BGP International Vs Commissioner (CESTAT Ahmedabad)
The Ahmedabad Bench of CESTAT allowed the appeal filed by M/s. BGP International against the Commissioner’s order dated 05.10.2020 concerning classification and valuation of Nicotine Sulphate. The appellant manufactured Organic Manure and Nicotine Sulphate and cleared the products domestically and for export. The department alleged that Nicotine Sulphate was classifiable under CTH 24039990 instead of CTH 29399900 declared by the appellant. A show cause notice proposed differential duty of Rs.4,60,00,920/- for the period June-2015 to June-2017 by invoking the extended limitation period, along with Rs.3,56,475/- on alleged undervaluation of sales to BGP Healthcare Pvt. Ltd., besides interest and mandatory penalty under Section 11AC of the Central Excise Act, 1944. The Commissioner confirmed the demands, interest and equal penalty.
The Tribunal identified three issues: whether the demand was barred by limitation, whether Nicotine Sulphate was classifiable under CTH 24039990 or CTH 29399900, and whether BGP International and BGP Healthcare Pvt. Ltd. were related parties. On limitation, the Tribunal noted that a letter dated 07.04.2006 from M/s. Alchem International, now known as BGP International, had informed the Deputy Commissioner of Central Excise about manufacture of Nicotine Salts, including Nicotine Sulphate, under H.S. Code 29397002. The appellant’s monthly ER-1 returns for the disputed period also disclosed manufacture and clearance of Nicotine Sulphate under CTH 29399900. The Tribunal therefore held that classification under Chapter 29 had already been intimated to the department and there was no basis to allege suppression or misstatement for invoking the extended period. The demand for June-2015 to June-2017 was accordingly held time-barred and liable to be dropped.
