2008 (1) TMI 677 - AT - Central Excise

Summary

Issues: Classification of accessories of card cans under different chapters, Limitation period for demand of differential duty, Availability of Modvat credit

Classification of accessories of card cans under different chapters:
The case involved a dispute regarding the classification of accessories of card cans manufactured by the assessee. The assessee had initially classified the accessories under heading 8448.00, but during adjudication, proposed an alternative classification based on their constituent material under sub-headings 7320, 7326, and 76.16. The adjudicating authority accepted the assessee's proposed classification and confirmed the demand accordingly. On appeal, the Collector (Appeals) upheld the classification but ruled that the demand could not be confirmed against the assessee under the said headings as the classification was finalized only on 17-2-1994. The issue was whether the limitation period for demand of differential duty should be counted from the date of the order or from the date of issuance of show cause notices within the six-month period under Section 11A.

Limitation period for demand of differential duty:
The Revenue contended that the limitation period for demand of differential duty should be reckoned from the date of issuance of show cause notices within the six-month period under Section 11A, covering the entire period from May 1992 to February 1994. The Appellate Tribunal agreed with the Revenue's contention, stating that since the classification list was open during the relevant period and finalized only on 17-2-1994, the duty liability would be assessed and quantified accordingly for all clearances made during the intervening period. The Tribunal held that the date of the order was not the relevant date under Section 11A, and as all show cause notices were issued within the six-month period, the limitation should not be counted from the date of the order.

Availability of Modvat credit:
Regarding the disputed issue of Modvat credit, the Collector (Appeals) observed that the assessee was entitled to the credit as they maintained all records and filed returns with the Revenue. The Appellate Tribunal confirmed the Collector's order on the availability of Modvat credit since the Revenue did not challenge this aspect in their appeal memo. Therefore, the order on Modvat credit was upheld while setting aside the portion related to the limitation period for demand of differential duty.

In conclusion, the Revenue's appeal was partially allowed, confirming the availability of Modvat credit and adjusting the calculation of the limitation period for demand of differential duty.