2010 (9) TMI 314 - AT - Central Excise

Valuation MRP based valuation - contention of the appellant that other mastics were not covered under the earlier Notification No. 5/2001 - HSN also described that these products include various types of mastics based on their composition - adjudicating authority in appellant s own case dropped the proceedings which were initiated by issuing a show cause notice - Commissioner (Appeals) order dismissed the appeal filed by the Revenue in respect of the demand

Summary

Issues:
1. Classification of goods under Central Excise Tariff.
2. Notification applicability for assessment under Section 4A of the Central Excise Act.
3. Interpretation of HSN Explanatory Notes for classification.
4. Reliance on Chemical Examiner's report and past adjudication decisions.

Analysis:

Issue 1: Classification of goods under Central Excise Tariff
The appellant argued that their product falls under "other mastics" under Heading 3214 of the Central Excise Tariff, which includes various types of mastics based on their composition. The Chemical Examiner's report supported this classification, stating the product in question falls under "other mastics." The Tribunal noted that the appellant's product, although a putty, falls under the category of "other mastics" as per the Tariff Heading.

Issue 2: Notification applicability for assessment under Section 4A
Notification No. 5/2001 classified fillers and putties under Section 4A of the Central Excise Act. However, Notification No. 13/2002 extended the scheme to include products like resin cements, caulking compounds, and other mastics under Heading 3214 of the Tariff. The Tribunal found merit in the appellant's argument that "other mastics" were not covered under the earlier Notification, thus setting aside the demand for duty assessment under Section 4A.

Issue 3: Interpretation of HSN Explanatory Notes for classification
The HSN Explanatory Notes describe products under Chapter 32.14 as preparations characterized by their uses and composition. The Tribunal considered these notes along with the Chemical Examiner's report to determine the classification of the goods. The Tribunal concluded that the appellant's product, although described as putty, falls under the category of "other mastics" based on the composition and use of the product.

Issue 4: Reliance on past adjudication decisions
The appellant relied on past adjudication decisions where proceedings were dropped for similar goods falling under Heading 3214 of the Tariff. The Tribunal considered these decisions, along with the Chemical Examiner's report and the Budget Note specifying the extension of the scheme to include "other mastics," in favor of the appellant. Consequently, the Tribunal allowed the appeal and set aside the demand for duty assessment under Section 4A, granting the appellants consequential relief as per the law.

In conclusion, the Tribunal found in favor of the appellant, ruling that the demand for duty assessment under Section 4A for the period in question was not sustainable, based on the classification of the goods as "other mastics" under Heading 3214 of the Central Excise Tariff and the extension of the scheme through Notification No. 13/2002.