2004 (1) TMI 560 - AT - Central Excise

Summary

Issues involved:
1. Classification of the product "Aromex" under heading 2707.90 or 2710.39.
2. Time-bar challenge based on the period of demand and the Classification List approval.

Detailed analysis:
1. The primary issue in this case was the correct classification of the product "Aromex" under either heading 2707.90 or heading 2710.39 for the purpose of determining the applicable duty rate. The Commissioner of Central Excise had confirmed a duty demand of approximately Rs. 2.86 crores against the appellant company, contending that "Aromex" fell under heading 2707.90 attracting a higher duty rate, while the company had classified it under heading 2710.39 and paid duty at a lower rate. The appellant argued that the product was initially considered as "Refined Diesel Oil" by the government and was classified under heading 2710.39 based on a Notification providing concessional duty rates for such products. Subsequently, after testing, it was found that the product should be classified under heading 2707.90 due to its aromatic constituent content. The Tribunal noted that the initial approval of the Classification List by the Assistant Commissioner and the absence of any evidence of mala fides or intent to evade duty on the part of the appellant supported their classification under heading 2710.39. Therefore, the demand based on the revised classification was deemed unjustified, and the appeal was allowed in favor of the appellant.

2. The second issue raised was a challenge to the time-bar aspect of the demand. The appellant contended that a significant portion of the demand fell beyond the statutory five-year limitation period under Section 11A. The Tribunal observed that the demand for the period from 1-3-86 to 31-3-87 was issued on 2-1-92, exceeding the five-year limit. The appellant argued that there was no justification for invoking the longer period of limitation as the initial Classification List was duly approved, and there was no obligation to disclose the product's contents unless requested by the Revenue. The Tribunal agreed with the appellant, emphasizing that there was no evidence of suppression or misstatement by the appellant to evade duty. Therefore, the demand was considered wholly barred by limitation, and the impugned Order of the Commissioner was set aside, granting relief to the appellant.