1984 (3) TMI 390 - AT - Central Excise

Summary

Issues Involved:
1. Classification of treated paper, treated fabrics, and treated glass fabrics under the Central Excise Tariff Schedule (CET).
2. Applicability of the extended period for recovery of duty under Rule 9(2) and Section 11A of the Central Excises and Salt Act.
3. Determination of whether there was suppression of facts by the appellants.
4. Whether the goods captively consumed within the factory were liable for excise duty.

Detailed Analysis:

1. Classification of Treated Paper:
The appellants contended that treated paper should not fall under Item 17(2) of the CET, arguing that treated paper does not retain the characteristics of untreated paper and citing various judicial precedents. However, the Tribunal held that the tariff item 17(2) includes treated papers, as it explicitly covers papers subjected to various treatments such as coating and impregnating. The Tribunal referenced its previous decision in the case of Uma Laminated Products, concluding that treated paper falls under Item 17(2) and is chargeable to duty under this item.

2. Classification of Treated Glass Fabrics:
The Tribunal noted discrepancies in the submissions regarding whether the substance used for treatment was resin or an unstable reacting mixture. It was clarified that the substance was indeed resin. The Tribunal examined whether treated glass fabrics should be classified under Item 22B or 68. It concluded that glass fabrics fall under Item 22F, which covers manufactures in which mineral fibers or yarn predominate in weight. The Tribunal set aside the lower authorities' classification under Item 22B and directed a re-determination of the correct classification, considering Items 22F and 68.

3. Classification of Treated Cotton Fabrics:
The Tribunal applied the same reasoning as for treated paper. It was determined that resin-coated or impregnated cotton fabric falls under Item 19(III), CET, which includes cotton fabrics impregnated, coated, or laminated with preparations of cellulose derivatives or artificial plastic materials. The Tribunal rejected the argument that synthetic resin is not a plastic material, holding that synthetic resins are indeed plastic materials.

4. Applicability of the Extended Period for Recovery of Duty:
The appellants argued that the extended period of five years could not be invoked as there was no suppression of facts. They cited previous cases where similar allegations were dismissed. However, the Tribunal found that the appellants did not declare the quantity and value of goods captively consumed in their self-assessment returns, despite submitting classification lists and paying duty on goods cleared outside the factory. The Tribunal emphasized that under the self-removal procedure, the primary responsibility for correct payment of duty lies with the assessee. The Tribunal concluded that the extended period of five years was applicable from the date of approval of the classification lists.

5. Determination of Suppression of Facts:
The Tribunal acknowledged the uncertainty and doubt in the minds of both the Department and the assessee regarding the classification of the goods. However, it held that the appellants were still responsible for paying duty on the captively consumed goods from the time the classification lists were approved. The Tribunal distinguished the present case from the cited precedents, noting that the appellants had submitted classification lists and the Department had approved them, thus negating any claim of bona fide belief of non-liability.

Conclusion:
The Tribunal directed that the demands for duty be re-determined and collected for the period commencing from the date of approval of the classification list for each product, subject to the Tribunal's decisions on the classification of each product. The Tribunal's detailed analysis addressed each issue comprehensively, ensuring that all relevant legal terminologies and significant phrases were preserved.