2008 (9) TMI 684 - AT - Central Excise

Summary

Issues:
1. Correct classification of Taspa yarn manufactured by the appellants.
2. Applicability of the period of limitation for raising a demand.

Analysis:

Issue 1: Correct classification of Taspa yarn
The dispute in the appeal revolves around the classification of Taspa yarn by the appellants. The appellants argued for classification under chapter heading 5606.00, while the Revenue classified it under heading 5402.62, resulting in a confirmed differential duty against the appellant. The appellant contended that during the relevant period, there were conflicting decisions by the Tribunal on the classification issue. Reference was made to the case of M/s. S.J. Vasania Silk Mills v. CCE, Surat, where the issue was resolved in favor of the Revenue. However, the appellant cited the decision in M/s. Liberty Phosphate Ltd. v. CCE, Vadodara, emphasizing that in cases of differing views on interpretation, no malafide intent can be attributed to the assessee. The appellant also relied on the Supreme Court's decision in M/s. Densons Pultretaknik v. CCE, which stated that a mere claim of incorrect classification does not constitute suppression of facts to invoke an extended period of limitation.

Issue 2: Applicability of the period of limitation
The appellant argued that since the issue of classification was subject to conflicting decisions and ultimately resolved by the Larger Bench, they should not be held guilty of suppression or misstatement of facts to evade duty payment. It was noted that the appellant had been clearing the yarn by filing declarations under chapter 56 and paying duty accordingly. The Tribunal agreed with the appellant's contention, stating that the longer period of limitation was not available to the Revenue. Consequently, the impugned order regarding limitation was set aside, and the appeal was allowed in favor of the appellant, granting consequential relief.

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing the importance of conflicting decisions on classification issues and the absence of malafide intent to evade duty payment. The decision highlighted the significance of legal precedents and interpretations in determining the correct classification of goods and the applicability of the period of limitation for raising demands in such cases.