Customs, Excise and Gold Tribunal - Tamil Nadu
Motherland Laboratories, Franch Herbs ... vs Cce on 20 April, 2006
Equivalent citations: 2006(109)ECC3, 2006ECR3(TRI.-CHENNAI)
ORDER P.G. Chacko, Member (J)
1. M/s. Motherland Laboratories (appellants in appeal No. E/201/2002) received from M/s. Franch Herbs Technologies Ltd. (formerly known as SPS Castor Product Ltd) [appellants in E/204/2002] bulk quantities of Cold-Pressed Castor Oil (SH 1503.00 of the CETA Schedule), repacked the same into 100 ml. pet bottles on job work basis and supplied the same as "Franch Oil - NH" to the raw material -supplier. They did not observe Central Excise procedure for this transaction as, according to them, the repacking of goods in bulk into retail packs did not amount to 'manufacture' in the absence of any Note to that effect in Chapter 15 of the CETA Schedule. However, it appeared to the department (whose officers visited the appellants' premises on 6.5.99 and made enquiries) that the activity of repacking amounted to 'manufacture'. Alter recording a statement from the Production Chemist of M/s. Motherland Laboratories and consulting the product literature pertaining to Franch Oil - NH*, the department took the view that Franch Oil - NH* was a branded Ayurvedic Medicament classifiable under SH 3003.39 and, therefore, M/s. Motherland Laboratories ought to have paid duty on the clearances of the said product. Accordingly, a show-cause notice dated 1.11.99, was issued which demanded duty from M/s. Motherland Laboratories and proposed penalties on them as well as on Shri S. Abdul Majeeth, Managing Partner, Motherland Laboratories (appellant in E/202/2002) and Shri Samson Papli. Managing Director, Franch Herbs Technologies Ltd. (appellant in E/203/2002), besides proposing to confiscate the goods seized on 10.5.99 from the factory of M/s. Motherland Laboratories. The original authority, in adjudication of the SCN, confirmed the demand of duty against M/s. Motherland Laboratories and imposed penalties on them and others, besides imposing redemption fine in lieu of confiscation of the goods seized and provisionally released. The appeals filed by the aggrieved parties were dismissed by the Commissioner (Appeals). Hence the present appeals.
2. After examining the records, we find that the proposal in the SCN was to classify Franch Oil - NH* under SH 3003.39; that the manufacturer, in their reply to the notice maintained that the product was classifiable in the same way (SH 1503.00) as 'Cold-Pressed Castor Oil IP Grade' received from M/s. SPS Franch Castor Product Ltd. that the original authority chose to classify the product under a third entry viz. Heading 33.04 and that the first appellate authority sustained this classification done by the adjudicating authority.
3. After hearing both sides and considering their submissions, we find that, for another period (June 1999 -August 2001), the very same product manufactured by the same party (Motherland Laboratories) was classified by this Bench under Heading 30.03 vide Motherland Laboratories v. CCE Chennai . Obviously, in the present case, the lower authorities had no occasion to consider the Tribunal's decision on the classification of Franch Oil - NH* However, as we have already noted, both the lower authorities have chosen to classify the product under a tariff entry different from the one proposed in the SCN and the one suggested by the assessee, a course of action which cannot be sustained in law. The original authority had not put the manufacturer to notice of this proposal to classify the product under Chapter 33, thereby having acted in violation of the principles of natural justice. For the aforesaid reasons, we set aside the orders of the lower authorities and remand the case to the original authority for fresh adjudication in accordance with law and the principles of natural justice. It goes without saying that a reasonable opportunity be given to all the appellants before orders are passed.
(operative part of the order was pronounced in open court on 20.4.2006)