2005 (2) TMI 640 - AT - Central Excise

Summary

Issues:
1. Confirmation of demand on wooden furniture and penalty imposition.
2. Dispute regarding manufacturing of handicraft items.
3. Previous show cause notice invoking extended period of limitation.
4. Acceptance of items as handicrafts based on artistic criteria.
5. Rejection of certificate issued by Kairali Depot.
6. Benefit of exemption under Notification No. 76/86-C.E.

Issue 1:
The Additional Commissioner confirmed a demand on wooden furniture manufactured and cleared by the respondents, imposing a penalty under Section 11AC of the Central Excise Act and Rule 173Q of the Central Excise Rules. The Commissioner (Appeals) set aside the order due to a previous show cause notice invoking the extended period of limitation, leading to the department's awareness of the nature of transactions. The Revenue appealed against this decision.

Issue 2:
The Tribunal had previously upheld the claim that the items in dispute were handicrafts, satisfying the criteria set by the Supreme Court in CCE v. Louis Shoppe. The respondents declared manufacturing both wooden furniture and handicraft items, with artistic work done predominantly by hand, meeting the definition of handicrafts. The certificate from Kairali Depot, though not issued by a statutory authority, was accepted by the Tribunal in a previous order, granting exemption under Notification No. 76/86-C.E.

Issue 3:
The Tribunal dismissed the Revenue's appeal, finding no merit in challenging the classification of items as handicrafts and granting the benefit of exemption. The rejection of the certificate from Kairali Depot was based on its non-statutory nature, while the artistic criteria for defining handicrafts were met, leading to the duty demand and penalty being unsustainable.

In conclusion, the Tribunal upheld the classification of the disputed items as handicrafts, based on artistic criteria and previous precedents, granting the benefit of exemption and dismissing the Revenue's appeal against the demand and penalty imposed on wooden furniture.