2010 (4) TMI 947 - AT - Central Excise

Benefit of N/N. 279/82-C.E. dated 22-11-1982 - Printed Boxes made out of duty-paid mill board pasted with duty-paid kraft paper - The assessee had filed classification list No. 53/83 effective from 18-4-1983 describing the goods as Printed Boxes made out of duty-paid mill board pasted with duty-paid kraft paper on which proforma credit has not been availed and classifying the same under Tariff Item No. 17(3) of the Old Central Excise Tariff Act. This classification list also claimed the benefit of exemption from payment of duty on the printed boxes under Notification No. 279/82-C.E. dated 22-11-1982 (Serial No. 1) - Held that - we have found no justification for demand of duty from the assessee for the period during which classification list No. 53/83 ibid was in force inasmuch as this classification list was duly approved by the Assistant Collector and such approval was ultimately sustained by this Tribunal - mill board boxes and mill board cartons were exempted from payment of duty if made wholly out of mill board as per serial number (1) of the table annexed to the notification Explanation to the notification defined mill board - Admittedly mill board used in the above boxes was having kraft paper pasted thereon. Consequently the item in question did not qualify for the benefit of exemption in terms of serial number (1) of the table annexed to the notification. In this scenario the amount of duty to be recovered from the assessee needs to be re-quantified by the original authority. Penalty u/s 11AC - Held that - the penal provision which was not invoked in show-cause notice was not to be pressed into service by the lower authorities. Section 11AC was therefore illegally invoked - This provision was even otherwise not applicable inasmuch as the entire period of dispute was prior to the date on which Section 11AC came into force. It is also settled law that there can be no composite penalty under different penal provisions. The lower authorities chose to impose a composite penalty under Section 11AC Rule 173Q (1944) and Rule 25(2002) which exercise is not permissible in law. The order for levy of interest and imposition of penalty are set aside and the original authority is directed to re-quantify the amount to be recovered from the assessee - appeal allowed by way of remand.

Summary

Issues:
1. Demand of duty on printed boxes manufactured and cleared by the assessee during a specific period.
2. Approval of classification list by the Assistant Collector and subsequent dispute regarding exemption under Notification No. 279/82.
3. Imposition of penalty on the assessee under various provisions of the Central Excise Act and Rules.
4. Demand of interest on duty and the applicability of specific provisions in the case.

Analysis:

Issue 1:
The main issue in this appeal was the demand of duty on printed boxes manufactured and cleared by the assessee between April 1983 and October 1985. The lower authorities demanded duty and imposed a penalty on the assessee, contesting the benefit of exemption under Notification No. 279/82. The classification list approved by the Assistant Collector was initially revoked, leading to a series of proceedings and appeals.

Issue 2:
The Tribunal found that during the period covered by the approved classification list, there was no justification for demanding duty from the assessee. However, for the remaining period, the benefit of the notification did not apply as the mill board used in the boxes did not meet the exemption criteria. The duty amount for this period needed to be re-quantified by the original authority.

Issue 3:
A penalty was imposed on the assessee under various sections of the Central Excise Act and Rules. The Tribunal determined that Section 11AC was illegally invoked as the entire dispute period predated its enforcement. It was clarified that there cannot be a composite penalty under different provisions. The imposition of interest under Sections 11AA and 11AB was also deemed inapplicable based on specific legal provisions and precedents cited by the counsel.

Issue 4:
The Tribunal set aside the order for levy of interest and imposition of penalty, directing the original authority to re-quantify the amount to be recovered from the assessee. It was emphasized that a reasonable opportunity of being heard must be provided to the assessee in this process. The appeal was disposed of accordingly, with a clear directive for further action by the authorities.