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2014 (4) TMI 98 - AT - Central ExciseClassification of goods - Bleached Leno Gauze Fabric - Classification under Chapter Heading 58.03 or under CETH 52.07 - Advalorem rate of duty - Bar of limitation - Penalty - Held that - Tribunal has held in the appellant s own case in 2009 (2) TMI 290 - CESTAT, AHMEDABAD , that Bleached Leno Gauze Fabric , manufactured by the appellant is correctly held to be classifiable under Chapter heading 58.03 of the Central Excise Tariff Act, 1985. Therefore, the main appellant was not eligible to clear said Bleached Leno Gauze Fabric under compounded levy scheme as held by the adjudicating authority. Extended period of limitation - Held that - Evidences collected by the investigation make it evident that main appellant was changing the description of bleached fabrics as Bleached Mosquito Net Fabrics when orders were placed on them by the buyers for Bleached Leno Gauze Fabric Even if there was a confusion in the mind of the main appellant regarding classification of Leno Gauze Fabrics but by changing the description of goods in the selling documents to Bleached Mosquito Net Fabrics makes the intention of the main appellant clear for evading Central Excise Duty. This is further fortified by the fact that main appellant was also paying central Excise duty with respect to certain clearances of Bleached Leno Gauze fabrics under 58.03. Such a mis-declaration on the part of the appellant could not be detected from the classification declarations, copies of invoices and monthly returns filed by the appellant in compliance to the provisions of central excise law and procedures. We, therefore, hold that this is clear case of intentional evasion of duty on the part of the appellant willfully mistaking/suppressing the facts, warranting recovery of duty under proviso to sub-section (1) of section 11A of the Central Excise Act, 1944. Therefore, the demand of duty is not time barred and extended period has been correctly invoked in these proceedings while confirming the demand - Decided against the assessee.
Issues Involved:
1. Classification of 'Bleached Leno Gauze Fabric' 2. Applicability of extended period of time limitation under Section 11A of the Central Excise Act, 1944 3. Treatment of money received from buyers as cum-duty price 4. Imposition of penalties on the main appellant and individuals Detailed Analysis: 1. Classification of 'Bleached Leno Gauze Fabric': The main appellant, M/s Neptune Textile Mills Ltd., was involved in the manufacture of various fabrics, including 'Bleached Leno Gauze Fabric'. The central issue was whether this fabric should be classified under Chapter Heading 58.03, attracting ad valorem duty, or under CETH 52.07. The Tribunal had previously held in the appellant's own case that 'Bleached Leno Gauze Fabric' is correctly classifiable under Chapter Heading 58.03 of the Central Excise Tariff Act, 1985. Consequently, the appellant was not eligible to clear the said fabric under the compounded levy scheme. 2. Applicability of Extended Period of Time Limitation: The appellant argued that the demand for duty was time-barred, as the classification and clearances were duly declared to the Central Excise Department. However, the Tribunal found that the appellant had intentionally misdeclared 'Bleached Leno Gauze Fabric' as 'Bleached Mosquito Net Fabrics' to avoid ad valorem duty. Evidence from investigations, including statements from various individuals and documents seized, indicated deliberate evasion of duty. The Tribunal concluded that this constituted willful misstatement and suppression of facts, justifying the invocation of the extended period under Section 11A of the Central Excise Act, 1944. 3. Treatment of Money Received from Buyers as Cum-Duty Price: The appellant requested that if any duty is recoverable, the money received from buyers should be treated as cum-duty price under Section 4(4)(d)(ii) of the Act. The Tribunal acknowledged this settled point of law and remanded the case to the Adjudicating Authority to rework the demand accordingly, after providing an opportunity for a personal hearing to the appellant. 4. Imposition of Penalties: - Main Appellant (M/s Neptune Textile Mills Ltd.): The Tribunal upheld the penalty of Rs. 5,00,000 imposed on the main appellant, finding it justified based on the evidence of intentional evasion of duty. - Shri Hetalbhai N. Shah (Managing Director): The penalty of Rs. 1,00,000 imposed on him was also upheld due to his involvement in the scheme of evasion. - Shri Nareshbhai P. Shah (Proprietor of M/s Nita Textile & Industries): The penalty of Rs. 1,00,000 imposed on him was set aside. It was established that he was not involved in the business activities due to his old age, and there was no evidence of his participation in the evasion scheme. Conclusion: The appeals were allowed to the extent of remanding the issue of cum-duty price to the Adjudicating Authority and setting aside the penalty on Shri Nareshbhai P. Shah. The appeals were otherwise rejected, affirming the classification of 'Bleached Leno Gauze Fabric' under Chapter Heading 58.03, the applicability of the extended period for duty demand, and the penalties on the main appellant and Shri Hetalbhai N. Shah.
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