector before approving the list; had made all enquiries and satisfied himself. A perusal of the Show Cause Notice, does not reveal any evidence or material relied, that the explanations offered were incorrect misleading or suppressed. Relying on the case of Supreme Court in the case of ESEI Industry & Chemical 1996 (83) ELT 444, and Muzzaffarnagar steel (1989 (44) ELT 552 (T) we would hold that there exist no ground to invoke the proviso to Section 11 A (1) as regards the demands on OSTO CALCIUM VET.
(ii) The demand determined is for the period 6/92 to 7/94 vide notice dated 20.5.97; there is no period of demand with six months. The notice alleges-
Para 3 - "whereas it also appears that the composition of the various ingredients present in these products has been with held from the department deliberately, with the malafide intention of getting the products classified at Chapter sub heading 2302 as AFS and evading Central Excise Duty."
And the 'statement of facts' enclosed to the notice allege-
STATEMENT OF FACTS M/s Kewmwell (P) Ltd., No.11, Tumkur Road, Bangalore (hereinafter also referred to as the 'assessees') are manufacturers of excisable goods assessable to duty under Chapters 17, 19, 21, 23 and 30 of the Schedule to the Central Excise Tariff Act, 1985. They filed Classification List No.1/94-95 w.e.f. 25.5.94 and 2/94-95 classifying their products viz., Vimeral and Vitablend under Chapter sub-heading 2302.00 as AFS attracting nil rate of duty which was duly approved by the jurisdictional Asst. Commissioner. Since the department disagreed with the decision of the Asst.Commissioner, an appeal was filed before the Commissioner of C.Ex. (Appeals Bangalore seeking re-classification of the said products under Chapter sub-heading 3936.00 as an intermixture of vitamins, attracting 20% duty. Subsequently, the assessees filed Classification List for the items, vimeral, vitablend and Ostocalcium Vet claiming classification of the products under Chapter sub-heading 2302.00 This was, however, rejected by the Asst.Commissioner vide Order-in-Original No.7/96 dtd 3.1.96/22.1.96, who classified the said products under heading 2936.00 of the Central Excise Tariff Act, 1985. Aggrieved by this Order, the assessees approached the Commissioner(Appeals), who, vide Order-in-Appeal No.53/97 and 77/97 both dated 17.3.97, dismissed the department's appeal in the first case and allowed the party's appeal in the second, thereby ordering classification of the said products under Chapter sub-heading 2302.00 of the Schedule to the Central Excise Tariff Act, 1985 as AFS. The Hon'ble Tribunal is being approached for reviewing the said Orders of the Commissioner (Appeals).
2. M/s Kenwell (P) Ltd., are manufacturers of the following products:- Vimeral, Vitablend and Ostocalcium Vet.
A perusal of the batch sampling advice sheet recovered under summons from the assessees, reveals the following:
1) VIMERAL LIQUID: A quantity of 2000 L has been tested. The Chemical essay as given in the advice sheet is as under:-
"Vitamin A potency : 14787 IU Vitamin D3 content : Input checked Vitamin E potency: : Input checked Vitamin B12 content : 22.03 mcg."
From the above, it appears that the Vimeral liquid is only a mixture of vitamins and contains nothing other than vitamins. Therefore, the same appears to be classifiable under Chapter sub-heading 2936 of the Central Excise Tariff Act, 1985 as intermixture vitamins and not as AFS under 2302 of the Contral Excise Tariff (sic) 1985.
(sic) VITABLEND WM FORTE: The sampling Advice Sheet dated 22.9.94 shows a quantity of 2000 kg. to have been tested. The chemical (sic) is an follows:-
(sic) "Vitamin A potency : 1,13,015 IU"
(sic) therefore appears that the said Vitablend WM Forte, being (sic) composed of only Vitamin A would merit classification under Chepter sub-heading 2936.00 of the Tariff Act as a pro-vitamin and not (sic) AFS under heading 2302.
(3) OSTOCALCIUM VET: The sampling Advice sheet dated 1.8.94 shows the following to be contained in 5000 ltsr. of Ostocalcium Vet:-
Calcium : 330 mg. Phosphorus : 171 mg. Vitamin D3 : 1942 IU. Vitamin B12 : 22.33 mcg.
3. As can be seen, the quantity of calcium and phosphorus contained in the said Ostocalcium Vet is very minute, and the same contains Vitamin D3 predominantly, along with a small quantity of Vitamin B-12. It, therefore, appears that Vitamin D3 and Vitamin B12. It, being predominant and active ingredients, render the said product an intermixture of vitamins, by virtue of which the same appears to be classifiable under Chapter sub-heading 29.36.
