2008 (9) TMI 732 - AT - Central Excise

Summary

Issues: Classification of products under Tariff Heading, Time limitation for demanding duty, Waiver of pre-deposit of duty

Classification of Products under Tariff Heading:
The case involved a dispute regarding the classification of absorbent cotton wools and non-absorbent cotton wools under the Central Excise Tariff. The applicant argued that absorbent cotton should be classified under Tariff Heading 5601, not under Heading 3005, as it is not impregnated or medicated. On the other hand, the revenue contended that both types of cotton wools should be classified under Heading 3005 for medical or surgical purposes. The Tribunal examined samples provided by the applicant, noting that absorbent cotton wools were packed for retail sale and used for medical purposes, while non-absorbent cotton wools were used for other purposes. The Tribunal found merit in the revenue's argument regarding the classification of absorbent cotton wools cleared as per IP standards. Consequently, the Tribunal directed the applicant to deposit a specific amount within a specified period, with the remaining duty and penalty waived upon compliance.

Time Limitation for Demanding Duty:
The applicant raised the issue of time limitation for demanding duty, arguing that the demand was time-barred as the show cause notice was issued for the period from 2004-05 to 2006-07, and earlier clearances were made under specific notifications known to the revenue. However, the revenue contended that as the applicant was not a registered unit with Central Excise and had not filed any declarations, they were not aware of the production of the items in question. The Tribunal acknowledged that the issue of limitation was a mixed question of fact and law, which would be further examined during the appeal hearing.

Waiver of Pre-Deposit of Duty:
The applicant sought a waiver of pre-deposit of duty amounting to Rs. 57,92,123 and penalties. After considering the arguments from both sides, the Tribunal decided that it was not a fit case for a total waiver of duty concerning the demand related to absorbent cotton wools. Instead, the Tribunal directed the applicant to deposit Rs. ten lakhs within eight weeks, following which the pre-deposit of the remaining duty and penalty would be waived upon compliance. The compliance was reported on 11th November 2008, concluding the matter.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT, New Delhi provides a comprehensive overview of the issues related to the classification of products under Tariff Heading, time limitation for demanding duty, and the waiver of pre-deposit of duty.