C.I. LABORATORIES Vs. CCE

JUDGEMENT

(1.) The present appeal filed by M/s. C.I. Laboratories (here -in -after referred to as the appellant company) against the Order -in -Appeal No. 018/KOL -II/2003 dated 11.3.2003 passed by the Commissioner of Central Excise (Appeals), Kolkata -II, wherein he has set aside the Order of the Assistant Commissioner allowed the appeal filed by the Revenue. The Assistant Commissioner in his Order has dropped a demand of Rs. 1,47,730.00 (Repees one lakh forty -seven hundred and thirty) arising out of re -classification of the goods. The appellants manufactured Glycerine I.P., Potassium Permanganate I.P./B.P., Dextrose Monohydrate I.P., Emulsifying Wax B.P. and Rishisol. These goods were initially cleared as Medicaments (Medicinal Grade Bulk Drug under Chapter 30) as per approved Classification List. The Classification List was approved on 23.6.1992. The Revenue issued a show cause notice dated 25.1.1995 proposing recovery of the differential duty worth Rs. 1,47,730.00 (Rupees one lakh forty -seven thousand seven hundred and thirty) by way of re -classification of the goods already cleared from the factory of the appellant company on payment of duty as per approved Classification List. The show cause notice covered the period 27.3.1992 to 3.1.1994. The appellants submitted that they had disclosed the full facts in the Classification List for the relevant period classifying the products under Tariff Item 3003.10 which was approved by the Assistant Commissioner of Central Excise. The appellant company further submitted that it has been held by the Apex Court as well as different Appellate Tribunals that the levy of excise duty on the basis of approved Classification List was the correct levy. It was further held that the levy of excise duty on the basis of approved Classification List was not short -levied. The differential duty cannot be recovered from an assessee on the ground that it is a case of short -levy. Accordingly, the appellant company has requested that the differential duty amounting to Rs. 1,47,730.00 (Rupees one lakh forty -seven thousand seven hundred and thirty) merits to be quashed. In support of their contention, the appellant company has relied upon the following judgments:

(2.) We have heard Shri B.C. Sarkar, Ld. Consultant for the appellant company and Shri J.R. Madhium, learned JDR for the Revenue. Learned JDR has reiterated the findings of the Commissioner (Appeals).

(3.) We have heard both sides. We find that in the case of J.L. Morison (India) referred to above, the Hon'ble Supreme Court has held that revision of classification could not be done without issuance of show cause notice reclassifying the item and a demand could be raised only prospectively. It is only when the correctness of the approval is challenged that an approved classification list ceases to be such. In this case, admittedly, the goods have been cleared on the basis of Classification List which was approved by the Revenue. The period for demand in this case as stated above is 27.3.1992 to 3.1.1994 for which the show cause notice demanding the differential duty was issued on 25.1.1995. When the JDR was asked whether any show cause notice was issued to modify the Classification List, he submitted that no show cause notice has been issued to modify the Classification List. In the case of Ador Thermal Engineering Ltd. (referred supra) decided by the CEGAT, It was also held that levy of excise duty on the basis of approved classification list is not a short levy. The differential duty is not recoverable on the ground that it is a short levy.