2001 (8) TMI 768 - AT - Central Excise

Summary

Issues:
1. Classification of product under Central Excise Tariff Act.
2. Liability for duty payment and penalty.
3. Consideration of rebate of duty.
4. Argument on limitation.
5. Imposition of penalties under Section 11AC and Rule 173Q.
6. Prima facie view on waiver of pre-deposit.

Classification of Product under Central Excise Tariff Act:
The case involved a dispute regarding the classification of Calcined Pyrophyllite under the Central Excise Tariff Act. The applicants argued that their product should be classified under Chapter Heading 25.05, citing past acceptance by the Department and similarities with Calcined Magnesite. However, the Department contended that the product, being calcined, fell outside the ambit of Heading 25.05 as per Chapter Note 2 of Chapter 25. The Tribunal found that the product, post the deletion of sub-heading 2505.10, stood excluded from Heading 25.05, requiring a new classification in the Tariff.

Liability for Duty Payment and Penalty:
The Tribunal considered the duty demand raised by the Department for the period in question. The applicants argued that duty liability did not arise before a specific date due to changes in the Tariff. The Department, on the other hand, alleged suppression of facts by the applicants, justifying the penalty under Section 11AC. The Tribunal found that while there was an arguable case on limitation, it was not strong enough to warrant complete waiver of pre-deposit. The applicants were directed to deposit a portion of the duty and penalty amounts.

Consideration of Rebate of Duty:
The applicants sought a rebate of duty under Section 4(4)(d)(ii) of the Act, which was not considered by the Commissioner. The Tribunal acknowledged the possibility of a deduction in duty amount based on the rebate provision, indicating a potential reduction in the duty liability.

Argument on Limitation:
Both parties presented arguments on limitation, with the applicants claiming lack of suppression of facts and the Department alleging withholding of information. The Tribunal noted that while there was some merit in the contention of withholding information by the applicants, the case did not warrant complete waiver of pre-deposit.

Imposition of Penalties under Section 11AC and Rule 173Q:
The Tribunal found the penalty imposed under Section 11AC unsustainable as the provision was not in force during the period of dispute. However, the penalty under Rule 173Q required further examination at the final stage of hearing, indicating a need for a detailed review before a final decision.

Prima Facie View on Waiver of Pre-Deposit:
After careful consideration of all submissions and evidence, the Tribunal concluded that the applicants should make a partial deposit of the duty and penalty amounts confirmed under the Act. They were directed to deposit a specified sum within a set timeframe, with compliance to be reported to the Bench by a specific date.

This detailed analysis of the judgment covers the various issues involved in the case, including classification, duty liability, penalty imposition, rebate consideration, limitation arguments, and the Tribunal's decision on pre-deposit waiver.