2015 (11) TMI 967 - SC - Central Excise

Rate of Duty - Classification of goods - classification of Cellulosic Spun Yarn - Classification under under Tariff Heading No. 18 III (i) or under heading 18 III (ii) - Held that - CESTAT has rejected the contention of the Revenue that the yarn in question was manufactured out of fibres. The Department had relied upon certain test reports which have been rejected by the CESTAT holding that those test reports are not relevant as sample for it was drawn on April, 1985 and after that, there is no evidence on record to show that the goods formed part of the manufacture lot during the relevant period. - These are pure finding of facts arrived at by the CESTAT on the appreciation of material/ evidence on record. We do not see any question of law which arises for consideration - Decided against Revenue.

Summary

Issues: Classification of Cellulosic Spun Yarn under Tariff Heading, Short levy on excise duty, Adjudication process, Appeal before CESTAT, Rejection of test reports by CESTAT.

Classification of Cellulosic Spun Yarn under Tariff Heading: The respondent, a yarn manufacturer, sought classification under Tariff Heading No. 18 III (i), which was initially approved. However, show cause notices alleged misclassification under heading 18 III (ii), leading to a higher duty rate. The dispute centered on the correct classification of the yarn, impacting the excise duty liability.

Short Levy on Excise Duty: The short levy amounting to &8377;74 lakhs was calculated due to the alleged wrong classification of the yarn consignment. The Adjudicating Authority confirmed the duty and penalty in its Order-in-Original, initiating a legal process to resolve the excise duty dispute.

Adjudication Process: Following an appeal, the Commissioner (Appeals) remanded the matter for fresh adjudication, leading to re-adjudication by the Adjudicating Authority. Despite subsequent confirmations of duty and penalty, the respondent continued to challenge the orders through the appellate process, seeking resolution through legal avenues.

Appeal before CESTAT: The respondent's appeal before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) resulted in a favorable judgment dated 08.01.2007. CESTAT rejected the Revenue's contention regarding the yarn's manufacturing process, emphasizing factual findings over legal issues. The rejection of test reports crucially influenced the final decision in favor of the respondent.

Rejection of Test Reports by CESTAT: CESTAT dismissed the relevance of test reports relied upon by the Revenue, citing the absence of evidence linking the samples to the relevant manufacturing period. The rejection highlighted the importance of credible and timely evidence in excise duty disputes, emphasizing the need for substantiated claims in legal proceedings.

In conclusion, the Supreme Court dismissed the appeal, affirming CESTAT's decision based on factual findings and the rejection of test reports, underscoring the significance of evidence and factual accuracy in excise duty classification disputes.