2019 (5) TMI 1790 - AT - Central Excise

Classification of manufactured goods - Micronutrient Mixtures Plant Growth Promoters and Bio-Fertilizers - Area Based Exemption - benefit of N/N. 50/2003-CE dated 10.06.2003 - HELD THAT - The Revenue is not disputing the fact that the appellants factory is located in Rudrapur where area based exemption notification no.50/2003 is available. The said notification is in respect of all the manufactured products in the factory located in that area except the products specified in the negative list. Inasmuch as Heading 31.02 to 31.05 fall under the negative list the revenue by classifying the product under tariff heading 31.04 held that the appellant is not entitled to the said area based exemption notification. Time Limitation - HELD THAT - The entire facts were placed by the appellant before their jurisdictional Central Excise Authorities which stands examined verified and accepted by them. As such it cannot be said that there was any suppression or misstatement on the part of the appellant with intent to evade payment of duty. In the absence of any evidence to the contrary the bonafide of appellant cannot be doubted. Consequentially the extended period could not available to the revenue - As such the demand falling beyond the normal period of limitation is set aside along with setting aside the penalty imposed upon the appellant. Appeal allowed by way of remand.

Summary

Issues:
Classification of manufactured products under Notification No.50/2003-CE, Limitation period for demand of duty, Correct classification of products for area based exemption.

Classification of manufactured products under Notification No.50/2003-CE:
The appellant, engaged in manufacturing Micronutrient Mixtures, faced a dispute regarding the correct classification of their products. Initially, their products were deemed eligible for area-based exemption under Notification No.50/2003-CE. However, subsequent visits by Central Excise Officers led to a different classification under Chapter 31 as "other fertilizers," which were not entitled to the exemption. This discrepancy resulted in the initiation of proceedings and a demand for duty for the period 2011 to 2013-14. The appellant contested this classification, arguing that their products should be classified under Chapter 38 based on various Tribunal decisions. The Tribunal noted the importance of correctly classifying the products to determine eligibility for the exemption.

Limitation period for demand of duty:
The appellant contested the imposition of duty and penalty beyond the normal limitation period. They argued that their declaration, filed in 2009 and verified by the range superintendent, had already been examined by the Central Excise Officers, who found the appellant eligible for the exemption. The Tribunal observed that the appellant had cooperated with the authorities and there was no evidence of suppression or misstatement to evade duty payment. Consequently, the Tribunal set aside the demand falling beyond the normal limitation period and the penalty imposed on the appellant.

Correct classification of products for area based exemption:
Regarding the demand falling within the limitation period, the Tribunal remanded the matter to the Original Adjudicating Authority for fresh consideration. The appellant had cited various precedent decisions to support their classification argument, which were not available during the initial adjudication. The Tribunal emphasized the need to re-examine the applicability of these decisions in light of the products' contents and manufacturing process. The appellant was granted an opportunity to present their case during the fresh consideration. Ultimately, the appeal was disposed of with these directions for further review by the Adjudicating Authority.