2011 (1) TMI 999 - AT - Central Excise

Classification - show-cause notice issued by the Range Superintendent to recover differential duty on the products manufactured by the respondent denying the exemption under Notification 52/86 - Held that - Classification has been approved by the Asst. Commissioner on 20.1.1987 by giving benefit of exemption Notification 52/86 at concessional rate of duty. The said order was not challenged by the department and same has attained finality during impugned period. Later on, the show-cause notice issued for the same period, by the Asst. Commissioner, demanding differential duty is not sustainable in the eyes of law, order confirming the demand for the impugned period for which classification issue has been settled in favour of respondent by giving the benefit under Notification no. 52/86 at concessional rate of duty which has attained finality, is not sustainable. In favour of assessee.

Summary

Issues:
Appeal against setting aside the demand order by lower appellate authority based on classification and exemption under Notification 52/86.

Analysis:
The appeal before the Appellate Tribunal CESTAT, Mumbai involved a dispute regarding the classification and exemption under Notification 52/86 for a product filed by the respondent in 1986. The adjudicating authority initially issued a show-cause notice in 1987 and classified the product, granting exemption under the said notification for some products. Subsequently, another show-cause notice was issued in 2002 by the Range Superintendent to recover differential duty, denying the exemption under Notification 52/86. The Assistant Commissioner adjudicated this notice, denying the exemption and confirming the demand against the respondent, which was then challenged by the respondent before the Commissioner (Appeals).

The Commissioner (Appeals) held that the classification for the period from February 1986 to August 1986 had already been decided by the Assistant Commissioner in 1987, allowing the exemption under Notification 52/86 for some products. The Commissioner (Appeals) found that since this decision was not challenged by the department, the demand for the impugned period was not sustainable. The revenue then appealed this decision.

The Revenue argued that the classification approved in 1987 was not available to the respondent as per a previous Tribunal decision and that the issue of classification could be raised at any time. However, the Tribunal found that the classification had been approved in 1987 with the benefit of exemption under Notification 52/86, and this decision had not been challenged by the department, thus attaining finality during the impugned period. The Tribunal emphasized that without challenging the classification order, the Revenue could not raise a demand for the same period, suggesting that any challenge should have been made for subsequent periods.

Ultimately, the Tribunal upheld the decision of the lower appellate authority, stating that the demand for the impugned period, for which the classification issue had been settled in favor of the respondent with the benefit of the notification, was not sustainable. The appeal filed by the Revenue was rejected, and the impugned order was upheld.