2006 (10) TMI 316 - AT - Central Excise

Summary

Issues: Classification of spares for pressure cookers under CETA sub-headings 7323.90 and 7323.10, applicability of Rule 9(2) of the Central Excise Rules, imposition of penalty.

In this case, the lower appellate authority agreed with the Revenue's classification of spares for pressure cookers under CETA sub-heading 7323.90 instead of 7323.10, which covers complete pressure cookers. Despite this, the lower authority dropped the demand raised in the show cause notice, citing Rule 9(2) of the Central Excise Rules, which applies to goods cleared clandestinely. The Tribunal noted that the notice invoked Rule 9(2) along with Section 11A of the Central Excise Act, and since the product was classified under 7323.90, the demand should have been upheld. As the demand was within the limitation period and the assessee had filed a declaration, no penalty was imposed. The Tribunal set aside the lower authority's order and upheld the duty demand, restoring the adjudicating authority's decision on duty demand.

The Tribunal allowed the appeal by upholding the duty demand and setting aside the lower appellate authority's decision. The key issue was the correct classification of spares for pressure cookers under CETA sub-headings 7323.90 and 7323.10. The Tribunal clarified that Rule 9(2) of the Central Excise Rules, which applies to clandestinely cleared goods, did not prevent upholding the duty demand in this case. The Tribunal emphasized that the notice invoking Rule 9(2) and Section 11A justified sustaining the demand, given the product's classification under 7323.90. The absence of penalty imposition was justified due to the timely demand and the assessee's declaration filing.

Overall, the Tribunal's decision focused on the proper classification of the goods and the application of relevant excise rules. By setting aside the lower authority's decision and upholding the duty demand, the Tribunal ensured compliance with the correct classification under the Central Excise Tariff Act. The absence of penalty was deemed appropriate considering the circumstances of the case, including the timely demand and the assessee's compliance with declaration requirements.