1993 (1) TMI 252 - AT - Central Excise

Summary

Issues:
Classification of products - cabinets and refrigeration appliances under Tariff Item 29A or Tariff Item 68. Time bar issue in relation to the demand raised.

Analysis:
The appeal was filed against Order-in-Original No. 7/CE/85 passed by the Collector of Customs & Central Excise, Chandigarh, concerning the classification of cabinets and refrigeration appliances. The dispute revolved around whether these products should be classified under Tariff Item 29A as per the Department's view or under Tariff Item 68 as claimed by the appellants. The key contention raised by the appellants was the time bar issue, asserting that the demand was beyond the six-month period as per the show cause notice dated 7-3-84. The appellants argued that there was no suppression of facts regarding the nature of the product or the lease of premises and machinery from M/s. Chandra Industries, Jallandhar, as these details were communicated to the Department in earlier correspondence.

The Revenue, represented by Shri M.S. Arora, contended that the predecessors of the appellants were paying duty under Tariff Item 29A, and the appellants knowingly misclassified their products under Tariff Item 68, constituting suppression. It was argued that the Department was justified in invoking the larger period for raising the demand since the misdeclaration was intentional and not disclosed during correspondence.

Upon careful consideration of the arguments from both sides, the Tribunal found merit in the appellants' argument regarding the time bar issue. The Tribunal held that non-disclosure of the predecessors' manufacturing activities did not amount to suppression, especially when the appellants had provided information about leasing premises and machinery from M/s. Chandra Industries in January 1982. The Tribunal emphasized that the Department should have conducted a proper inquiry based on the information provided and raised the demand within the stipulated time. Since the show cause notice was issued beyond the permissible time limit on 7-3-1984, the Tribunal concluded that the demand was time-barred. Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellants.