1984 (4) TMI 297 - AT - Central Excise

Issues Involved: Classification of tyre flaps under Central Excise Tariff, validity of show cause notice, principles of natural justice, change in classification by excise authorities, and estoppel against the statute.

Classification of Tyre Flaps

The primary issue was the classification of tyre flaps manufactured by the appellants and the consequential demand of duty on removals for the period from 20-6-1980 to 19-12-1980. The appellants contended that tyre flaps were not covered by Item 16 of the Central Excise Tariff Schedule, which defines "tyres" to include pneumatic tyres, inner tubes, tyre flaps, and outer covers. They argued that tyre flaps could not be considered "pneumatic" as they do not contain air under pressure and should only be dutiable if manufactured along with inner tubes and outer covers. However, the Tribunal held that Item 16 explicitly includes tyre flaps, irrespective of whether they are manufactured along with other components or separately. The Tribunal cited the Supreme Court's judgment in Dunlop India Ltd. v. Union of India, emphasizing that once an article is classified under a distinct entry, the basis of the classification is not open to question.

Validity of Show Cause Notice

The appellants argued that the show cause notice was invalid as it did not specify the amount of duty and contained a pre-determined classification. The Tribunal referred to the Delhi High Court's judgment in Hindustan Aluminium Corporation v. Superintendent of Central Excise, which held that a show cause notice is not void merely because it does not specify the amount of duty. The Tribunal observed that the notice in this case included a detailed list of consignments alleged to have been removed without payment of duty, thus providing sufficient specificity. The Tribunal also dismissed the argument that the adjudicating authority had pre-determined the classification, noting that the notice was issued by the Superintendent and made returnable to the Assistant Collector, who was the adjudicating officer.

Principles of Natural Justice

The appellants claimed a violation of natural justice, arguing they were not given adequate time to gather information and submit documents. The Tribunal found no substance in this claim, noting that the appellants did not appear before the Assistant Collector at the appointed time and had no evidence of their request for adjournment being received. The Assistant Collector had given a reasoned decision based on the appellants' reply to the show cause notice. The Tribunal also found no merit in the argument that the Appellate Collector violated natural justice by not allowing additional time to file documents, stating that it was the appellants' responsibility to have the documents ready at the time of the hearing.

Change in Classification by Excise Authorities

The appellants argued that the excise authorities were not entitled to change the classification from Item 68 to Item 16 without a cogent reason. The Tribunal held that the amendment of the Tariff Item in 1975, which specifically included tyre flaps, was a cogent reason for the change. The Tribunal emphasized that the fact that the Department had not enforced this classification earlier did not entitle the appellants to continue enjoying a benefit contrary to the Tariff Item's wording. The Tribunal cited the principle that there can be no estoppel against a statute.

Estoppel Against the Statute

The appellants contended that the Department's previous acceptance of classification under Item 68 should prevent them from changing it. The Tribunal rejected this argument, reiterating that the amendment of the Tariff Item was a cogent reason for the change and that there can be no estoppel against a statute. The Tribunal noted that the lower authorities had been fair in not seeking to go back more than six months beyond the date of the show cause notice.

Conclusion

The Tribunal confirmed the Appellate Collector's order, holding that the classification of tyre flaps under Item 16 was correct, the show cause notice was valid, there was no violation of natural justice, and the change in classification was justified. The appeal was rejected.

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