2002 (4) TMI 392 - AT - Central Excise

Summary

Issues:
Classification of rubber parts for air-conditioning/refrigerating machinery, SSI exemption eligibility, Correct classification under Central Excise rules, Imposition of duty and penalties.

Classification of Rubber Parts:
The appellants manufactured rubber parts like Flat Rings, Rubber Caps, Seals, Rubber Bush, Damping Strips, Faucil Guards, etc., claiming classification under sub-heading No. 4016.19 and availing full SSI exemption. The Central Excise authorities alleged misclassification, stating the parts supplied were used in compressors and refrigerators, classifying them under sub-headings 8414.92 and 8418.90. The Commissioner confirmed this classification, leading to short-levy of Rs. 22,86,665. However, the appellate tribunal found in favor of the appellants, citing the Apex Court's judgment in Kohinoor Rubber Mills, stating the items were appropriately classified under Tariff Heading No. 40.16 due to being made from unhardened vulcanised rubber, not covered under Section XVI. Consequently, the appellants were not liable for differential duty or penalties.

SSI Exemption Eligibility:
The Commissioner held that the SSI benefit availed by the appellants was not applicable due to the misclassification of goods, confirming the duty amount and imposing penalties under Central Excise Rules. However, the tribunal, relying on the Apex Court's decision, found no misdeclaration or suppression by the appellants, leading to the conclusion that they were not liable to pay any differential duty or penalties. The appeal was allowed in favor of the appellants.

Correct Classification under Central Excise Rules:
The Commissioner classified the rubber parts under sub-headings 8414.92 and 8418.90, resulting in short-levy and imposition of duty and penalties under Central Excise Rules. The tribunal, after considering the submissions and relevant case laws, held that the appellants' items were appropriately classified under Tariff Heading No. 40.16, as established by the Supreme Court's judgment. Consequently, there was no basis for imposing duty or penalties on the appellants, and the appeal was allowed.

Imposition of Duty and Penalties:
The Commissioner confirmed the duty amount and imposed penalties on the appellants under various provisions of Central Excise Rules for alleged misclassification and suppression of facts. However, the tribunal, in line with the Apex Court's decision and the specific classification of the rubber parts, found no grounds for imposing differential duty or penalties on the appellants. The appeal succeeded, and the appellants were not held liable for any duty or penalties.