2011 (9) TMI 921 - AT - Central Excise

SSI exemption - Notification No. 8/2003, dated 1-3-2003 - time limitation - classification of various goods - Revenue is of the view that the products would get classified under Chapter Heading 48.20 while the assessee is of the view that the said products would get classified under Chapter Heading 49.11

Summary

Issues Involved:
1. Classification of pre-printed forms under Chapter 48 or Chapter 49.
2. Eligibility for SSI exemption under Notification No. 8/2003.
3. Validity of demand and penalties under Sections 11A, 11AB, and 11AC of the Central Excise Act, 1944.
4. Consideration of limitation period for issuing the Show Cause Notice.

Detailed Analysis:

1. Classification of Pre-Printed Forms:
The primary issue is whether the pre-printed forms manufactured by the appellant fall under Chapter Heading 48.20 or Chapter Heading 49.11 of the Central Excise Tariff Act, 1985. The appellant argued that their products, which include various types of pre-printed forms, should be classified under Chapter 49, which generally covers printed matter. Conversely, the Revenue contended that these products fall under Chapter 48, which includes articles of stationery.

The Tribunal analyzed the classification based on the nature and use of the printed forms. It referred to Chapter Note 12 of Chapter 48, which states that printed paper with motifs, characters, or pictorial representations not merely incidental to the primary use of the goods falls under Chapter 49. The Tribunal found that the pre-printed forms in question, which include details specific to the appellant's business, are not merely incidental but essential to the primary use of the forms. Hence, these forms should be classified under Chapter 49.11.

2. Eligibility for SSI Exemption:
The appellant was availing SSI exemption under Notification No. 8/2003. However, it was found that the value of clearances exceeded the prescribed limit during the relevant years, making the appellant ineligible for the exemption. The Tribunal upheld the findings of the lower authorities that the appellant was not eligible for SSI exemption due to exceeding the clearance limit.

3. Validity of Demand and Penalties:
The Show Cause Notice demanded recovery of Central Excise duty, interest, and penalties under Sections 11A, 11AB, and 11AC of the Central Excise Act, 1944. The adjudicating authority confirmed the demand and imposed penalties, which were partly upheld by the first appellate authority. The Tribunal, however, found that the classification of the products under Chapter 49.11 meant that no duty liability was payable. Consequently, the demands and penalties were set aside.

4. Consideration of Limitation Period:
The appellant argued that the Show Cause Notice issued on 10-9-2008 was time-barred, as they were under a bona fide belief based on prevailing case laws and Board Circulars. The Revenue countered that suppression of facts justified the extended limitation period. The Tribunal did not record a specific finding on the limitation issue, as the appeals were disposed of on merit, holding that the products were correctly classified under Chapter 49.11.

Conclusion:
The Tribunal concluded that the pre-printed forms manufactured by the appellant fall under Chapter Heading 49.11 and not Chapter Heading 48.20. Consequently, the demands and penalties imposed were set aside, and the appeals were allowed. The issue of limitation was not addressed, as the appeals were decided on the merits of the classification.

(Pronounced in Court on 16-9-2011)