Decided on July 28,2015



B.RAVICHANDRAN,J - (1.)THE appellant are manufacturers of hair oils, shampoo, toilet water and Ayurvedic medicaments subject to Central Excise Duty. They have manufacturing units in different parts of the country. The present case is in respect of their unit in the State of Jammu and Kashmir in respect of which they are availing the exemption under Notification No. 56/2002 -C.E.
(2.)There are 5 appeals by the appellant. As the issue involved in all these appeals are same, they are taken up together for decision. The period covered is from 1 -4 -2004 to 31 -7 -2011. The dispute relates to three products namely Gulabari, Keora Water and Shilajit Capsules. The appellants were paying duty on these products either by utilizing Cenvat credit or by cash and claimed the same as refund of the amount paid through PLA. The Department's view is that Gulabari and Keora Water were correctly classifiable under Heading 3301 of Central Excise Tariff as "aqueous solutions of essential oils" and the process undertaken by the appellant does not amount to manufacture and as such no duty is chargeable accordingly there is no question of granting exemption of paying refund as per Notification No. 56/2002 -C.E. Further Shilajit Capsules manufactured by the appellant is to be classified under Heading 30.03 as Ayurvedic Medicine as the same is made in accordance with formula prescribed in the Authoritative Ayurvedic text which is specified in the 1st Schedule to the Drugs and Cosmetic Act, 1940. As such they are fully exempt in terms of Notification No. 3/2005 -CE. and accordingly the benefit of Notification No. 56/2002 -C.E. is not available to the same. Show cause cum demand notices were issued to the appellants and they were decided by the Adjudicating Authority by 5 orders covering the period from April, 2004 to July, 2011. The refund sanctioned in terms of Notification No. 56/2002 -C.E. and the credit taken as per Cenvat Credit Rules on inputs are denied and demand confirmed in these proceedings alongwith penalty under Rule 25 of Central Excise Rules, 2002 and Rule 15 of Cenvat Credit Rules, 2004. Aggrieved by these orders, the appellant is before us. The appellants contended that both Rose Water and Keora Water are specifically mentioned in the Tariff under Heading 3303 00 20 and 3303 00 30 respectively under the main heading Perfumes and Toilet waters. The Department's case that these are different and classified as "aqueous solutions of essential oils" is neither supported by facts nor the Tariff entries. The action of the Department is apparently motivated only to deny the concession extended by the Government under Notification No. 56/2002 -C.E. as is evident from the fact that the appellant's own unit in Sahiba -bad is manufacturing same items (Rose Water, Koera Water, the Shilajit Capsules). There is no dispute regarding classification or duty payment. A different view is taken only in respect of their Jammu unit. The appellant also contended that the proceedings initiated against them in the show cause notice dated 3 -4 -2009 are not sustainable as the refund sanctioned already by the proper authority is not to be recovered by a demand invoking extended period as per proviso to Section 11A of the Central Excise Act. The learned Counsel for the appellants argued at length explaining the process of manufacture in respect of Gulabari, Keora Water and Shilajit Capsules. The process undertaken by the appellant in respect of Gulabari is as below: - -
"Step 1: Warm propylene glycol in a SS container upto 60 degree Cent. And dissolve MP and PP by stirring.

Step 2 : Cool the resultant solution to room temperature, mix Rooh gulab with stirring.

Step 3 : Take D.M. Water in manufacturing Tank fitted with mechanical stirrer. Add bronopol.

Step 4: Add the solution of step 2 slowly with stirring and mix for another 5 minutes after complete addition of solution.

Step 5 : The product thus prepared in Step 4 is filtered through sparker filter.

Step 6 : Submit the sample to QC lab for analysis, undertake packaging operation soon after getting satisfactory report from DC Department."

Similarly, in respect of Keora Water, the process undertaken by the appellant is as below: - -

"Step 1 : Disperse required quantity of Pandanol in Propylene Glycol in a S.S. container with continuous stirring until Pandanol is completely mixed.

Step 2 : Take D.M. Water in the manufacturing tank fitted with mechanical stirrer and add Keora Water to it. Add slowly the solution of step 1 to the bulk with continuous agitation. Make up the final volume with D.M. Water (previously boiled and cooled.) and mix for 20 minutes with constant stirring. Also add Potassium sorbate.

Step 3 : Filter, send sample for analysis.

Step 4 : Pack after QA approval.

Step 5 : The product thus prepared in Step 4 is filtered through sparker filter.

Step 6 : Submit the sample to QC lab for analysis, undertake packaging operation soon after getting satisfactory report from DC Department."

(3.)IN respect of both Gulabari and Keora Water the appellant's plea is that the resultant item sold by them are manufactured products entirely different from the raw materials used and they are rightly classifiable under specific heading in their own name under Central Excise Tariff 3303 00 20 and 3303 00 30 respectively. Regarding Shilajit Capsules, the learned counsel for the appellant stated that the said Ayurvedic medicine is not made as per the specifications mentioned in the Authoritative text and these are PP medicines approved as such by the Drug Controller and hence cannot be categorized as generic Ayurvedic Drug. He also submitted the process of manufacture which indicated addition of certain chemical etc. The drug package also which was produced by the Counsel during hearing, did not contain declaration to the effect that the same is made as per the ingredients declared in Authoritative text of Ayurveda. He reiterated that the Department is taking a different stand in respect of their Jammu unit when compared to the same products manufactured and cleared from their Sahibabad Unit only to deny them the exemption granted under Notification No. 56/2002 -C.E. Such different approach in respect of same products in different unit is legally untenable.

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