2026-VIL-1353-CESTAT-AHM-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise – Classification of Nicotine Sulphate and Applicability of Extended Period of Limitation – Appellant manufactured Organic Manure and Nicotine Sulphate and cleared products in DTA and for export – Dept investigated case of mis-classification of Nicotine Sulphate, alleged it should be classified under CTH 24039990 instead of CTH 29399900 declared by appellant in returns - Whether Nicotine Sulphate is correctly classifiable under CTH 24039990 covering tobacco extracts and essences or under CTH 29399900 covering vegetable alkaloids – HELD – Appellant had intimated department about manufacture of Nicotine Sulphate under CTH 29397002 vide letter dated 07.04.2006 addressed to Deputy Commissioner, Central Excise and monthly Excise Returns (ER-1) filed for disputed period clearly disclosed manufacture and clearance of Nicotine Sulphate under CTH 29399900. Since the Classification was already known to Department therefore no ground to allege suppression or misstatement to invoke extended period – Information declared in statutory returns, if suppression cannot be alleged for non-furnishing of any other information not required to be supplied in statutory return. When facts are known to both sides, omission to do what ought to have been done cannot be considered as suppression – Demand for period June-2015 to June-2017 is barred by limitation – Further, the appellant correctly classified Nicotine Sulphate under CTH 29399900 and demand of differential duty is set aside – The appeal is allowed - Classification - Nicotine Sulphate obtained by adding dilute sulphuric acid to Nicotine extracted from tobacco is vegetable alkaloid and appropriately classifiable under CTH 2939. Manufacturing process clearly indicates that Nicotine Sulphate is vegetable alkaloid extracted from tobacco – Chapter Note 1(a) restricting heading to separate chemically defined compounds does not apply as sub-heading C under General Notes to Chapter 29 provides exceptions for certain products which remain classified in Chapter 29 even when not separate chemically defined compounds, alkaloids being one such exception – CTH 2403 covers Other Manufactured Tobacco and Tobacco Substitutes, Homogenised or Reconstituted Tobacco and Tobacco Extracts and Essences – Nicotine Sulphate obtained by the appellant is vegetable alkaloid and therefore, it is appropriately classifiable under CTH 2939 - Validity of Test Report - Test report on sample drawn from third party premises on 08.03.2016 is unreliable as samples drawn in absence of manufacturer or his representative violated CBIC Supplementary Manual procedure requiring samples to be drawn in presence of owner or manager of factory – Sample tested after more than one year from date of drawl violating IS 10627:1983 prescribing testing within 90 days of manufacture – Chemical examiner's opinion on classification is not relevant, role being only to supply analytical data not to determine classification –Appellant correctly classified Nicotine Sulphate under CTH 29399900 and demand of differential duty is set aside - Related party sales – The related party sales, showing one common director between appellant and BGP Healthcare Pvt Ltd does not establish related party status as Section 4(3)(b) of Central Excise Act requires mutuality of business interest which is absent – Allegation of related party sale without supportive evidence cannot be sustained – Differential duty demand on undervaluation for related party sales is also set aside and the appeal is allowed
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