Gowri Shankar (T), Members ORDER
G.P. Agarwal, Member (J)
1. The appellant manufactures and sells a product "shikakai" bathing powder output. It commenced manufacture from 1st August, 1991 and cleared the goods at nil rate of duty. It did not file any classification list or price list for the product or otherwise declare the fact of manufacture and clearance of this product to the Central Excise Department. It filed on 28th April, 1992 a declaration to the Superintendent claiming the goods to be classified under Heading 3003.30 and claiming exemption from duty. Correspondence took place between the appellant and the department with regard to composition of goods. The department issued a show cause notice dated 8-10-1992 proposing classification of the product under Heading 3307.30 of the tariff and consequent recovery of duty [on] clearances from August, 1991. Penalty was also proposed. After considering the cause shown and hearing the assessee the Collector passed the order impugned in this appeal. He held the product to be classifiable under sub-heading 3303.30 as a bath preparation denying the Notification of 140/83, dated 5-8-1983 which the appellant had claimed confirmed the duty for Rs. 17.74 lakhs approximately and imposed a penalty of Rs. One lakh.
2. The advocate for the appellant contends that the product is an Ayurvedic medicine; its ingredients find mention in recognised texts of Ayurvedic medicines and it is manufactured in accordance with the prescribed formulae given in such texts. The product is manufactured under a licence granted by the State Government for manufacture of Ayurvedic medicine. On inquiry by the department, this fact was confirmed by the Ayurvedic Medicine Department and the State of Rajasthan. Vaidyas skilled in practising Ayurvedic medicine also certified that product is used in treating skin disease. The goods are excluded from Chapter 33 by virtue of Note 2 to that Chapter as the product is not sold with any intimation either on the container or on the label that it is for use as cosmetics or toilet preparation or put up in a form specialised to such use. He seeks to support his argument by the judgment of the Madras High Court in Panama Chemical Works v. Collector of Central Excise and decisions of this Tribunal in Collector of Central Excise v. Warmer Hindustan - 1989 (42) E.L.T. 33, Henna Export Corporation v. Collector of Central Excise - 1993 (67) E.L.T. 907 and Dabur India v. Collector of Central Excise -1994 (71) E.L.T. 1069. He says that it is advertised and sold as Ayurvedic medicine. The literature accompanying it and the words used on the container both indicate its use as such a medicine.
3. He says that if the product is classifiable under Chapter 33 the benefit of Notification 140/83 would be available. It had been denied by the Collector only because of his view that it contained a brand name of other person who is not eligible for grant of exemption. This view is incorrect. The appellant's entire production was marketed by M/s. Bajaj Sewashram Ltd. and this fact was indicated on the container. He disputes the Collector's finding that these words used constitute a brand name or trade mark. He further argues that the demand in the present case is barred by limitation as the appellant made known to the department the fact of its manufacture by its letter dated 16-4-1992 under the bona fide belief that it was classifiable as an Ayurvedic medicine. The facts did not disclose suppression of material with an intent to evade the duty and therefore the extended period would not apply. He cites the judgment of the Supreme Court in Padmini Products v. Collector of Central Excise -1989 (43) E.L.T. 195.
4. The departmental representative says that it has not been established that the ingredients found place as Ayurvedic medicine and that the texts in which the formula for manufacture is contained, has not been indicated. While the product is stated on its container as Ayurvedic medicine, the specific disease or disorder which it specialised to cure is not indicated. The literature of the Company also did not indicate this. He contends that it is not sold by chemists against presc........