2007 (8) TMI 517 - AT - Central Excise

Textile fabrics - Fusible collar interlining cloth - Classification - Demand - Tariff amendments - Effect - Seizure of goods

Summary

Issues:
Classification of goods under different chapter headings of the Central Excise Tariff Act, 1985; Duty demand, interest, and penalty imposed by the Deputy Commissioner; Appeal to Commissioner (Appeals) and subsequent orders; Confiscation and penalty imposed by the Commissioner; Appeal to Tribunal and final order; Writ petition filed in the Hon'ble Bombay High Court challenging CESTAT's order; Clarification on setting aside duty demand; Contention regarding duty demand under Chapter Heading 59.03 post 1-3-1989; Seizure of goods and its impact on duty demand; Applicability of Kuil Fireworks Industries v. CCE decision; Final decision on the duty demand and clearance of goods.

Detailed Analysis:

1. The appellants, manufacturers of textile fabrics, faced duty demands on fusible collar interlining cloth seized by the department. The Deputy Commissioner confirmed a duty demand of Rs. 3,29,051.88, which was upheld by the Commissioner (Appeals) with modifications. Another duty demand of Rs. 65 lakhs was confirmed by the Commissioner. Appeals were filed against these orders, which were disposed of by the Tribunal, setting aside the confiscation and penalty imposed by the lower authorities.

2. An appeal was made to the Hon'ble Bombay High Court challenging the Tribunal's order, seeking clarification on the duty demand set aside. The High Court directed the matter back to the Tribunal for clarification, leading to the appeal being heard again.

3. The appellants argued that the duty demand of approximately Rs. 3.9 crores was confirmed based on the goods falling under Chapter Heading 59.03 post 1-3-1989, while duty was paid under Chapter Heading 52.06. They contended that since the goods were seized and later released by the Tribunal, the duty demand under Chapter Heading 59.03 was unjustified. Citing the Kuil Fireworks Industries case, the Tribunal agreed with the appellants and set aside the duty demand, acknowledging that the goods were cleared under the appropriate Chapter Heading 52.06.

4. The Tribunal allowed the appeal, concluding that the duty demand under Chapter Heading 59.03 post 1-3-1989 was unsustainable due to the seizure of goods and subsequent release. The decision was based on the principle that the appellants should not suffer due to illegal acts of departmental authorities, aligning with the apex court's precedent and the interim order of the High Court.

5. The Tribunal's final decision set aside the duty demand under Chapter Heading 59.03 and upheld the clearance of goods under Chapter Heading 52.06, in line with the High Court's interim order. The appeal was allowed, providing relief to the appellants in this matter.