2006 (1) TMI 325 - AT - Central Excise

Summary

Issues involved:
Classification of polyurethane washers manufactured by the appellants under Chapter Heading 3921.00 or 3926.10 of the CETA, 1985 for eligibility of SSI exemption.

Analysis:
The primary issue in this appeal before the Appellate Tribunal CESTAT, BANGALORE was the classification of polyurethane washers manufactured by the appellants. The appellants contended that the goods should be classified under Chapter Heading 3921.00 as Elastomers to avail SSI exemption. However, the Revenue classified them under Chapter Heading 3926.10, leading to a demand for duty, penalty, and interest. The Original Authority relied on test results and the opinion of the Indian Institute of Science to support the classification under Chapter Heading 3926.10. The Commissioner (Appeals) upheld this decision, prompting a strong challenge from the appellants.

The learned Advocate for the appellants argued that the samples were taken from a different entity, M/s. IFB Automatic Seatings and Systems Ltd., as the appellants had halted production when the department sought samples. The Mahazar documenting the sample seizure was not cited in the show cause notice, raising doubts about the authenticity of the samples. The adjudicating authority based its decision on these unproven samples, which were not conclusively linked to the appellants' manufacturing.

On the other hand, the learned SDR supported the lower authorities' orders, emphasizing the reliance on the test results and opinions derived from the contested samples. However, upon careful review of the case records, the Appellate Tribunal found discrepancies in the seizure of samples from a third-party user of the goods, not the manufacturer's premises. The Tribunal noted that the samples were not drawn as per proper procedures and the seizure Mahazar was not referenced in the show cause notice. Consequently, the Tribunal deemed the classification based on such questionable samples as untenable and unsubstantiated. Therefore, the impugned order was set aside, and the appeal was allowed with consequential relief.

In conclusion, the Tribunal's decision focused on the lack of proper sample collection from the manufacturer's premises and the reliance on inadequate evidence for classification, leading to the reversal of the lower authorities' findings and the grant of relief to the appellants.