1983 (8) TMI 258 - AT - Central Excise

Summary

Issues:
Classification of goods under Central Excise Tariff - Tinned trimmings as cuttings under Item 28.
Validity of show cause notice for reviewing classification.
Authority of Collector to change established classification.
Impact of Board's letter dated 29-8-1960 on classification.
Calculation and increase of demand amount through corrigendum.

Classification of Goods under Central Excise Tariff:
The appellants contended that the tinned trimmings were not cuttings but trimmings arising during the process of dressing tinned sheets. They argued that trimmings were not standard cuttings and were meant for detinning and use as melting scrap. However, the tribunal found that the trimmings were narrow width cuttings from the edges of tinned sheets, falling under the definition of cuttings in Tariff Item 28. The tribunal rejected the distinction made by the appellants between cuttings from middle portions and edge-cuttings, stating that edge-cuttings were indeed cuttings as commonly understood. The tribunal upheld the Collector's classification of the trimmings under Item 28 due to their value and necessity for detinning before use as melting scrap.

Validity of Show Cause Notice for Reviewing Classification:
The appellants argued that the show cause notice for reviewing the classification was invalid as it did not specify the amount of the duty demand. However, the tribunal held that the notice was valid as it included essential details like the period of demand, quantity of goods, and applicable duty rate. The tribunal emphasized that the calculation of the demand amount was a straightforward process based on the information provided in the notice.

Authority of Collector to Change Established Classification:
The appellants raised objections to the Collector changing an established classification without sufficient reasons. However, the tribunal clarified that the Collector had the authority under Section 35A of the Central Excises and Salt Act, 1944, to review orders and change classifications. The tribunal cited the Delhi High Court's view that tax decisions are not final and conclusive for subsequent periods, allowing authorities to revise decisions based on correct interpretations.

Impact of Board's Letter dated 29-8-1960 on Classification:
The appellants relied on a letter from the Central Board of Excise and Customs dated 29-8-1960, which exempted certain trimmings from duty. However, the tribunal noted that the letter had no statutory force, was an internal communication, and was formally withdrawn in 1982. The tribunal held that the letter could not override the statutory tariff and that no formal exemption notification existed for the trimmings.

Calculation and Increase of Demand Amount through Corrigendum:
The appellants objected to the increase in the demand amount through a corrigendum, alleging that the initial calculation mistake was not adequately explained. However, the tribunal found that the show cause notice contained sufficient details for calculating the demand amount. The tribunal concluded that the appellants were not left in uncertainty regarding their liability, and the increase in the amount through the corrigendum was justified.

In conclusion, the tribunal upheld the Collector's classification of the tinned trimmings as cuttings under Item 28 of the Central Excise Tariff, rejecting the appeal. However, the tribunal directed the grant of set off of duty paid on uncoated steel sheets to the appellants if not already granted.