2003 (6) TMI 251 - AT - Central Excise

Fabric - Coated, covered or impregnated with rubber - Classification - Calendering of fabrics - Demand - Limitation - Suppression

Summary

Issues: Classification of goods under heading 59.06, liability for additional duty of excise, limitation period for duty recovery, interpretation of processing procedures under Rule 57F(3).

Classification of Goods under Heading 59.06:
The appellant contended that goods classified under heading 59.06 are not liable to additional duty of excise. The Tribunal acknowledged previous decisions but highlighted the need for reconsideration. It noted that the Explanatory Notes to the Harmonised System of Nomenclature specify that heading 59.02 covers tyre cord fabrics, whether or not dipped or impregnated with rubber. The Tribunal emphasized the importance of these notes in classification decisions. It clarified that unless certain conditions are met, tyre cord fabrics should be classified under heading 59.02.

Liability for Additional Duty of Excise:
The appellant was issued a notice proposing recovery of duty for fabrics received during a specific period, alleging suppression of facts regarding the conversion of tyre cord fabrics. The Commissioner confirmed the duty liability and imposed a penalty. However, the Tribunal found in favor of the appellant. It highlighted that the notice was barred by limitation as the appellant had informed the department of its intention to avail of a specific procedure under Rule 57F(3). The Tribunal emphasized that the appellant did not misdeclare or suppress information, and the extended period of limitation was not applicable.

Limitation Period for Duty Recovery:
The Tribunal analyzed the communication between the appellant and the department regarding the processing of fabrics under Rule 57F(3). It noted that while the departmental officers might not have understood technical terms related to rubber technology, the appellant had provided sufficient information. The Tribunal concluded that the appellant had not suppressed or misdeclared facts, and the department could have determined the significance of the terms through technical references. Therefore, the appeal was allowed based on the ground of limitation.

Interpretation of Processing Procedures under Rule 57F(3):
The Tribunal examined the processing procedures under Rule 57F(3) concerning the coating of fabrics with rubber. It referred to technical materials to explain the process of calendering as a method of coating fabrics with rubber. The Tribunal clarified that while the departmental officers might not have been experts in rubber technology, the appellant had adequately communicated the processes involved. It emphasized that the appellant's communication did not amount to suppression or misdeclaration of facts. Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellant.