2014 (1) TMI 629 - AT - Central Excise

Bar of Limitation - Classification of Goods Denial of the benefit of Notification No. 3/2006-CE Waiver of Pre-deposit Held that - There was no prima-facie case in favour of appellant - the goods were cleared during the material period are prima facie classifiable under heading 3823 of the CETA schedule - on limitation, they appear to have made out a case inasmuch as the only ground raised in the show-cause notice to invoke the proviso to Section 11A (1) of the Central Excise Act is that the appellant misclassified the goods with intent to evade payment of duty - No mens rea has been attributed to them other than the misclassification - Pre-deposits waived till the disposal Stay granted.

Issues:
1. Classification of goods under Central Excise duty.
2. Invocation of extended period of limitation.
3. Application of circulars for classification of goods.
4. Prima facie case on merits for the appellant.
5. Granting waiver of pre-deposit and stay of recovery.

Classification of Goods under Central Excise Duty:
The appeal and stay application were mainly against a demand of duty on 'RBD Palm Stearin' classified by the appellant under SH 1511 90 90, while the show-cause notice classified it under 3823 11 12. The appellant claimed the benefit of Notification No. 3/2006-CE dated 01.03.2006, which was denied. An amount of duty was already paid, and both sides argued whether the extended period of limitation was rightly invoked. The appellant argued that the proviso to Section 11A(1) was invoked without valid grounds, while the Additional Commissioner argued that the appellant misclassified the goods to evade duty.

Invocation of Extended Period of Limitation:
The show-cause notice invoked the proviso to Section 11A(1) alleging misclassification by the appellant with intent to evade duty. The appellant's counsel argued that no mens rea was attributed to them other than the alleged misclassification. The Tribunal found that there was no prima facie case on merits against the demand of duty, as the goods were prima facie classifiable under heading 3823 of the CETA schedule. However, the Tribunal considered the appellant's case on limitation and granted waiver of pre-deposit and stay of recovery against the demand of duty for the extended period and connected penalties.

Application of Circulars for Classification of Goods:
During the material period, the appellant relied on a Board's Circular classifying Palm Stearin under heading 15.11 based on triglycerides of fatty acids. The Circular was later withdrawn, clarifying that goods declared as Crude Palm Stearin should be assessed under CTH 3823 11 11. The appellant argued that the withdrawn circular should not have retrospective effect, citing a Supreme Court judgment. The Additional Commissioner referred to a Supreme Court judgment holding RBD Palm Stearin as classifiable under chapter 38 of the Customs Tariff schedule.

Prima Facie Case on Merits for the Appellant:
The Tribunal did not find a prima facie case on merits for the appellant against the demand of duty, as the goods were prima facie classifiable under heading 3823 of the CETA schedule. However, the Tribunal considered the appellant's case on limitation and found that no mens rea was attributed to them other than the alleged misclassification. Consequently, waiver of pre-deposit and stay of recovery against the demand of duty for the extended period and connected penalties were granted.

Granting Waiver of Pre-Deposit and Stay of Recovery:
Considering the arguments and submissions, the Tribunal granted waiver of pre-deposit and stay of recovery against the demand of duty for the extended period and connected penalties. The appellant had already paid duty with interest for the normal period, and the stay application was allowed by the Tribunal.

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