2015 (4) TMI 1087 - AT - Central Excise

Concessional rate of duty as per the Notification No. 141/86-C.E. dated 1-3-1986 - whether the appellant is not entitled to the concessional rate of duty prescribed in the above said notification as the base fabric used is falling under Chapter 60 and not under Chapter 52 as prescribed under the notification - Held that - In the present case since the coated fabric manufactured by the appellant is not made of base fabric of Chapter 52 54 or 55 therefore is not classifiable either under Chapter sub-heading 5903.19 or 5903.29. In view of this undisputed fact the product in question is correctly classifiable under Chapter 5903.99 and therefore correctly extended the benefit of Notification No. 141/86-C.E. dated 1-3-1986 under Sr. No. 10 of the table and Notification No. 63/87 dated 1-3-1987 under Sr. No. 5 of the table appended thereto. Extended period of limitation invoked - Held that - We observed that in the classification list the appellant admittedly mentioned rate 6 per sq. mtr. plus the duty for the time being leviable on the base fabrics under Chapter 52 if not already paid . From this mention it is clear that department is under belief that base fabric used by the appellant is falling under Chapter 52 whereas the appellant used the base fabric which is falling under Chapter 60 therefore this is a clear misdeclaration of the fact. As regards to submission of ld. Counsel that stock was verified physically by the departmental officer we are of the view that though the stock of the goods was verified but from the stock verification officer cannot ascertain whether the base fabric used in the product is falling under Chapter 52 or Chapter 60. Therefore we do not agree with the submission of the ld. Counsel on this count. We therefore are of the view that there is clear suppression of facts and misdeclaration on the part of the appellant therefore extended period was rightly invoked. during the period 1-3-1986 to 31-1-1989 the appellant has suppressed and misdeclared facts therefore show cause notice for the said period can be issued up to five years. Only because show cause notice for the extended period was issued subsequently nature of suppression and misdeclaration does not get extinguished. We therefore do not agree with this submission of the ld. Counsel. - Decided against assessee

Summary

Issues Involved:
1. Classification of PVC coated/laminated cotton fabrics.
2. Entitlement to concessional rate of duty under specific notifications.
3. Applicability of extended period for demand due to alleged suppression and misdeclaration.
4. Correctness of de novo adjudication by the Commissioner.

Detailed Analysis:

1. Classification of PVC Coated/Laminated Cotton Fabrics:
The appellant, M/s. Bhor Industries Ltd., engaged in manufacturing PVC coated/laminated cotton fabrics, classified their product under Chapter Heading 5903.19. The main contention was whether the base fabric, classified under Chapter 60, disqualified the product from the concessional rate of duty specified for fabrics under Chapter 52. The Tribunal found that the product should be classified under sub-heading 5903.99, as it used base fabric from Chapter 60, not Chapter 52.

2. Entitlement to Concessional Rate of Duty:
The appellant claimed a concessional rate of duty under Notification No. 141/86-C.E. and Notification No. 63/87-C.E. The Tribunal, referencing past judgments (Natson Laminates v. Collector of Central Excise and CCE v. Entremonde Polyecoaters Ltd.), held that exemption could be allowed even if the base fabric fell under a chapter other than Chapter 52. The Commissioner confirmed that the product correctly classified under 5903.99 was eligible for the concessional rate under the mentioned notifications.

3. Applicability of Extended Period for Demand:
The appellant argued that the demand for the period 1-3-1986 to 31-1-1989 was time-barred, as they had filed classification lists that were approved, implying no suppression of facts. The Tribunal found that the appellant's classification list misdeclared the base fabric as falling under Chapter 52, leading to a belief that the concessional rate was applicable. This misdeclaration constituted suppression of facts, justifying the extended period for issuing the show cause notice.

4. Correctness of De Novo Adjudication by the Commissioner:
The Tribunal reviewed the de novo adjudication and upheld the Commissioner's findings. The Commissioner had correctly classified the product under 5903.99 and extended the benefit of the relevant notifications. The demand was reduced from Rs. 1,17,52,675.40 to Rs. 32,52,451/-, and a penalty of Rs. 10 lakhs was imposed under Rule 173Q(1) of the Central Excise Rules, 1944. The Tribunal found the Commissioner's order to be legal and correct, dismissing the appeal.

Conclusion:
The Tribunal confirmed the classification of the product under sub-heading 5903.99, upheld the concessional rate of duty under the relevant notifications, justified the use of the extended period for demand due to suppression of facts, and validated the de novo adjudication by the Commissioner. The appeal was dismissed, and the Commissioner's order was deemed sustainable.