4. In the case of M/s Ranbaxy Laboratories Ltd. Vs. CCEX. New Delhi as reported in 1994 (72) ELT 197 (T), the Hon'ble Tribunal has held per majority that the "products are synthetic preparations containing mixtures of vitamins, as active ingredients. as per the composition declared by the appellants themselves. They are evidently not of a type whose origin could be traced to vegetable or animal material in the nature of residue or waste from food industries. Therefore, these products are outside the scope of Chapter 23. These products are used to take care of vitamin or mineral deficiency and impose the general condition of health and can also be used as food supplement for men and animals as also for fortifying their food (sic) or medicine to ensure good health and strength. There is however nothing in the material to indicate that the items in question were meant to be sold as medicines or drugs for men or animals. Hence the products are also outside the scope of Chapter 30. Heading entry 29.36, read with the clauses to Chapter Note (1), shows that this entry not only covers the items named therein but also products or preparations made from them or containing them and includes such products dissolved in water/other solvents and/or with added stabilisers or preservatives etc. Hence the products in question being (sic) preparations containing a No. of vitamins as active (sic) are covered by the entry and the fact that some minerals and materials are also present, does not make any difference. The products are, therefore, classifiable under heading 29.36.
5. This decision of the CEGAT appears to be squarely applicable to the assessees for the reasons states supra, and hence the products appear to merit classification under Chapter sub-heading 2936 as intermixture of vitamins.
6. The list of raw material and packing materials used for the above products furnished by M/s Kemwell (P) Ltd. alongwith their Classification List merely list out the same, and does not divulge the proportions in which the same are used, to determine the active ingredients contained in the said products by virtue of which the correct classification of the same could not be determined. Thereby, it appears that M/s Kemwell (P) Ltd., have deliberately suppressed this information from the department (sic) the malefide intention of getting their products classified under Chapter sub-heading 2302.00 of the Schedule to the Central (sic) Tariff Act, 1985, as AFS attracting nil rate of duty.
7. From the above, it appears that the said M/s Kemwell (P) Ltd. have contravened the provisions of Rules 9, 49, 173F, 173G and further committed the offences specified under Rules 173Q(1) (a) and 173Q(1) (d) ibid. The duty payable on this account worksout to Rs.2,22,84,805/- for the period from 6/92 to 7/94. M/s (sic) (P) Ltd., appear to be liable to an equivalent penalty under Section 11AC of the Act and also under Rule 173Q of the Central Excise Rules, 1944."
A careful perusal of the same does not reveal how there was a deliberate intention of getting the products classified as Animal supplements. The chart prepared in the appeal book extracted above, indicates that the Assistant Collector's Range Officer had sought details vide letter dated 8.3.93, which were replied vide letter dt 9.3.93, i.e. within 24 hours. The Range Staff, sought further information on 16.10.93 which was replied along with samples on 29.10.93, thereafter further details were sought by the department, vide letter dt 26.9.94 i.e. almost after a year. From the same it is abundantly clear that the officers were definitely making the enquiries. Once these enquiries were on, they should therefore, not have approved the classification Lists for the year 1992-93 on 2.11.92, the classification Lists of year 93-94 on 23.2.94 and 4.9.94. Rule 173 B provided, that the approvals were to be made after due enquiries. Hence, if the lists have been approved, the same must have been done after due enquiry and satisfaction. There is not indication of any incorrect misleading reply, test report etc. submitted by the appellants and or detected by the department. The 'statement of facts' give the constitution of the products and thereafter in para 6, allege that the list of Raw Material & Packing Material used were furnished along with the Classification List filed. The only allegation is "it does not divulge the proportions which the same were used to determine the active ingredients contained in the said product." Nothing stopped the proper officer to ask for the same. Failure of the proper officer, does not call for the charge of 'deliberate intention to evade duty' on the part of the appellants. We find no material to come to any findings, adverse, as regards the conduct of the appellants contributing to the alleged incorrect classification as Animal Feed Supplement'. We therefore find no reasons in Show Cause Notice to invoke the proviso clause in the facts of this case.
(iii) The labels of the products, packing material, admittedly supplied declare the contents on them and have been found on testing to be the same. As declaration could have been converted into nutrition value of vitamin or on standard formula, therefore, we find, no suppression, misdeclaration of facts as given in the charges.
(iv) The notice itself admits that ever since 1994, the department was seeking to reclassifying the products. How an appeal admittedly, filed claiming the goods to be intermixture of Vitamins in 1994 was made without ascertaining the ingredients, in not understood and then in the present Show Cause Notice allege that ingredients were suppressed. We therefore find no cause for confirming any demand in this case.
(v) The impugned order finds the following findings as regards the invocation of proviso to Section 11 A (1).
"17. I have given my anxious thoughts to the facts of the case as well as the submissions of the party. I hold that the case is not barred by limitation and the proviso to Section 11 A has been properly invoked. Though the classification list was submitted the ingredients of the products were not specifically spelt therein. As the issue is whether the goods are animal feed supplement and falls specifically under heading 23.02 or 29.36, it was vitally important to know the ingredients of the product."
We find no justification, in these findings, for invoking a demand for the period 6/92 to 7/94 of Rs,2,22,84,805/- by a notice dt.20.5.97. The demand is totally barred by limitation.
(c) Examining the issue on merits we find that the issue is no longer Res-integre having settled in favour of chapter heading 2303 of C.E.T. Act 1985 in the case of M/s TETRAGON CHEMIE (P) Ltd. by the larger bench of the Tribunal, which we are bound to follow, when we find the products herein to be similar and same, following the same, we find no merits in the case as made out in the impugned order. The impugned order cannot be sustained.
3. In view of our findings, the order is set aside and appeal is allowed.
(Pronounced in the Court on 11/4/2001