1998 (3) TMI 455 - AT - Central Excise

Summary

Issues Involved: Classification of 'Prosup Liquid'; Demand of Central Excise Duty; Validity of Show Cause Notice; Jurisdiction of Assistant Collector; Time-bar.

Issue-wise Detailed Analysis:

1. Classification of 'Prosup Liquid':
The appellants, M/s. Medley Pharmaceuticals Pvt. Ltd., classified 'Prosup Liquid' under Item No. 1-B of the erstwhile Central Excise Tariff, claiming it as a food supplement exempt from duty. The Revenue contended it should be classified under Item No. 68, which covers goods not elsewhere specified and attracts duty. The Assistant Collector initially classified it under Item No. 68 and confirmed the demand. The Tribunal re-adjudicated and upheld the classification under Item No. 68, noting the product contained protein hydrolysate and vitamins.

2. Demand of Central Excise Duty:
A show cause notice dated 21-1-1986 proposed reclassification but did not demand duty. A corrigendum issued on 4-3-1986 demanded Rs. 2,56,295.59 for the period 1-7-1985 to 31-12-1985. The Assistant Collector confirmed the demand, but the Collector (Appeals) noted that part of the demand was beyond the six-month limitation period and thus invalid under Section 11A of the Central Excises Act, 1944, as amended. The Tribunal found that the demand for the six-month period prior to the show cause notice was valid but noted procedural lapses.

3. Validity of Show Cause Notice:
The corrigendum demanding duty was issued after the amendment to Section 11A, which required the Collector to issue notices for demands beyond six months. The Tribunal noted the original show cause notice lacked a demand and was issued post-amendment. Thus, the corrigendum was procedurally flawed as it should have been issued by the Collector.

4. Jurisdiction of Assistant Collector:
The Collector (Appeals) ruled that the Assistant Collector lacked jurisdiction to confirm demands beyond six months, directing the records to the Collector. The Tribunal observed that the Assistant Collector's actions post-remand were not in compliance with the Collector (Appeals)'s directions, as the proper authority was the Collector.

5. Time-bar:
The demand included a period beyond the normal six-month limitation, invoking the extended period under Section 11A due to alleged mis-statement or suppression. However, no such allegations were substantiated. The Tribunal highlighted the improper procedure and lack of valid show cause notice for the extended period, rendering the demand invalid.

Conclusion:
The Tribunal set aside the impugned order due to procedural improprieties and lack of valid demand notice, allowing the appeal by M/s. Medley Pharmaceuticals Pvt. Ltd. without addressing the merits of the classification. The appeal was allowed on the grounds of improper procedure in confirming the demand.