2005 (6) TMI 324 - AT - Central Excise

Summary

Issues: Alleged wrongful classification of goods under Notification 8/96 leading to non-payment of central excise duty and imposition of penalty under Rule 173Q of the Central Excise Rules.

Analysis:
1. The appellants were issued two show cause notices alleging the clearance of nylon filament yarn without payment of central excise duty under Notification 8/96, to which they were not entitled. The notices also accused the appellants of contravening the Central Excise Act and Rules, making them liable for penalty under Rule 173Q.

2. The crux of the matter revolved around the classification of goods under sub-heading 5402.10 and 5402.41. The appellants claimed they manufactured goods falling under both sub-headings but mistakenly cleared goods under 5402.10, claiming the benefit of Notification 8/96. They argued that the debiting of 8% of the value of goods at clearance, as required by Rule 57CC for exempted goods, indicated their intention to clear only goods eligible for the notification.

3. After hearing both sides, the Tribunal noted the appellants' argument that the misclassification on invoices was a mistake, supported by the debiting of 8% of the goods' value. This action demonstrated their intent to clear goods entitled to the notification, even though wrongly classified. Consequently, the Tribunal found the demand for duty and penalty unsustainable.

4. The Tribunal concluded that the evidence presented by the appellants, specifically the debiting of 8% of the goods' value, substantiated their claim of mistakenly classifying goods under the wrong sub-heading. Therefore, the Tribunal set aside the duty and penalty imposed in the impugned order, ruling in favor of the appellants.

5. As a result of the detailed analysis and consideration of the evidence, the appeal was allowed, providing relief to the appellants from the duty and penalty demanded in the impugned order.