2013 (12) TMI 979 - AT - Central Excise

Classification of Goods HDPE Warp Kntted Fabrics manufactured - Chapter 54 OR 39 of Central Excise Tariff Act,1985 Waiver of Pre-deposit Held that - The Board Circular clarify that the goods should be classified under Chapter 39 assessee contended that the demand was not quantified correctly and they are eligible for CENVAT credit benefit - prima facie, there is dispute in classification of the goods appellant directed to deposit Rupees twenty five lakhs as pre-deposit upon such submission rest of the duty to be waived till the disposal Partial stay granted.

Summary

Issues: Classification of HDPE strips under Chapters 54 or 39 of CETA, 1985; Correct quantification of demand; Eligibility for CENVAT credit benefit.

Classification Issue:
The applicants, engaged in manufacturing HDPE Warp Knitted Fabrics, claimed classification of HDPE strips under Chapter 54 of CETA, 1985, while the Revenue contended it should be under Chapter 39. The counsel argued that as per Note 1(g) of Chapter 39, HDPE strips of width not exceeding 5 mm are excluded from Chapter 39. He highlighted the manufacturing process and the changes made in Budget 1995 under Chapter 54. On the other hand, the AR referred to CBEC Circular F.No.54/12/91-CX I dated 24.9.1992, stating that HDPE strips with width not exceeding 5 mm should be classified under sub-heading 3920.32. The AR also cited the decision of the Supreme Court in Jai Fibres Ltd. Vs. CCE 2007 (218) ELT 484 (SC). The Tribunal found that the Board Circular clarified the classification under Chapter 39, but the counsel argued that the demand was not quantified correctly and claimed eligibility for CENVAT credit benefit. The Tribunal acknowledged a dispute in classification and directed the applicant to pre-deposit Rs.25,00,000 within eight weeks, with the balance amount waived during the appeal's pendency.

Quantification of Demand Issue:
The Revenue demanded Rs.1,10,34,190.80 for the period 1.4.2006 to 31.3.2009, based on their classification under Chapter 39. The counsel disputed the quantification, claiming eligibility for CENVAT credit benefit, which would reduce the amount to about Rs. 22 lakhs. The Tribunal, after considering both sides' submissions, found a prima facie dispute in the classification of goods, leading to the directive for the pre-deposit and waiver of the balance amount during the appeal process.

Eligibility for CENVAT Credit Benefit Issue:
The counsel argued for CENVAT credit benefit eligibility, asserting a reduction in the demanded amount to around Rs. 22 lakhs after considering this benefit. The Tribunal, acknowledging this claim, directed the pre-deposit of Rs.25,00,000 while waiving the balance amount during the appeal's pendency, pending compliance by the specified date.