2006 (3) TMI 565 - AT - Central Excise

Dunnage specifically for floor covering of godown - Classification of goods - Laminated items

Summary

Issues Involved:
1. Classification of the product under the correct tariff heading.
2. Determination of excise duty liability.
3. Allegation of discriminatory treatment.
4. Applicability of relevant notifications and exemptions.
5. Validity of penalties imposed.

Detailed Analysis:

1. Classification of the Product Under the Correct Tariff Heading:
The primary issue was whether the product, go-down dunnage flooring, should be classified under tariff heading 3918 (plastics) or 5903 (textile fabrics). The impugned order classified "floor covering with plastic lamination on both sides" under heading 3918.90 and "floor covering with plastic lamination on a single side" under heading 5903. The appellant argued that both varieties were not plastic items but rot-proof jute products, which should attract a nil rate of duty.

2. Determination of Excise Duty Liability:
The appellant, M/s. SPL Siddhartha Ltd., had been clearing the product without paying central excise duty, which led to the issuance of a show-cause notice alleging duty evasion of about Rs. 4 crores. The Commissioner, Central Excise, Noida confirmed the duty demands and imposed penalties. The appellant contended that the classification under heading 3918 was incorrect as the product was predominantly made of jute and not plastic.

3. Allegation of Discriminatory Treatment:
The appellant highlighted that its rival manufacturer, Air Trax Polymers Pvt. Ltd., produced the same item and sold it without paying any central excise duty. The appellant argued that denying them the same treatment was unjustified discrimination. The Commissioner dismissed this argument, stating that one individual's liability to tax cannot be avoided by pointing out another individual's non-taxation.

4. Applicability of Relevant Notifications and Exemptions:
The appellant relied on several notifications (e.g., Notification No. 6/2000-C.E., Notification No. 3/2001-C.E., and Notification No. 6/2002-C.E.) that exempted rot-proofed jute products, laminated jute products, and fire-resistant jute products from excise duty. The Tribunal noted that the product in question was a jute product both by its composition and commercial identity, and these notifications confirmed that laminated jute products should fall under the category exempt from duty.

5. Validity of Penalties Imposed:
Given that the duty demands were found unsustainable due to the incorrect classification, the penalties imposed on the appellant and its director were also deemed invalid. The Tribunal concluded that the items in question were not classifiable under the impugned order, thus nullifying the duty demands and associated penalties.

Conclusion:
The Tribunal set aside the impugned order, allowing the appeals with consequential relief to the appellants. The product was determined to be a jute product, not a plastic item, and thus not liable for the excise duty as classified under heading 3918. The Tribunal emphasized that excise classification should follow commercial identity unless specified otherwise by statute, and the discriminatory application of tax law was not justified.