2006 (3) TMI 412 - AT - Central Excise

Summary

Issues:
1. Upholding duty demand on textile auxiliary chemicals.
2. Applicability of concessional rate of duty under Notification 12/94-CE.
3. Imposition of penalty on the appellants.
4. Time limitation for duty demand.

Analysis:
1. The Commissioner of Central Excise (Appeals) upheld a duty demand on textile auxiliary chemicals by disallowing the benefit of concessional duty rate under Notification 12/94-CE. The products in question were not entitled to the concessional rate under the notification, and the appellants accepted this fact. However, they contested the demand on the grounds of time limitation, arguing that their classification declaration was approved after communicating details about their products' end use to the department in 1994. They claimed that they only realized the correct classification of their products as textile auxiliary chemicals after a tariff splitting in 1996.

2. The appellants had deliberately described their products as lubricating preparations in declarations filed from 1995, claiming the benefit of the notification. The department argued that despite knowing their products were textile auxiliary chemicals, the appellants provided misleading information to claim the concessional rate. The department contended that the appellants were guilty of suppression, justifying an extended period of limitation for raising the demand and imposing a penalty.

3. The relevant information provided by the appellants in a letter dated 28-6-1994 clearly indicated the end use of the products as textile auxiliary chemicals. The classification declaration filed in 1995 was approved based on this information, extending the benefit of the notification. The Tribunal agreed with the appellants that the demand was time-barred as the details about the products were adequately communicated earlier. The demand and penalty were set aside, and the appeal was allowed based on the information provided in 1994.

4. The Tribunal's decision was based on the clarity of information provided by the appellants regarding the end use of their products in the letter from 1994, which was consistent with the products in question. The approval of the classification declaration in 1995 further supported the appellants' argument that there was no intention to evade duty payment. Therefore, the demand was considered time-barred, and the penalty was set aside, leading to the allowance of the appeal.