2015 (8) TMI 1392 - AT - Central Excise

Classification of goods - storage and proportioning bins - classified under CTH 8474.90 or under CTH 73.08 - the appellant has filed classification declaration under Rule 173 B of the CEA 1944 - Held that - The classification declaration filed by the appellant was accepted during the relevant time. In these circumstances the allegation of suppression is not sustainable against the appellant. Admittedly in this case the SCN has been issued by invoking extended period of limitation. Therefore there is no suppression on the part of the appellant extended period of limitation is not invokable - whole of the demand pertains the extended period of limitation therefore demand confirmed along with interest by the impugned order is set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Duty demanded by re-classifying the product
- Invoking extended period of limitation for demand of duty

Analysis:
1. Duty re-classification: The appellant appealed against an order demanding duty for the period December 1997 to March 1998 due to re-classification of their product. The appellant, a manufacturer of machinery parts, had initially classified their goods under CTH 8474.90, which was accepted by the Department. Subsequently, it was discovered that the goods should have been classified under CTH 73.08. This led to the initiation of proceedings and a show cause notice was issued in 2002 to demand duty. The appellant contested the re-classification but admitted to having no case on merits.

2. Extended period of limitation: The main contention revolved around the invokement of the extended period of limitation. The appellant argued that since they had filed the classification declaration well in advance in 1997, the show cause notice issued in 2002 was time-barred. The Department, however, contended that the extended period was justified as the appellant had misrepresented the nature of the goods by declaring them as part of a sintering machine when they were actually part of a sintering plant. The Department claimed that the appellant had not disclosed crucial information in their declaration.

3. Judgment: After hearing both parties and examining the records, the Tribunal found that the appellant had filed the classification declaration correctly in 1997, which was accepted by the Department at that time. The Tribunal noted that there was no suppression on the part of the appellant, and therefore, the extended period of limitation was deemed inapplicable. Consequently, the demand for duty, interest, and penalty imposed by the impugned order was set aside, and the appeal was allowed in favor of the appellant with consequential relief.

This judgment highlights the importance of accurate classification declarations by manufacturers and the implications of invoking the extended period of limitation in tax matters. It underscores the need for transparency and consistency in dealings with tax authorities to avoid disputes and penalties.