1. The appeal is directed against order, dated 5-9-1989 passed by Collector of Central Excise, Pune demanding duty on (i) Corn Flour under Tariff Heading 1901.19 for the period 1-3-1986 to 31-3-1988 at 15% with the benefit of adjustment of duty paid on Maize Starch under Heading 1103.10 and (ii) Glucose-D under Heading 1702.19 for the same period 1-3-1986 to 31-3-1988 with the benefit of adjustment of duty paid on Dextrose Monohydrate. He directed the Assistant Collector to work out the duty liability on the above basis. A sum of Rs. 10,602.30 was demanded as duty on waste of Maize Starch.
2. By a corrigendum to the order, Chapter Heading 1702.19 given in respect of Glucose-D was ordered to read as Chapter Heading 1702.29 in the findings at Page 8 and in the order at Page 9 wherever it occurred.
3. Shri L.P. Asthana, learned Counsel for the appellant stated that they bought duty paid starch and after sieving repacked and sold the same as cornflour. There was no manufacture involved and starch remained as starch only, it was contended. The show cause notice was resisted on merits as well as on the question of limitation. The notice which was, dated 25-8-1988 and covered the period 1-3-1986 to 31-3-1988 was time barred for most of the period. There was no mis-statement or suppression on their part. They had a bonafide belief that cornflour was not a manufactured product as also the other item, Glucose-D. There was a Budget Circular of the Central Board of Excise & Customs No.21/70, dated 4-6-1970 that duty paid glucose and dextrose repacked into smaller units will not attract any further duty liability under Tariff Item IE even if some other ingredients are added before repacking. This ruling under the Old Tariff IE was believed by them to be applicable under the new tariff also. Reliance was placed on the following decisions :-Collector of Central Excise v. Maize Products Limited -1990 (49) E.L.T. 544 (Tribunal) Reprocessing of white dextrose and mapropharm starch into yellow dextrine and maize starch powder did not result in any manufacture of a different excisable commodity.Collector of Central Excise, Bombay v. Maize Products Ltd. -1994 (73) E.L.T. 390 (Tribunal).
Sieving of duty paid anhydrous dextrose powder and removal of moisture to get dextrose powder not amounting to manufacture, (iii) Krishna Chander Dutta (Spice) Pvt. Ltd. v. Commercial Tax Officer -1994 (70) E.L.T. 501 (S.C.) Whole black and white pepper and pepper powder are same goods, (iv) Asiantic Ultramarine & Pigments of India v. Collector of Central Excise, Packing of ultramarine blue in smaller packing amounting to manufacture only after the relevant Chapter Note 6 to Chapter Note 32 introduced to that effect in Finance Act, 1995 and not earlier, (v) Reckitt & Colman of India Limited v. Collector of Central Excise, Bangalore Conversion of enzyme blend powder into tablets not amounting to manufacture.
4. Learned Counsel submitted that there was no suppression and intention to evade duty as they had a bonafide belief about their product, cornflour and glucose being not excisable. They had declared both these products in their classification lists filed by them as other goods produced by them with the remark "repacking of duty paid glucose and repacking of duty paid starch." These classification lists had been duly approved by the department. In the circumstances, the allegation of suppression or mis-statement is without any basis and the longer time limit is not available to the department.
5. Regarding Glucose-D, on merits, learned Counsel for the appellant fairly conceded that the Tribunal's decision in Vijaya Packers v.Collector of Central Excise, Cochin - 1994 (71) E.L.T. 254 was against them. He, however, pointed out that the show cause notice referred to Glucose-D as falling under Heading 1702.19 which covered other sugars whereas the order, after the corrigendum, classified Glucose-D under Heading 1702.29 covering preparations of other sugars. Shri Asthana contended that such a corrigendum which sought to change the classification of the product decided under the order is not permissible. It was not a clerical mistake which could be corrected by a corrigendum but a change of classification from the one decided and one contrary to the proposal in the show cause notice. Learned Counsel pointed out that the Tribunal had, in Collector of Central Excise, Vadodara v. Asmi Industries -1996 (85) E.L.T. 313, held that classification of goods cannot be revised or modified by issuing a corrigendum to the adjudication order.
6. The above mentioned submissions in support of the appeal were resisted by Shri J.M. Sharma, learned Departmental Representative. He stated that the Tribunal had classified Glucovita or Glucon-D as preparation of other Sugars under Heading 1702.21 and, accordingly, classification being a question of law, it was open to the Collector to apply the correct classification. As regards the plea of limitation, he pointed out that the Collector had considered the appellant's contention and held that the Board's Circular 21/70, dated 4-6-1970 relied upon by them was no longer valid under the new tariff. Glucose-D containing other added ingredients is not the same as Dextrose Monohydrate. Such addition and blending had been suppressed in the classification list where they had only mentioned repacking. This finding was supported by Shri Sharma who relied upon Tribunal's decision in Skep Cosmetics v. Collector of Central Excise, Bombay-II - 1996 (87) E.L.T. 734 and contended that the longer time limit was applicable in the present case. As regards the other product, cornflour, appellant had received maize starch and cleared cornflour which is a different product known as such. Manufacture was involved and duty had been correctly demanded, he concluded.
