2007 (5) TMI 104 - AT - Central Excise

Demand and penalty - Department contended that the Zinc waste classifiable under Heading 79.02 but as per assessee under Heading 26.02 - Held that department contention was correct and demand and penalty sustained

Summary

Issues involved:
Classification of zinc waste under Chapter Heading 79.02 for duty demand and penalty imposition.

Analysis:
The case involved an appeal against the order of the Commissioner of Central Excise (Appeals) upholding the duty demand and penalty imposed by the Joint Commissioner of Central Excise. The dispute revolved around the classification of zinc waste under Chapter Heading 79.02 of the Schedule to the Central Excise Tariff Act, 1985. The appellants had initially classified the product under Heading 26.02 and paid duty at 8% ad valorem for the period from March 1998 to February 2000. However, the department contended that zinc waste should be classified under Chapter Heading 79.02, leading to a demand for differential duty. The authorities relied on the fact that the appellants did not challenge the classification under Heading 26, but the appellants argued that they had the right to challenge the classification under Heading 79 based on a Supreme Court decision stating that zinc waste is not excisable.

The Apex Court's ruling in the case of Commissioner of Central Excise v. Indian Aluminium Co. Ltd. was crucial in this matter. The Supreme Court had held that zinc residue and zinc waste are not the result of manufacture and therefore not liable to excise duty. Despite the authorities below not accepting the initial classification under Heading 26 by the appellants, the appellants were deemed entitled to challenge the classification under Heading 79. The appellants relied on the Supreme Court decision to argue that the product is not excisable, and the same ratio applied to their case. Consequently, the impugned order confirming the duty demand and penalty was set aside, and the appeal was allowed.

The duty demand confirmed in the impugned Order-in-Appeal covered four different Show Cause Notices issued for various periods, totaling Rs. 50,25,397. The details of the duty demand confirmed in the order were specified in the Annexure, listing the Show Cause Notices, dates, amounts, and periods for which the demands were raised. The Tribunal, after considering the arguments and legal precedents, pronounced the decision in favor of the appellants, thereby resolving the classification dispute and nullifying the duty demand and penalty imposed by the lower authorities.