ORDER
V.K. Agrawal, Member (T)
1. These are six appeals arising out of common adjudication order dated 31-10-2000 involving the issue of classification of Himtaj Tel and consequently demand of duty and penalty imposed on all the appellants.
2. Shri R. Swaminathan, learned Consultant, appearing on behalf of Himtaj Ayurvedic Udyog Kendra and Shri K.K. Pandey submitted that the issue regarding classification of Himtaj Tel has been settled by the Larger
Bench of the Appellate Tribunal vide Misc. Order Nos. 50-51 /2001-C, dated 13-12-2001, 2001 (139) E.L.T. 610 (Tri.-LB) that according to the Larger Bench Himtaj Tel has to be classified as an ayurvedic medicine under sub-heading 3003.30 of the Schedule to the Central Excise Tariff Act. The learned Consultant, further, submitted that the Central Excise duty has been demanded from them for the period from 17-8-90 to September, 1995 under the show cause notice dated 3-9-97 and as such the entire demand is time-barred; that since 1987, the issue was known to the Department inasmuch as in 1987, the matter was agitated before the High Court and interim Stay was granted by the High Court against collection of duty; that in October, 1990, CCE, Allahabad ruled that Note 2 to Chapter 30 of the Tariff applies and the product is to be classified under Chapter 30 and it is to be ensured that there is no deliberate addition of any perfume and that in July, 1994 retest report was given by the Chief Chemist confirming that no synthetic perfumery was added and fragrance is of natural origin and based on ingredients themselves which have specific thermopeutic quality as per Ayurvedic literature; that again after issue of show-cause notice in 1996, matter was finally decided by the Commissioner (Appeals) holding the classification claimed by them. The learned Consultant therefore, contended that the question of invoking the extended period of limitation does not arise in the present matter. The learned Consultant also mentioned that principle of natural justice have also been not followed by the Adjudicating Authority; that the final hearing was fixed on 11-10-2000 and 13-10-2000, the notice for which was sent under letter dated 20-8-2000, which was received by them only on 9-10-2000, that they had requested the Adjudicating Authority for hearing the matter on 15-10-2000 under their letter dated 11-10-2000 as Shri K.K. Pandey had gone to New Delhi in connection with some other appeal in Supreme Court, which was not acceded to and the impugned Order was passed on 31-10-2000. Finally, he submitted that they had also claimed the benefit of small-scale exemption under the relevant notification which had not been considered by the Adjudicating Authority. He, therefore, requested that the matter need to be remanded to the Adjudicating Authority for considering all these aspects and also for observing the principles of natural justice.
3. Shri Bipin Garg, learned Advocate appearing on behalf of all other four appellants submitted that Shri Mohd. Aslam and Shri Mohd. Ak-ram are partners in M/s. Azad General Stores and Shri Mukhtar Ahmad Munshi is their employee; that penalties have been imposed on them under the impugned order on the ground that they have cooperated with the appellant No. 1 in evasion of Central Excise duty; that their firm Azad General Stores is a trading firm producing goods against proper documents; that they were purchasing the goods through the salesman and had no occasion to find out that whether the goods were duty paid or not. Further, they were clearly informed that impugned goods are ayurvedic medicines and do not attract any duty liability; that in these circumstances, the imposition of penalty on them is not sustainable; that further the classification of the product was determined as Ayurvedic medicine and on account of a change in the classification the proceedings had been initiated against the manufacturer; that in these circumstances, they cannot be made liable to pay the penalty imposed on them.
4. Learned Advocate arguing on behalf of Shri Ibney Hassan submitted that he was trading in medicament; that he traded for Himtaj Ayurvedic tel having belief and awareness that Himtaj tel is an ayurvedic medicament; that he did not have any knowledge of its manufacture and has no interest or relation with the owners of the firm manufacturing Himtaj tel; that further he has not transacted any quantity of Himtaj Tel during the relevant period and therefore question of imposing of any penalty does not arise.
5. On the other hand, Shri A.K, Jain, learned SDR, reiterated the finding contained in the impugned Order and emphasized that sufficient opportunities were provided to the Appellants No. 1 and 2 and as they had railed to appear for hearing on one ground or the other, the Adjudicating Authority proceeded with the adjudication of the matter, and therefore, there was no violation of principles of natural justice; that Shri Ibney Hassan used to purchase goods worth Rs. five to six lakhs annually from appellant No. 1 since 1989 and as such has cooperated with the appellant Nos. 1 and 2 in the evasion of Central Excise duty; that Mukhtar Ahmad, Mohd. Aslam and Mohd. Akram have admitted in their statements that diaries seized from their premises related to purchase and payment made by them to appellant No. 1 and as such the penalties imposed on them are sustainable.
6. We have considered the submissions of both the sides. As far as the classification of the impugned product Himtaj Tel is concerned, the Larger Bench of this Tribunal has held as reported in 2002 (139) E.L.T. 610 (T) = 2002 (48) RLT 264, that Himtaj Tel containing ingredients exclusively mentioned in various text books on Ayurveda is a medicinal oil and not hair oil falling under sub-heading 3003.30 of the Tariff and not under Heading 3005. Accordingly, the impugned product Himtaj Tel is classifiable under subheading 3003.30 of the Tariff. A perusal of the reply dated 31-10-97 filed by the appellant No. 1 reveals that they had claimed the benefit of Notification No. 1/93 as amended. The impugned Order is silent about the availability of the notification. Further, it has not been rebutted by the Revenue that the letter 28-9-2000 fixing the personal hearing on 11th and 13th October, 2000 was received by the appellant Nos. 1 and 2 on 9-10-2000 when appellant No. 2 was away to Delhi to attend some matter in Supreme Court and as such their request for adjudication of the hearing to 15th October, 2000 cannot be treated as a tactics for delaying the adjudication proceedings. We are, therefore, of the view that the principles of natural justice has not been followed. Moreover, we also observe that as the product has now been held Ayurvedic medicament the demand of duty has to be recomputed and the issue has also to be decided whether extended period of time-limit is applicable in the matter or not. As far as question of imposition of penalty on other appellant Nos. 3 to 6 is concerned, they have all denied their connection with the appellant No. 1 on which also the Adjudicating Authority has to give his specific finding. We, therefore, allow all the appeals and remand the matter to the Adjudicating Authority for deciding the matter afresh after affording a reasonable opportunity of hearing to all the appellants. The cross-objection filed by the Revenue also stand disposed of as no other point has been raised herein.