7. Shri Asthana gave a rejoinder to the submissions of the learned Departmental Representative that for Glucose-D, the rate of duty under Heading 1702.19 as per the show cause notice was 15% while the rate of duty under the Heading 1702.29 as per the order as corrected was 12%.
He referred to the judgment of the Supreme Court in Fenner India Limited v. Collector of Central Excise, Madurai -1995 (77) E.L.T. 8 about it not being open to the department to make out a new case of tariff classification different from the one proposed originally.
8. We have considered the submissions. We have perused the record as also the decisions cited. We shall first take up the contention regarding the non-permissibility of a corrigendum to the order being issued changing the tariff heading of Glucose-D from 1702.19 as per the order as originally issued to 1702.29 as per the corrigendum. The corrigendum only refers to the substitution of Tariff Heading 1702.29 for 1702.19. Since these two tariff sub-headings refer to two different products, namely other sugars (Heading 1702.19) and preparations of other sugars (Heading 1702.29), it is necessary to see if the order had identified the product in question as a sugar or as a preparation thereof. In the first paragraph in Page 8 of the impugned order, in the findings portion, it is mentioned that the product (glucose) is prepared (Emphasis supplied) after addition of other material to Dextrose Monohydrate and blending. A finding has been given that Glucose-D is not the same as Dextrose Monohydrate which points to the product being a preparation of other sugar and not such other sugar itself. The contention on behalf of the appellant is that they were guided by the earlier circular of the CBEC clarifying that repacking of duty paid glucose and dextrose would not attract any further duty liability under Tariff Item IE even if some other ingredients are added before repacking. This plea has been rejected by the Collector on the ground that the said Circular was no longer valid under the new tariff.
On a comparison of the two tariffs, we find that the old Tariff Item IE covered Glucose in whatever form including liquid glucose, dextrose monohydrate and anhydrous dextrose under sub-item (1) and preparations of glucose and dextrose in which the reducing sugars expressed as anhydrous dextrose amount to more than eighty percent by weight fell under sub-item (2). Both the sub-items carried the same rate of duty of 15%. In the new tariff, sub-heading 1702.19 covers other sugars including chemically pure lactose, maltose, glucose and fructose in any form while sub-heading 1702.21 covers preparations of other sugars in which the reducing sugars expressed as anhydrous dextrose amount to more than 80% by weight. This sub-heading corresponds to the earlier Tariff Item 1E(2). Subheading 1702.29 applied by the Collector in terms of the corrigendum to his order reads "others" and can only refer to preparations of other sugars expressed as anhydrous dextrose amount to 80% or less by weight. There is no indication whether in the present case, the anhydrous dextrose content was tested for its concentration and whether it was found to be such as to attract classification under sub-heading 1702.29. Trade Notice issued under the authority Ministry of Finance Circular No. 7/90-CXT, dated 7-3-1990 a copy of which has been filed alongwith the appeal papers clarified that Glucose-D manufactured out of duty paid Dextrose Monohydrate by blending with 0.6% Calcium Phosphate and Vitamin D and packed in pouches or printed cartons would be classifiable under sub-heading 1702.21. The Collector's decision classifying the product question under 1702.29 is apparently in conflict with this circular. The percentage of anhydrous dextrose would determine the correct classification as between 1702.21 and 1702.29. Information in this regard is however not available on record. This has to be decided on a factual basis. There is however no support for the appellant from the Supreme Court decision in the Fenner India case as the ratio therein was that it was not open to the department to claim a new classification at the appellate stage.
9. The above mentioned issue need not, however, come in the way of a decision on the basis of the alternative plea of limitation raised by the appellant which will cover most of the period involved. Though the plea of the appellant continuing to be guided by the earlier circular of the Board was rejected by the Collector as that was not applicable under the new tariff, the tariff sub-heading in the new tariff headings, as seen above, are on the same pattern. The fresh circular classifying the Glucose-D falls under Tariff Heading 1702.21 was also issued subsequently i.e. on 7-3-1990 while the dispute relates to the period 1-3-1986 to 31-3-1988. The show cause notice is, dated 25-8-1988. All clearances effected earlier than six months from the date of service of the notice will, therefore, be barred by limitation.
For the period within six months, the amount of duty requires to be redetermined on the basis of correct data regarding composition as between sub-headings 1702.21 and 1702.29.
10. The demand of duty in respect of cornflour will also be hit by time bar insofar as the demand pertains to clearances more than six months prior to the notice. On merits, the contention of the appellant is that no manufacturing process was carried out by them and what they did was to sieve the duty paid starch and sell the same under the name "corn flour". The plea is valid and is accepted. The appeal insofar as this item is concerned succeeds on merits also.