2008 (3) TMI 518 - AT - Central Excise

Classification of goods - Regenerated Methyl Methacrylate Polymer - Demand - Time Limitation - Suppression of Facts - Held that - the appellant was justifiable in entertaining the bona fide belief that the goods manufactured by them, irrespective of the fact that whether the same are Monomer or Polymer were appropriately classifiable under Chapter 39, in as much as the Supdtt. himself has classified the product under Chapter 39 It is well-settled law that for invoking extended period, some positive act on the part of the assessee to suppress or mis-state with an intent to evade payment of duty is required. We find that positive action is missing in the present case - appeal allowed - decided in favor of appellant.

Summary

Issues:
Classification of product under Chapter heading 3906.10 for exemption under Notification No. 53/88-Central Excise, limitation period for demand of duty, classification dispute between Monomer and Polymer, reliance on test reports of other units, bona fide belief of the appellant, extended period of demand, suppression of facts, Modvat credit entitlement, delay in issuing show cause notice.

Classification Dispute:
The appellants claimed classification of their product under Chapter heading 3906.10 with exemption under Notification No. 53/88-Central Excise. However, samples revealed the product as MM Monomer under Chapter heading 2916.00, leading to a show cause notice for duty demand. The appellant argued that despite being known as Monomer in trade, technically, it was a Polymer. They disputed the classification and highlighted a letter from the Supdtt. classifying MM Monomer under Chapter Heading 3906.10. The Tribunal noted the appellant's bona fide belief and the lack of conclusive test reports, setting aside the classification dispute.

Extended Period of Demand:
The demand for duty was contested based on the limitation period. The show cause notice issued beyond the normal period was justified by the adjudicating authority due to the appellant's registration as a Monomer manufacturer. However, the appellant maintained a bona fide belief in classifying the product under Chapter 39, supported by the Supdtt.'s classification letter. The Tribunal emphasized that the Revenue's silence on the declaration implied agreement with the appellant's classification view, precluding the extended period of demand.

Suppression of Facts and Modvat Credit:
The Tribunal highlighted the absence of positive actions by the appellants to evade duty, as no intent to suppress or misstate was evident. The appellants were entitled to Modvat credit, reducing the duty demand significantly compared to the credit availed. Moreover, the delay in issuing the show cause notice post-receipt of the test report was noted, with the Tribunal referencing a Supreme Court decision to reject the adjudicating authority's reliance on a previous Tribunal decision.

In conclusion, the Tribunal set aside the impugned order on the limitation issue, allowing both appeals in favor of the appellants based on the lack of conclusive evidence, the bona fide belief, and the absence of suppression of facts.