2007 (1) TMI 462 - AT - Central Excise

Summary

Issues:
The issues involved in the judgment are the demand of duty on polypropylene (PP) tapes manufactured and captively consumed in the manufacture of sacks, imposition of penalty, eligibility for SSI exemption, classification of final product under Heading 54.06, and the benefit of Notification No. 221/86-C.E.

Demand of Duty and Penalty:
The appellants were engaged in manufacturing PP tapes and sacks during the disputed period. The department demanded duty on the PP tapes and imposed a penalty. The Joint Commissioner confirmed the duty demand under Section 11A of the Central Excise Act and imposed a penalty under Rule 25 of the Central Excise Rules, 2002. The case was remanded for re-quantification of duty and penalty.

Eligibility for SSI Exemption:
The appellants claimed eligibility for the benefit of Notification No. 221/86-C.E. and Board's Section 37B Order No. 8/92 for the disputed period. The appellants argued that the benefit of the Notification should apply to the PP tapes manufactured and consumed by them based on the classification of HDPE strips/tapes and sacks by the Madhya Pradesh High Court.

Classification of Final Product and Benefit of Notification:
The Revenue contended that the plastic sacks were not classifiable under SH 5406.90, thus the exemption under the Notification would not apply to the plastic tapes. The appellants argued that the plastic sacks were classified under SH 3923.90, and therefore, they should be eligible for the exemption. The Commissioner (Appeals) remanded the case for revaluation without deciding on the Notification's applicability.

Judgment:
The Tribunal allowed the appeal by remanding the case to the original authority to consider the assessee's claim for exemption under Notification No. 221/86-C.E. for the PP tapes manufactured and consumed in the manufacture of sacks. The authority was directed to consider the claim in light of Board's Order No. 8/92. The original authority was instructed to provide a reasoned decision before following the remand order, ensuring the assessee's opportunity to be heard on the matter.