2007 (2) TMI 419 - AT - Central Excise

Summary

Issues:
Classification of twine/cabled yarn under Chapter Heading 5607, exemption under Notification No. 6/2002, denial of benefit due to low denierage, applicability of Notification No. 30/04, time-barred demand, consistent policy of exemption for specified yarns, change in duty structure post Finance Bill 2004, acceptance of classification under Chapter Heading 5607, suppression with intent to evade duty.

Classification under Chapter Heading 5607 and Exemption under Notification No. 6/2002:
The applicant, engaged in manufacturing twine/cabled yarn, procured monofilament yarn and claimed exemption under Notification No. 6/2002 for goods under Heading 5607. The Department accepted this classification previously. However, show cause notices alleged non-classifiability under Chapter Heading 5607 due to low denierage, seeking to deny exemption as input yarn was duty-exempt. The Commissioner confirmed demands and imposed penalties, leading to an appeal.

Applicability of Notification No. 30/04 and Time-barred Demand:
The applicant claimed exemption under Notification No. 30/04 post-2004, but the plea was not considered during adjudication due to ongoing communication with CBEC. The exemption was not denied, and the demand for the period pre-2004 was argued as time-barred, citing consistent government policy of exempting specified yarns for fishing nets.

Change in Duty Structure and Suppression Allegations:
Post-Finance Bill 2004, duty structure changes were explained, with optional exemption for intermediate products. The applicant's classification under Chapter Heading 5607 was historically accepted, and no suppression to evade duty was alleged. The Tribunal found prima facie entitlement to exemption under Notification No. 30/04 from 2004 onwards and waived pre-deposit for the duty and penalty, staying recovery pending appeal disposal.

This detailed analysis of the judgment highlights the issues of classification, exemption claims, duty structure changes, and time-barred demands, providing a comprehensive understanding of the legal complexities and arguments presented before the Appellate Tribunal CESTAT, Mumbai.