2015 (3) TMI 173 - AT - Central Excise

Demand of differential duty - Classification of goods - Held that - Court in previous order has held that the classification of the product manufactured by the appellant would fall under Chapter 54 of Central Excise Tariff Act, 1985 and rejected the claim of the appellant that it would fall under Chapter 56 of Central Excise Tariff Act, 1985. We do not find any merit in the appeal filed by the appellant as regards the issue of classification and following our order dt.29.05.2009 uphold the impugned order which classify the product manufactured by the appellant under Chapter 54. Penalty of ₹ 1 lakh imposed by the adjudicating authority on the appellant under Rule 25 of Central Excise Rules 1944 is unwarranted and the same is accordingly set aside for the reason that appellant is still disputing the classification before Apex Court - appeal filed by the appellant is rejected on the point of classification and allowed on the point of penalty imposed - Decided partly in favour of assessee.

Summary

Issues: Classification of polyester covered yarns and nylon covered yarns.

Classification Issue:
The appeal addressed the classification of polyester covered yarns and nylon covered yarns manufactured by the appellant. The issue was previously decided against the appellant by a Final Order dated 29.05.2009. The appellant argued that the product should fall under Chapter 56 of the Central Excise Tariff Act, 1985, but the Bench upheld the classification under Chapter 54. The Tribunal found no reason to deviate from the earlier decision and rejected the appellant's claim. The penalty imposed on the appellant was set aside due to the ongoing dispute over classification before the Apex Court.

Penalty Issue:
The penalty of &8377; 1 lakh imposed on the appellant under Rule 25 of the Central Excise Rules 1944 was deemed unwarranted by the Tribunal. The penalty was set aside because the appellant was still contesting the classification issue before the Apex Court. The Tribunal allowed the appeal on the point of penalty but rejected it concerning the classification of the products as per the Central Excise Tariff Act, 1985. The Tribunal decided to uphold the impugned order classifying the appellant's products under Chapter 54.

Conclusion:
The Tribunal disposed of the Stay Petition and proceeded to address the appeal. It rejected the appellant's claim regarding the classification of polyester covered yarns and nylon covered yarns, upholding the earlier decision. The penalty imposed on the appellant was set aside due to the ongoing dispute over classification. The appeal was allowed on the penalty issue but rejected on the classification issue, affirming the classification under Chapter 54 of the Central Excise Tariff Act, 1985.