2001 (11) TMI 566 - AT - Central Excise

Summary

Issues: Classification of spade and gamela, Penalty imposition on manufacturer and individuals, Modvat credit entitlement

Classification of spade and gamela:
The primary issue in this appeal was the classification of the spade and gamela manufactured by a company. The Commissioner had classified the spade as a hand tool under Heading 82.01 and as an article of iron and steel under Heading 73.26, rejecting the classification as agricultural implements under Heading 84.32 claimed by the appellant. The appellant argued that orders received for the goods described them as agricultural implements, supported by an index in the Central Excise Tariff. However, the Tribunal found this defense contrived, stating that the index merely indicated agricultural machinery for soil preparation under Heading 8432.00 and agriculture produce for cleaning under Heading 8433.00. The Tribunal confirmed the classification of the spade under Heading 82.01 and the gamela under Heading 73.26, as it was used for carrying loads by construction workers, not just in agriculture.

Penalty imposition on manufacturer and individuals:
A penalty was imposed on the manufacturer and two individuals for wrongly describing the goods and clearing them without payment of duty. The Tribunal agreed that the penalty on the manufacturer and its chairman was justified under Rule 173Q. Although Section 11AC did not apply to the period in question, a penalty under Rule 173Q was deemed appropriate. The penalty on the manufacturer was reduced to Rs. 14 lakhs. Regarding the individuals, the penalty on the Executive Chairman was upheld as he acknowledged awareness of the incorrect classification. However, the penalty on the Excise Clerk was set aside, considering his lack of expertise and acting on superior authority.

Modvat credit entitlement:
The appellant claimed entitlement to Modvat credit on duty paid for inputs used in manufacturing finished goods. However, there was no evidence presented regarding duty payment on raw materials or components. The Tribunal declined to provide a finding on this issue, leaving it open for the appellant to pursue before the appropriate authority.

Judgment Outcome:
Appeal E/3544/2000 was allowed in part, while Appeal E/3570/2000 was dismissed. Appeal E/3571/2000 was allowed. The Tribunal upheld the classification of the spade and gamela, imposed penalties on the manufacturer and Executive Chairman, reduced the manufacturer's penalty, set aside the penalty on the Excise Clerk, and left the Modvat credit issue open for further pursuit by the appellant.