2019 (10) TMI 1289 - AT - Central Excise

Classification of goods - Purified Terephthalic Acid (PTA) - whether classifiable under Tariff sub heading 29173600 of the Central Excise Tariff which attracts central excise duty of 16%? - N/N. 37/2006-CE dated 20.07.2006 - SCN was issued on the ground that the goods cleared by appellant was Purified Terephthalic Acid and not Pure Terephthalic Acid inasmuch as terephthalic acid manufactured by them underwent purification process by which it reached 99.8% purity approximately - HELD THAT - On perusal of the Certificate issued by the Chemical Engineering Department of the Jadavpur University after a detailed analysis of purification process applied to terephthalic acid it has been stated that Purified Terephthalic Acid manufactured by the appellant can be deemed as Pure Terephthalic Acid as used interchangeably and synonymously with the term Purified Terephthalic Acid in the sense of the highest grade of terephthalic Acid as understood in industry as well as standards globally. It is a settled position of law as also held by the Hon ble Supreme Court in the case COMMISSIONER OF CUSTOMS (IMPORT) MUMBAI VERSUS M/S KONKAN SYNTHETIC FIBRES 2012 (3) TMI 273 - SUPREME COURT that in a fiscal or taxation law that while ascertaining the scope or expression used in a particular entry the opinion of the expert in the field of trade who deals in those goods should not be ignored rather it should be given due importance. The certificate from the experts was not available before the Ld. Commissioner at the time of adjudication. In order to meet the ends of justice the matter should be remanded back to the Ld. Commissioner for his perusal and observation on the contents of the above certificate issued by the University - appeal allowed by way of remand.

Summary

Issues:
1. Central excise duty demand confirmation for the period 21.07.2006 to 31.03.2007.
2. Interpretation of exemption notification for 'Purified Terephthalic Acid' (PTA) under Tariff sub heading 29173600.
3. Allegation of wilful suppression and penalty imposition.
4. Expert opinion on purity of the manufactured goods.
5. Differentiation between 'Pure' and 'Purified' materials.
6. Consideration of market parlance and expert opinions in interpreting the exemption notification.
7. Remand of the matter to the Ld. Commissioner for further adjudication.

Analysis:
1. The appeal was filed against the Order-in-Original confirming central excise duty demand for the mentioned period. The appellant, engaged in PTA manufacture, availed an exemption benefit under Notification no. 37/2006-CE for 8% excise duty. However, a show cause notice alleged that the goods were 'Purified Terephthalic Acid' and not 'Pure Terephthalic Acid', leading to the duty demand confirmation and penalty imposition for wilful suppression.

2. The appellant argued that PTA should be considered 'Pure Terephthalic Acid' for exemption purposes based on HSN notes and commercial standards. They presented a certificate indicating insignificant impurity levels in their product, considered the highest grade of PTA. The Revenue contended that the goods did not meet the exemption criteria, placing the onus on the appellant to prove eligibility.

3. The Tribunal noted the Ld. Commissioner's differentiation between 'Pure' and 'Purified' materials, emphasizing market understanding. Expert analysis from Jadavpur University supported the appellant's claim that their PTA could be deemed 'Pure Terephthalic Acid'. The Tribunal cited precedents emphasizing expert opinions' relevance in interpreting tax laws.

4. As the expert certificate was not before the Ld. Commissioner during the initial adjudication, the matter was remanded for reevaluation. The Commissioner was directed to consider the expert views on the product's purity and provide a decision based on this new evidence. The Tribunal emphasized the importance of expert opinions in such matters.

5. The Tribunal found that the extended period of limitation was not applicable as the appellant had disclosed their product correctly, and there was no suppression involved. Consequently, the penalty imposed was set aside. The appeal was allowed for remand to the Commissioner for further consideration, ensuring the appellant's right to be heard and expeditious resolution within three months.

6. The judgment emphasized the significance of expert opinions in interpreting tax laws, especially regarding product classifications and exemption criteria. The remand decision aimed to ensure a fair evaluation based on all available evidence and expert insights, maintaining principles of natural justice.