2004 (12) TMI 537 - AT - Central Excise

Summary

Issues involved:
Whether the extended period of limitation is invokable for demanding Central Excise duty.

Analysis:
The appeal was filed by M/s. Bharat Carbon & Ribbon Mfg. Co. to determine if the extended period of limitation can be applied for demanding Central Excise duty. The appellant claimed that they manufactured carbon paper classified under Tariff Item 68, with approved classification lists periodically filed with the Department. They received show cause notices proposing to reclassify the product and demand differential duty. The Commissioner confirmed the duty demand under Rule 10(1) of the Central Excise Rules, 1944, along with a penalty. The appellant argued that as they had filed approved classification lists, the extended period of limitation could not be invoked, citing precedents like C.C.E. v. H.M.M. Ltd. The appellant also relied on the decision in C.C.E., Baroda v. M/s. Cotspun Ltd. to support their position that show cause notices cannot be issued for past periods when classification lists were approved. The appellant contended that Section 110 of the Finance Act, 2000 did not validate actions under Rule 10 of the Central Excise Rules, 1944, making the demand unsustainable.

The respondent, however, supported the findings in the impugned order and referenced the Supreme Court's decision in ITW Signode India Ltd. v. C.C.E., which upheld the retrospective demand of duty even with approved classification lists. The Tribunal considered both arguments, acknowledging that the appellant's classification lists were approved under Tariff Item 68. Rule 10 of the Central Excise Rules, 1944 allowed the issuance of show cause notices within six months unless fraud or suppression was involved, extending the limit to five years. The Tribunal agreed with the appellant's position that since the Department was aware of the classification claimed and could have changed it earlier, the extended period of limitation was not applicable. Citing Sarabhai M. Chemicals v. C.C.E., Vadodara, the Tribunal concluded that no wilful suppression occurred as the approved classification lists were filed. Relying on the decision in Cotspun Ltd., the Tribunal held that excise duty based on an approved list is valid until challenged. The retrospective effect of Section 110 of the Finance Act, 2000 did not validate actions under Rule 10, leading to the demand being set aside, and the appeal was allowed. The operative part of the order was pronounced on 24-12-2004.