2003 (4) TMI 312 - AT - Central Excise

Summary

Issues involved:
Classification of crayplas shapeless plastic crayon under sub-heading No. 9609.00 vs. sub-heading No. 3204.19.

Detailed Analysis:

Issue 1 - Classification Dispute:
The main issue in this case revolves around the classification of crayplas shapeless plastic crayon, with the appellants arguing for sub-heading No. 9609.00 and the department classifying it under sub-heading No. 3204.19. The appellants claim that the impugned goods are an in-process material used in manufacturing plastic crayons falling under sub-heading 9609.00, chargeable to nil rate of duty. They argue that the impugned goods are a mixture of raw materials in shapeless form, only needing to be molded into plastic crayons. The department issued show cause notices suggesting classification under sub-heading 3202.19 and demanding duty. The CCE confirmed the demand and imposed a penalty. A previous Tribunal order remanded the matter for de novo adjudication on the issue of classification.

Issue 2 - Shifting of Production and Subsequent Disputes:
The appellants shifted production of the impugned goods to a different unit, leading to further classification disputes. Initially, they claimed classification under sub-heading 3204.19 but later revised it to sub-heading 9609.00. Show cause notices were issued, and after adjudication, the Deputy Commissioner held the impugned goods to be classifiable under sub-heading 9609.00. However, a review by the Commissioner resulted in an appeal confirming the demand and imposing a penalty.

Issue 3 - Grounds of Challenge:
The advocate challenges the impugned order-in-appeal on various grounds, including the classification of the goods as unfinished plastic crayons under sub-heading 9609.00, procedural issues regarding the appeal sustainability, penalty imposition compliance, and the right to claim Modvat/Cenvat credit on inputs.

Issue 4 - Legal Arguments and Precedents:
The advocate argues that the impugned goods are solely used for making crayons, citing legal precedents and circulars supporting their classification under sub-heading 9609.00. They emphasize that the impugned goods have the essential characteristics of finished crayons and should be exempt from duty to align with the government's intention.

Issue 5 - Revenue's Position:
The Revenue argues that the impugned goods are mis-declared as shapeless crayons but are actually plastic crayon compound falling under Chapter 32 as a preparation. They rely on a test report and legal precedent to support their classification under sub-heading 3204.19.

Final Decision:
After considering the submissions, case records, and relevant legal provisions, the Tribunal concludes that the impugned goods should be classified under sub-heading 9609.00, in line with the essential characteristics of finished crayons. The Tribunal sets aside the impugned order-in-appeal and restores the original order-in-original, allowing the appeal in favor of the appellants.