2013 (10) TMI 230 - AT - Central Excise

Classification of Goods - Differential Duty Waiver of Pre-deposit - Revenue was of the view the goods i.e Polyester Staple Fibres and PET Flakes are to be classified under Chapter Heading No.3915 as waste and parings Held that - The perusal of the Chapter Note No.6 under Chapter Heading No.39, the said Note categorically states that the expression primary form applies only to the forms, one of which is stated as flakes the appellant is manufacturing flakes out of the PET bottles in factory premises and hence any demand arising out of the classification of the product from Chapter Heading No.3907 to Chapter Heading No.3915, prima facie is incorrect as the Chapter Heading No.3915 would apply to a manufacturer in whose factory premises waste, parings and scrap arises - the appellant has made out a case for waiver of pre-deposit of the amounts involved in respect of PET flakes. - stay granted. Duty Liability on PET Fibre - The duty liability arises on the appellant due to the retrospective amendment which has been brought into effect - the notification which has been issued exempting such product is of retrospective nature and will be applicable, needs to be considered at the time of final disposal of appeal - the appellants unit has been taken over but at the same time, there is nothing on record to show that the appellant has a severe financial hardship Partial stay granted.

Issues:
1. Classification of PET flakes under Chapter Heading No.3907 or Chapter Heading No.3915
2. Classification of Polyester Staple Fibres under Chapter Heading No.39 or Chapter Heading No.54
3. Retrospective amendment under Section 142 of Finance Act, 2012 affecting duty liability
4. Financial hardship of the appellant and waiver of pre-deposit amounts

Classification of PET Flakes:
The appellant contended that PET flakes should be classified under Chapter Heading No.3907, while the Department argued for Chapter Heading No.3915. The Tribunal noted Chapter Note No.6 under Chapter Heading No.39, which states that the term "primary form" includes forms like flakes. Since the appellant produced flakes from PET bottles in their factory, any demand to reclassify under Chapter Heading No.3915 was deemed incorrect, as Chapter Heading No.3915 pertains to waste, parings, and scrap arising in a factory, not primary forms like flakes. Consequently, the Tribunal found in favor of the appellant for waiving pre-deposit amounts related to PET flakes.

Classification of Polyester Staple Fibres:
Regarding Polyester Staple Fibres, the Department cited a retrospective amendment under Section 142 of the Finance Act, 2012, adding Chapter Note No.1A to Chapter No.54, which would classify the appellant's product under Chapter 54. The appellant argued for exemption under Notification No.24/2012-CE, asserting that the product should be exempted as it was manufactured from PET bottles. The Tribunal acknowledged the duty liability post 29.06.2010 due to the retrospective amendment but directed the appellant to deposit Rs.25 lakhs within twelve weeks, considering the financial situation and previous orders.

Retrospective Amendment and Financial Hardship:
The retrospective amendment impacted the duty liability for Polyester Staple Fibres post 29.06.2010, although the appellant had filed under Chapter Heading No.39 initially. The Tribunal considered the exemption notification's retrospective nature but required further review during the appeal's final disposal. Despite the appellant's financial challenges and the State Bank of India taking over the factory, the Tribunal ordered a deposit of Rs.25 lakhs within twelve weeks based on previous precedents. The waiver of pre-deposit for the remaining amounts was granted, pending appeal disposal.

This judgment from the Appellate Tribunal CESTAT AHMEDABAD addressed issues related to the classification of PET flakes and Polyester Staple Fibres, a retrospective amendment affecting duty liability, and the appellant's financial hardship. The Tribunal ruled in favor of the appellant for PET flakes' classification under Chapter Heading No.3907, rejecting the Department's claim for Chapter Heading No.3915. For Polyester Staple Fibres, the retrospective amendment led to duty liability post 29.06.2010, but the appellant was directed to deposit Rs.25 lakhs within twelve weeks. The Tribunal considered the exemption notification's retrospective nature and the appellant's financial situation in granting the waiver of pre-deposit for the remaining amounts pending appeal disposal.

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