2013 (5) TMI 432 - AT - Central Excise

Classification dispute - Demand of duty Extended period of Limitation - manufacture of forgings and forged articles of iron and steel. - Held that - Following the decision of Hon ble Supreme Court decision in the case of CCE, Baroda vs. Cotspun Limited 1999 (9) TMI 87 - SUPREME COURT OF INDIA wherein, when the classification list approved by the revenue, the Hon ble Court held that the demand cannot be raised even within the limitation period as provided u/s 11A. However, the said declaration law was neutralized by retrospective legislation amending the provision of Section 11A and laying down that even in the case of approval of classification or price list, the demand can still be raised within the limitation period. In the present case demand is within the limitation period and appellant is not challenging the classification confirmed, thus, no infirmity in the impugned order. Appellant submits that the interest confirmed against the appellant is @ 20% whereas the correct rate was 15% in terms of Notification No. 41/2000 while upholding the confirmation of demand, therefore direction is given to lower authority to quantify the interest at the correct rate applicable during the relevant period.

Summary

Issues: Classification of goods under different headings, demand of duty, period of limitation, interest rate on duty.

The judgment addresses the issue of the classification of goods under different headings for duty purposes. The appellant, engaged in the manufacture of forgings and forged articles of iron and steel, initially classified their goods under a specific heading, which was later shifted by the proper officer to different headings attracting varying rates of duty. The revenue approved this reclassification, and the appellant continued to clear their goods under the new headings. Subsequently, a show cause notice was issued proposing a demand of duty alleging misclassification under a different subheading. The Assistant Commissioner confirmed the demand along with interest, which was upheld by the Commissioner (Appeals), leading to the present appeal.

The main argument presented by the appellant's advocate was that the revenue could not raise a demand without first changing the classification list, especially since the appellant had accepted and continued to clear goods under the revised headings approved by the revenue. It was acknowledged that the notice did not invoke the extended period of limitation, and the demand was confirmed only for the normal period. The appellant did not contest the classification adopted by the revenue, and the demand fell within the normal period of limitation.

The judgment referred to a Supreme Court decision emphasizing that once the classification list is approved by the revenue, a demand cannot be raised even within the limitation period unless there is a retrospective legislation allowing such action. As the demand in this case was within the limitation period and the appellant did not challenge the classification, the impugned order was found to be valid. However, the interest rate confirmed against the appellant was found to be incorrect, and the lower authority was directed to quantify the interest at the correct rate applicable during the relevant period.

In conclusion, the appeal was disposed of with the confirmation of the demand but with a direction to adjust the interest rate. The judgment highlighted the importance of adherence to approved classifications and the implications of retrospective legislation on duty demands within the limitation period.