2015 (9) TMI 203 - HC - Central Excise

Demand of differential duty - SSI exemption under Notification No.1/93 - Whether the Tribunal is justified in upholding the order of the lower authority despite the fact that there is no estoppel against the statutes and it is always open to the appellant or an assessee to adopt the correct assessable value in terms of Section 4 (1) (a) of the Central Excise Act, 1944 for the purpose of computing the clearances in terms of above said notification, notwithstanding the fact that duty was paid incorrectly at higher value by mistake or otherwise - Held that - Admittedly, no statutory appeal was preferred against the order under Rule 173-I of the Rules. The appellant, though did not challenge the order of assessment under Rule 173-I of the Rules, in the instant proceedings, in effect, has challenged the said order contending that they were not liable to pay the duty as determined by the Adjudicating Officer under Rule 173-I of the Rules. This, in our opinion, is not permissible in law. It is not in dispute that the show-cause notice was issued on the basis of the order under Rule 173-I of the Rules passed by the Adjudicating Authority and therefore it is not open to the appellant, in the proceedings arising from a show-cause notice, such as one in the present case, to contend that more duty was recovered from them based on the provisions of Section 4 (1), as it stood at the relevant time, of the Act. - no question of law arises for our consideration as the entire case is based on facts leading to the finalization of assessment and its consequential effect. - Decided against assessee.

Summary

Issues Involved:
1. Demand for differential duty for clearances made during 1995-96 and 1996-97.
2. Classification of Bonding Gum/Repair Gum under the appropriate tariff heading.
3. Imposition of penalty under various rules of Central Excise Rules, 1944.
4. Eligibility for concessional rate of duty under Notification No.19/95-CE.
5. Finality of the order under Rule 173-I of Central Excise Rules, 1944 and its implications on subsequent proceedings.

Detailed Analysis:

1. Demand for Differential Duty:
The Deputy Commissioner issued a show cause notice demanding differential duty of Rs. 1,00,812/- for 1995-96 and Rs. 3,41,032/- for 1996-97 (up to 31.05.96) under Rule 9(2) of Central Excise Rules, 1944, read with Section 11A of the Central Excise Act, 1944. The assessee had cleared goods valued above the exemption limit, making them ineligible for concessional duty rates. The Deputy Commissioner confirmed the demand, which was upheld by the Commissioner of Customs & Central Excise (Appeals) and the Tribunal, leading to the present appeal focusing on the demand for Rs. 4,41,844/-.

2. Classification of Bonding Gum/Repair Gum:
The show cause notice also questioned the classification of Bonding Gum/Repair Gum, proposing it should fall under sub-heading 4006.10 instead of 4006.90. The Deputy Commissioner confirmed this classification and the associated duty demand of Rs. 1,76,853/-. However, the Tribunal later modified this, classifying the product under subheading 4006.90 and granting SSI exemption, thus setting aside the demand for Rs. 1,76,853/-.

3. Imposition of Penalty:
The show cause notice proposed penalties under Rule 173Q and 226 for contraventions of various rules. However, the detailed judgment does not specifically address the outcome of the penalty imposition, focusing primarily on the duty demands and classification issues.

4. Eligibility for Concessional Rate of Duty:
The appellant had opted for concessional duty rates under Notification No.19/95-CE. The authorities found that the appellant exceeded the exemption limit of Rs. 150 lakhs in 1995-96, making them ineligible for concessional rates and liable for differential duty. The Tribunal upheld the denial of concessional rates, agreeing with the Commissioner (Appeals) that the appellant's assessable values were correctly determined and finalized, and could not be re-opened at this stage.

5. Finality of the Order under Rule 173-I:
The appellant did not challenge the Proper Officer's order under Rule 173-I, which had finalized the assessable values. The court held that without challenging this order, the appellant could not re-determine the assessable values in subsequent proceedings. The court referenced the Supreme Court's judgment in Collector of Central Excise, Kanpur vs. Flock (India) Pvt. Ltd., emphasizing that once an order is final and not appealed, it cannot be questioned in refund or subsequent proceedings.

Conclusion:
The High Court dismissed the appeal, agreeing with the Tribunal and Commissioner (Appeals) that the assessable values declared and finalized could not be re-opened. The court found no substantial question of law arising from the case, as it was based on factual determinations leading to the finalization of assessments. The appeal was dismissed with no order as to costs, and any pending miscellaneous petitions were also disposed of.