2013 (12) TMI 669 - AT - Central Excise

Goods cleared in small packing Assessable u/s 4A of Central Excise Act,1944 Waiver of Pre-deposit Held that - Note 3 to Section VI and Note 1 to Section VII of the Central Excise Tariff Act, 1985 provides that goods put up in sets consisting of two or more separate constituents, some or all of which in all this section are intended to mixed together of obtain a product of Section VI or VII, are to be classified in the heading appropriate to that product, provided that the constituents are put up, clearly identifiable as being intended to be used together without being repacked. Revenue was of the view that the resin and hardener even though packed separately are intended to be used in the predetermined ratios - the goods were cleared even in 500 gms. Relying upon The learned AR strongly relied upon the decision of the Hon ble Supreme Court in the case of Commissioner Vs. Convertor Adhesive & Chemicals (P) Ltd. 2005 (8) TMI 17 - SUPREME COURT OF INDIA - It is apparent that the intended use of the product was not within the knowledge of the Department - the applicants failed to make out a prima facie case for waiver of pre-deposit assessee directed to deposit Rupees forty lakhs as pre-deposit upon such submission rest of the duty to be stayed till the disposal Partial stay granted.

Summary

Issues:
Classification of goods under different Tariff Headings, applicability of Section 4A of the Central Excise Act, 1944, limitation period for demand of duty.

Classification of Goods:
The case involved the classification of Epoxy Resin and Polyamides under Tariff Heading No. 3907.30.10 and 3908.90.90 respectively. The dispute arose when it was alleged that the resin and hardener, cleared in small packs, should be classified under Tariff Heading 3506 of the CETA, 1985. The Tribunal considered the contention that the goods were cleared separately in different packings since 1996 under Chapter 39 and paid duty under Section 4 of the Act, 1944. The Tribunal referred to a previous decision that emphasized classification based on the condition in which the product is removed from the factory. The argument was also made that the goods were not sold as adhesive, making the classification under Heading 3506 unsustainable. The AR presented evidence of repacking by another entity under a different sub-heading, supporting the contention that the resin and hardener were intended to be used together.

Applicability of Section 4A:
The dispute also involved the applicability of Section 4A of the Central Excise Act, 1944, for assessing the duty. The Commissioner had confirmed a demand of duty along with interest and penalty under Section 4A, while the applicant cleared the goods under Section 4 of the Act. The applicant argued that there was no suppression of facts to evade duty payment and that the entire demand was barred by limitation. The Tribunal noted the contentions of both sides and directed the applicant to make a partial deposit while waiving the pre-deposit of the remaining amount until the appeal's disposal.

Limitation Period for Demand of Duty:
Regarding the limitation period for the demand of duty, the applicant contended that the entire demand was time-barred. The Tribunal acknowledged this argument and indicated that the submission on limitation would be examined during the hearing. The Tribunal found that the intended use of the product was not known to the Department, leading to the applicant failing to establish a prima facie case for the waiver of the pre-deposit of the entire duty amount. As a result, the Tribunal directed the applicant to deposit a specified amount within a set timeframe, with the remaining amount being waived until the appeal's resolution.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT CHENNAI highlights the key issues of classification of goods, the applicability of Section 4A, and the limitation period for the demand of duty. The Tribunal considered arguments from both sides, referred to relevant legal provisions and precedents, and made a decision regarding the deposit of duty amounts pending the appeal's disposal.