2004 (12) TMI 438 - AT - Central Excise

Issues Involved:
1. Classification of intermediate plastic articles (PPVC).
2. Applicability of exemption notifications.
3. Validity and jurisdiction of show cause-cum-demand notices.
4. Time-barred demands under Section 11A.
5. Marketability and excisability of PPVC.
6. Valuation under Central Excise (Valuation) Rules, 1975.
7. Binding nature of Board's Circulars.

Detailed Analysis:

1. Classification of Intermediate Plastic Articles (PPVC):
The appellants manufactured medical requisites, specifically intermediate plastic articles (PPVC) used in Urocom sets. The primary issue was whether PPVC should be classified under Heading No. 39.23 as "articles of plastic for conveyance or packing of goods" or under Heading No. 90.18 as "Ostomy Products." The Assistant Commissioner had previously settled the classification under Heading 39.23, and this was confirmed by the Commissioner of Central Excise (Appeals). The Tribunal found no merit in the appellant's contention regarding the marketability of PPVC as an intermediate product.

2. Applicability of Exemption Notifications:
The appellants claimed exemption under Notification No. 339/86-CE (as amended) and Notification No. 14/92. The Tribunal noted that the benefit of Notification No. 15/94 dated 1-3-1994 was correctly granted for PPVC, and this order had attained finality. Therefore, the demands for the period from 1-3-1994 onwards were discharged as PPVC was fully exempt from duty. For periods covered by Notification No. 14/92, the Tribunal found that PPVC, made from plastic sheets classified under Heading 39.20, should be considered as made from primary forms of plastic under Heading 39.01 to 39.15, thus qualifying for the exemption.

3. Validity and Jurisdiction of Show Cause-Cum-Demand Notices:
The appellants contested the validity of the show cause-cum-demand notices issued by the Range Superintendent, arguing that they were without jurisdiction and time-barred. The Tribunal found that the notices issued without proper application of mind were not valid for demanding duty.

4. Time-Barred Demands Under Section 11A:
The Tribunal examined the contention that the demands were time-barred. It was found that the protective demands raised for six months were not barred by limitation, as per the Supreme Court's decision in CCE, Baroda v. Safari Industries. However, the Tribunal set aside the demands for the period from April 1992 to November 1993 as they were based on an incorrect application of Notification No. 53/88, which was not in existence during that period.

5. Marketability and Excisability of PPVC:
The Tribunal rejected the appellant's argument that PPVC, being an intermediate product, was not marketable and hence not exigible to duty. It upheld the classification and duty liability on PPVC as an article of plastic under Heading 39.23.

6. Valuation Under Central Excise (Valuation) Rules, 1975:
Given that the Tribunal did not sustain the duty liability on PPVC, it did not make further findings on the plea of valuation under Rule 7 of the Central Excise (Valuation) Rules, 1975.

7. Binding Nature of Board's Circulars:
The Tribunal emphasized the binding nature of the Board's Circulars, which consistently supported the view that articles made from intermediate plastic products classified under Heading 39.20 should be considered as made from primary forms of plastic under Heading 39.01 to 39.15. The Tribunal found no reason to deny the benefit of Notification No. 14/92 based on these circulars and set aside the demands accordingly.

Conclusion:
The Tribunal set aside the determination of duty demands, discharged the show cause notices, and allowed the appeal. The findings were based on the correct classification of PPVC, applicability of exemption notifications, and adherence to the Board's Circulars. The Tribunal also noted that the approval of classification lists should be upheld from the date of filing, and the benefit of exemptions should be granted at the re-quantification stage.

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