2003 (8) TMI 341 - AT - Central Excise

Metal boxes - Geometrical/Mathematical boxes - Classification of goods - Demand - Limitation - Suppression

Summary

Issues:
Classification of metal boxes as geometry boxes/mathematical boxes under Central Excise Tariff Act, 1985; Allegation of evasion of central excise duty; Denial of exemption under Notification No. 8/96; Demand of interest and penalty; Contention of erroneous findings by Commissioner; Challenge of duty demand on the ground of limitation.

Analysis:
1. The appellant, a manufacturer of metal boxes, claimed exemption under Notification No. 8/96 for boxes classified under Chapter Heading 73.10 as geometry boxes/mathematical boxes. However, a show cause notice alleged evasion of central excise duty for boxes cleared as geometry boxes. The Commissioner confirmed the duty demand, interest under Section 11AB, and imposed a penalty, citing that the presence of mathematical instruments makes them geometry boxes, not empty boxes. The order emphasized that the identity of boxes depends on the items inside, denying exemption for empty boxes.

2. The appeal challenges the Commissioner's findings, arguing that like other box manufacturers, geometry/mathematical box makers do not sell boxes with instruments. The appellant highlighted trade understanding, commercial parlance, and specific marketing practices to support the classification of the boxes as geometry/mathematical boxes. The appellant contended that the boxes were recognized as such in the industry and provided evidence of their trade as geometry sets.

3. The appellant asserted that the Revenue failed to prove that the boxes were not known as geometry/mathematical boxes in trade. Evidence was presented, including an affidavit from a trading company confirming the boxes' use as geometry sets. The appellant argued that the boxes' classification should align with trade practices and that no suppression of facts occurred to justify the duty demand within the extended period.

4. During the hearing, the appellant highlighted that denying the exemption based on the absence of instruments could render the exemption redundant, as the Tariff exempted mathematical instruments. The appellant emphasized that the exemption was intended for boxes under Chapter 73.10, supporting their claim for exemption.

5. The appellant challenged the duty demand on the grounds of limitation, citing prior declarations of the goods as wholly exempted geometry boxes. The appellant argued that there was no intention to evade duty, as other manufacturers cleared similar boxes without duty demands. The appellant emphasized that the duty demand lacked justification and was hit by limitations under Section 11A.

6. The Revenue argued that granting exemption to empty boxes was incorrect, as geometry/mathematical boxes are defined by the presence of instruments. They contended that exempting empty boxes could lead to abuse of the exemption, emphasizing the specific nature of the exemption for boxes with instruments.

7. The Tribunal found in favor of the appellant, setting aside the impugned order. The decision was based on commercial understanding, trade practices, and the evidence presented, supporting the classification of the metal boxes as geometry/mathematical boxes. The Tribunal rejected the test of identity based on actual use post-clearance, emphasizing the commercial/trade understanding for classification.

8. The Tribunal upheld the appellant's contention that relevant facts were not suppressed, as the goods were declared as wholly exempted geometry boxes. The failure of Revenue authorities to verify the declaration did not constitute suppression of facts, rendering most of the demand time-barred under Section 11A.

9. Consequently, the Tribunal allowed the appeal, overturning the impugned order based on the evidence, trade understanding, and lack of suppression of facts regarding the classification and exemption of the metal boxes as geometry/mathematical boxes under the Central Excise Tariff Act, 1985.