2008 (1) TMI 809 - AT - Central Excise

Summary

Issues: Leviability of special excise duty on goods manufactured post-2005.

Analysis:
The case involves a dispute regarding the leviability of special excise duty on goods manufactured by the respondents after 2005. Prior to 2005, there was no disagreement as the respondents were already paying the special excise duty. However, post-2005, a change occurred in the tariff classification system from a six-digit to an eight-digit classification. The Revenue contends that due to Note 2 of the second schedule, the items made by the respondents should be classified under a specific category and attract an 8% special excise duty. On the contrary, the respondents argue that based on relevant notifications and Note 1 of the second schedule, their product does not fall under the said schedule and thus, they are not liable to pay the special excise duty. The respondents also filed a cross-appeal challenging the impugned order of the Commissioner (Appeals).

Upon careful consideration, the Tribunal observed that the respondents' product is classifiable under a specific tariff item in the first schedule, which is not listed in the second schedule. The Revenue, however, relies on Note 3 of the second schedule, the Finance Minister's speeches, and the government's policy to argue that the change in classification from six digits to eight digits does not alter the duty structure of the product. The Tribunal acknowledged the Revenue's arguments but noted that since the product is not specifically listed in the second schedule, the issue of charging special excise duty is debatable. Consequently, the Tribunal found the impugned order to be legally sound and dismissed the Revenue's application for a stay on the order.

In conclusion, the Tribunal upheld the respondents' position that they are not liable to pay special excise duty based on the current classification of their product and the absence of a specific listing in the second schedule. The decision highlights the importance of precise classification and interpretation of tariff items in determining the applicability of excise duty, emphasizing the need for consistency in duty structures and adherence to legal provisions.