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TMI Blog2018 (7) TMI 1048X X X X Extracts X X X X X X X X Extracts X X X X ..... he Central Excise Department. It appeared to Revenue that the respondent should have registered with the Central Excise Department since it appeared to them that the goods manufactured by the respondents were classifiable under Chapter 3005 and were attracting Central Excise duty. Therefore, the respondents were issued with series of Show Cause Notices. The respondents were issued with a Show Cause Notice dated 29/07/2011, Revenue has stated that earlier a Show Cause Notice, for the period 2007-08, was issued to the respondent on 22/09/2008 for demanding Central Excise duty of Rs. 20,43,256/- under Section 11A of Central Excise Act, 1944. On similar lines through the said Show Cause Notice dated 29/07/2011 the respondents were called upon to show cause as to why Central Excise duty amounting to Rs. 6,59,783/- should not be demanded from them under Section 11A of the Central Excise Act, 1944 by denying them the benefit of Notification No. 8/2003-CE dated 01/03/2003. The said Show Cause Notice was adjudicated through Order-in-Original dated 30/01/2012, wherein the Original Adjudicating Authority had confirmed the demand. Aggrieved by the said order respondent preferred appeal before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale, distribution or delivery to an intermediary. On the other hand it is sold directly to Jet Airway and the Jet Airways supplied the said bottles to their passengers and thus there is no further sale by the Jet Airways of these bottles. Therefore, it is obvious that after the first sale bottles go directly to the "ultimate consumers". There would be, therefore, no question of application of Rule 2(x)(i). Rule 2(x)(ii) will also not apply as this does not amount to a commodity sole to an intermediary in bulk so as to enable such intermediary to sell, distribute or deliver, the said commodity to the consumer in smaller quantities. The concerned period regarding which the show cause notice was given is April, 2002 to September, 2002. Therefore, Rule 2(x)(iii) which came by way of an amendment into 2000 would also have to be considered. However, even that clause is not applicable as the said "package" though contains more than 10 bottles, those bottles cannot be viewed as the "retail package" nor is there any rule requiring labelling the said "retail package" and declaring the price thereof. In fact there is no price involved as it is specifically written on the package "not meant fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peals) has again ignored the rulings given by Hon'ble Supreme Court in the case of Chamanlal Jagjivandas Sheth vs. State of Maharashtra [1963] Supp 1 SCR 344, opined that even absorbent, cotton wool, roller bandages and gauze would be drugs within the meaning of the provisions of the Act, stating: "...The expression "substances", therefore, must be something other than medicines but which are used for treatment. The part of the definition which is material for the present case is "substances intended to be used for or in the treatment." It cannot be disputed, and indeed it is not disputed, that absorbent cotton wool, roller bandages and gauze are "substances" within the meaning of the said expression. If so, the next question is whether they are used for or in "treatment". The said articles are sterilized or otherwise treated to make them disinfectant and then used for surgical dressing; they are essential materials for treatment in surgical cases. Besides being aseptic these articles have to possess those qualities which are utilized in the treatment of diseases. Thus, for instance, in the case of gauze-one of the articles concerned in this appeal - it has to conform to a standar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduction of eight digit tariff they were classifying the same in Chapter 56. There was no change in manufacturing process prior and post introduction of eight digit tariff. The only basis that new Chapter 56 has absorbent cotton wool as new entry does not form any basis for classifying their product under Chapter 56. Hon'ble Tribunal in the case of CCE, Calicut vs. Kerala Chemicals & Proteins Limited wherein on the similar facts Hon'ble Tribunal observed as under: "Di-calcium Phosphate of Animal Feed Grade- Obtained by crushing animal bone-it was classifiable as preparation used in animal feed under Heading 2303 of Central Excise Tariff attracting nil rate of duty, as it existed prior to introduction of 8 digit tariff effective from 28.02.2005, and thereafter under 2309 ibid- In absence of any change in notes to Section VI or Chapter 28 or Heading No.2835 ibid, both prior to and on or after 28.02.2005, impugned product could not be reclassified from Chapter 28/ Tariff Item 28352500 merely because it referred to di-calcium phosphate-Furthermore, there was no change in manufacturing process prior and post 01.03.2005." 5. Hon'ble Supreme Court in Civil Appeal No.783-803 of 2004 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parameter for the correct classification of a commodity. The process of manufacture of a product and the end use to which it is put, cannot necessarily be determinative of the classification of that product under a fiscal schedule like the Central Excise Tariff. What is more important is whether the broad description of the articles fits in with the expression used in the Tariff..." Moreover, the functional utility and predominant or primary usage of the commodity which is being classified must be taken into account, apart from the understanding in common parlance." From the above, the combined factor that requires to be taken note of the purpose of the classification of the goods are the composition, the product literature, the label, the character of the product and the use to which the product is put. However, the miniscule quantity of the prophylactic ingredient is not a relevant factor. In the instant case, it is not in dispute that this is used by the hospitals for the purpose of cleaning or placing over wounds in order to protect it. The purpose is to prevent the infection or disease. Therefore, the product in question can be safely classified under chapter sub-heading 30 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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