2008 (8) TMI 767 - AT - Central Excise

Demand - Limitation - Suppression of facts - Bona fide belief - Classification of coated calcite

Summary

Issues:
Classification of product under Heading 3824.90 vs. sub-heading 25.05, Limitation period for raising demand, Bona fide belief of the appellant, Imposition of penalty.

Classification of product under Heading 3824.90 vs. sub-heading 25.05:
The duty was confirmed against the appellant for classifying the product Coated Calcite under Heading 3824.90, contrary to the appellant's claim of classification under sub-heading 25.05, which would attract a Nil rate of duty. The appellant argued that other units of the company had filed classification lists claiming the product under Chapter 25, approved by the authorities, leading to a bona fide belief that the product was exempted. The Tribunal found no positive suppression or misstatement by the appellant, thus holding the demand as barred by limitation.

Limitation period for raising demand:
The appellant contended that the demand raised for the period from 1-4-94 to 16-7-99 was barred by limitation, except for a part which was within the limitation period. The Tribunal, citing Supreme Court decisions, emphasized that for invoking a longer period of limitation, there must be positive withholding of information or suppression by the assessee. As there was no suppression or misstatement by the appellant, the demand was considered time-barred.

Bona fide belief of the appellant:
The Tribunal noted that the appellant's units had filed classification lists claiming exemption under Chapter 25, approved by authorities, leading to a genuine belief by the appellant that the product was exempted. Since there was no positive suppression or misstatement, the demand was held to be barred by limitation. The Tribunal set aside the impugned order and remanded the matter for quantification of duty within the limitation period.

Imposition of penalty:
Due to the Tribunal's findings in favor of the appellant regarding the bona fide belief and the demand being barred by limitation, it was deemed not a fit case for the imposition of a penalty. The penalty was accordingly set aside. The appeal was disposed of in favor of the appellant with directions for re-quantification of duty within the limitation period and the extension of benefits as per relevant precedents.