Absence of Corroborative Evidence on Misclassification as Ingredients to invoke Extended Period of Limitation u/s 11A, No Penalty: CESTAT [Read Order]

The Eastern Zonal Kolkata bench of the Customs, Excise and Service Tax Appellate (CESTAT) held that lack of corroborative evidence on misclassification can be an ingredient to invoke a period of limitation u/s 11A and penalty not sustainable.

Shri Ananda Sen & Shri I Banerjee appeared for the Appellant and Shri S Mukhopadhyay appeared for the Respondent.

The appellant, M/s. Sikkim Organics engaged in the manufacturing of “Sikko Sol” classified under tariff item No. 38140010 of the First Schedule to the Central Excise Tariff Act, 1985 and cleared the goods on payment of Central Excise duty. The Commissioner of Central Excise & Service Tax, Siliguri, confirmed the demand of Central Excise duty of Rs. 33.77,95,151.00 along with interest and imposed a penalty on the clearance of Sikko Sol classifying under tariff item 27101213 of CETA, 1985. The AO confiscated the seized goods and imposed a redemption fine of Rs. 1,57,592.00 and directed recovery of re-credit of Rs. 42,088.00 and inadmissible Cenvat Credit of Rs. 44,100.00 and also imposed a penalty.

It was evident that Sikko Sol was not used in Automobile and the Tribunal couldn’t find any evidence that Sikko Sol was used as Light Oil and/or motor spirit suitable for use in Spark Ignition Engine which can’t be classifiable under tariff Item 27101213 of CETA 1985. The demand of duty along with interest and penalty by the impugned Orders classifying the product under Tariff No. 27101213 cannot be sustained.

The Tribunal was not convinced with the finding of the Adjudicating authority in so far as there was no material available on record to establish willful misclassification and/or misstatement as the ingredients to invoke an extended period of limitation under Section 11A of the Central Excise Act, 1944.

Shri P K Choudhary, member(judicial)& Shri Raju, member(technical) held that ““Sikko Sol” cannot be classified under tariff item 27101213 of the CETA, 1985.  Accordingly, the demand of duty with interest and imposition of the penalty would be set aside on merit and on limitation.”

While allowing the appeal, the authority set aside the confiscation of goods, imposition of redemption fine and recovery of credit.

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