1998 (10) TMI 196 - AT - Central Excise

Summary

Issues:
Classification of "Bambino Vermicellini Kheer" under Chapter Heading 19.02 or 21.07, Duty demand confirmation, Penalty imposition, Non-filing of classification list, Suppression of facts, Applicability of Notification No. 17/70-C.E.

Classification Issue:
The appeal concerned the classification of "Bambino Vermicellini Kheer" under Chapter Heading 19.02 or 21.07. The appellants argued that the item should be classified under Heading 19.02 as vermicelli, emphasizing that it was a preparation of vermicelli mixed with sugar powder, milk powder, cashew nuts, etc. They contended that the item was not dutiable during the period in question and should be exempted based on their belief. The Tribunal noted that vermicelli, whether prepared or not, is specifically included in Chapter Heading 19.02. It highlighted that the Additional Collector had incorrectly classified the item under Heading 21.07, which refers to edible preparations, not elsewhere specified or included. The Tribunal found that the item fell under Chapter Heading 19.02 and set aside the Additional Collector's classification.

Judicial Precedents:
The Revenue supported the impugned order, arguing that once the item undergoes roasting or cooking, it moves out of Chapter 19. They cited judgments such as CCE v. Frozen Foods Pvt. Ltd. and CCE v. Nektar Fruit Products to support their stance. However, the Tribunal distinguished these cases from the present situation. In the Frozen Foods case, the item was appropriately classified under sub-heading 2107.91, while in the Nektar Fruit Products case, the item was considered fit for human consumption after processing, leading to its classification under sub-heading 2107.91. The Tribunal found that these judgments were not applicable to the current case due to the specific nature of the item in question.

Suppression of Facts and Time Bar Issue:
The appellants contended that they had a bona fide belief that the item was non-dutiable and eligible for exemption under Notification No. 17/70-C.E. They argued that there was no suppression of facts, justifying the invocation of a larger period for duty demand confirmation. The Tribunal accepted their plea, stating that the appeal succeeded both on merits and on the time bar. Consequently, the appeal was allowed in favor of the appellants.

In conclusion, the Appellate Tribunal CEGAT, MADRAS ruled in favor of the appellants, setting aside the duty demand confirmation and penalty imposition. The classification issue was resolved in favor of the appellants under Chapter Heading 19.02, emphasizing the specific inclusion of vermicelli. The Tribunal also acknowledged the appellants' bona fide belief and the absence of suppression of facts, leading to the allowance of the appeal on both merits and time bar grounds.