2003 (12) TMI 518 - AT - Central Excise

Summary

Issues: Classification of goods under Central Excise Tariff Act and invocation of extended period of limitation for demanding duty.

Classification of Goods Issue Analysis:
The central issue in this case revolves around the classification of goods manufactured by M/s. S.K. Enterprises under the Central Excise Tariff Act. The dispute arises from whether the goods should be classified under Heading 83.01 as parts of locks, as determined by the Commissioner (Appeals), or under different tariff headings as parts of general use. The appellant argued that they manufacture items like pins, nuts, bolts, screws, washers, collars, etc., which are used for diverse applications in various industries, including motor vehicles. They contended that the products are not industry-specific but of general purpose, falling under Chapter 73 of the Tariff. The appellant cited relevant tariff provisions, such as Note 2(a) of Section XV, to support their classification claim. Additionally, they highlighted past instances where similar products were classified under Heading 73.18. The appellant also raised concerns regarding the mala fide intention attributed to them by the Commissioner (Appeals) for allegedly evading duty payment. The appellant further argued that the extended period of limitation for demanding Central Excise duty should not apply as they had filed necessary declarations and returns, indicating the classification claimed by them, and had no intent to evade duty.

Extended Period of Limitation Issue Analysis:
The second issue pertains to the invocation of the extended period of limitation for demanding Central Excise duty. The appellant contended that the show cause notice issued beyond the normal limitation period specified under Section 11AC(1) of the Central Excise Act was not valid. They argued that they had filed Rule 173B declarations and R.T. 12 Returns, clearly indicating the classification claimed, and all supplies were made to original equipment manufacturers eligible for Modvat credit, with no market sales involved. The appellant relied on the Supreme Court decision in Densons Pultretaknik v. C.C.E., which held that claiming a particular classification does not constitute wilful misstatement or suppression of facts justifying the invocation of the extended period of limitation. On the contrary, the Department contended that the appellants had wilfully misclassified the goods in their declaration, indicating an intent to evade duty payment, thereby justifying the larger period of limitation for issuing the show cause notice.

Judgment Analysis:
The Appellate Tribunal, after considering the submissions from both sides, concluded that the appeals could be resolved based on the question of whether the demand was time-barred, without delving into the classification aspect of the products. The Tribunal noted that the appellants had consistently classified their products under different headings of the Tariff and filed returns indicating the classification regularly. It was emphasized that the Department could not attribute mala fide intention without evidence to support such a claim. The Tribunal highlighted the appellants' reliance on Note 1 to Chapter 83 of the Tariff and the Supreme Court precedent regarding classification claims. Ultimately, the Tribunal ruled in favor of the appellants, allowing both appeals solely on the grounds of the time limit, as there was no evidence of wilful misstatement or suppression of facts in the classification of the products under a particular heading.