2010 (2) TMI 615 - AT - Central Excise

Demand - suppression of fact - to evade payment of duty - Appellant that the activity undertaken by the Appellant amounts to manufacture - Held that - Revenue was aware of the activity undertaken by the Appellant - Appellant explained their manufacturing process - allegation of suppression with intent to evade payment of duty is not sustainable - Appeal is allowed

Summary

Issues: Time-barred demand based on alleged suppression of facts to evade duty, classification of goods under Tariff Heading 4823.90, jurisdictional Assistant Commissioner's directives for registration.

Analysis:

1. Time-barred Demand:
The case involved a demand of Rs. 1,40,278 confirmed against the Appellant, along with a penalty, for classifying gay wrappers under Tariff Heading 4823.90. The Appellant contended that the demand for the period from 20-12-1996 to 31-3-1997 was time-barred as they had responded to the jurisdictional Assistant Commissioner's letters dated 10-9-1996 and 24-1-1997, explaining their manufacturing activities. The Appellant had also obtained registration on 28-12-1996. The Show Cause Notice issued on 6-11-1997 alleged suppression of facts to evade duty. The Tribunal found that since the Revenue was aware of the Appellant's activities and the Appellant had provided explanations in response to the letters, the allegation of suppression was not sustainable. Consequently, the demand was set aside on the ground of limitation.

2. Classification of Goods:
The Appellant argued on the merits of the classification of the goods under Tariff Heading 4823.90. However, the Tribunal did not delve into this issue as the demand was set aside based on the ground of limitation. The impugned order confirming the demand and penalty was overturned, and the Appeal was allowed without addressing the classification issue.

3. Jurisdictional Assistant Commissioner's Directives:
The jurisdictional Assistant Commissioner had directed the Appellant to register under Central Excise or submit a declaration for exemption, as the Appellants were manufacturing gay wrappers falling under 4823 of the Tariff. The Appellant responded to these directives by explaining their manufacturing process and obtained registration. The Tribunal considered these interactions and the Appellant's compliance with the directives in determining that the allegation of suppression with intent to evade payment of duty was not sustainable, leading to the setting aside of the demand on grounds of limitation.

In conclusion, the Tribunal's decision was based on the finding that the demand was time-barred due to the Appellant's responses to the jurisdictional Assistant Commissioner's directives and the Revenue's awareness of the Appellant's activities. The classification issue was not addressed, and the demand was set aside without prejudice to the classification of the goods.