2007 (7) TMI 519 - AT - Central Excise

Summary

Issues:
1. Classification of goods under Chapter sub-headings.
2. Confiscation of tarpaulin, canvas cloth, and tarpaulin cloth.
3. Imposition of penalty.

Classification of Goods under Chapter Sub-headings:
The case involved a dispute over the classification of goods under specific Chapter sub-headings of the Central Excise Tariff Act, 1985. The department contended that tarpaulin, canvas cloth, and tarpaulin cloth were misclassified by the appellants. The Collector of Central Excise initially ruled in favor of the appellants, but the revenue challenged this decision before the Tribunal. The revenue argued that the goods should be classified under different sub-headings due to being processed with the aid of power. The Commissioner, in the subsequent order after remand, upheld the revenue's classification. However, the Tribunal, considering relevant case law, held that the goods fell under exempted categories and could not be confiscated or penalized for non-payment of additional duties. Consequently, the Tribunal set aside the confiscation of canvas cloth and tarpaulin cloth.

Confiscation of Tarpaulin, Canvas Cloth, and Tarpaulin Cloth:
Regarding the confiscation of goods, the appellants did not dispute liability but requested a reduction in the redemption fine and penalty. The Tribunal acknowledged the duty payable on the goods and the exportation of tarpaulin, reducing the fine for tarpaulin to Rs. One lakh. For canvas cloth and tarpaulin cloth, the revenue argued for classification under a different sub-heading due to processing with power. However, the Tribunal, following legal precedents, concluded that since the goods were exempted from basic excise duty, confiscation and penalties could not be imposed for non-payment of additional duties. Therefore, the Tribunal set aside the confiscation of canvas cloth and tarpaulin cloth, upholding only the confiscation of tarpaulin.

Imposition of Penalty:
In light of the upheld confiscation of tarpaulin, the penalty was reduced to Rs. 50,000. The Tribunal partially allowed the appeals, modifying the penalties and confiscation orders based on the classification of goods and relevant legal principles.

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