2016 (1) TMI 204 - AT - Central Excise

Classification of chemicals - assessee was classifying under CSH 2942 or 2943 - department was of the view that the said products are classifiable under CSH 3402, 3904 or 3906 and liable to duty - manufacturer of water treatment chemicals, boiler water treatment chemicals, fuel additives, fire side chemicals, resins etc. - extended period of limitation - Held that - during the period from April 1993 to June 1995 classification lists being approved by the Revenue authorities, it cannot be said that the appellant had mis-stated or suppressed information with intention to evade duty. For the period from June 1995 onwards, we find that approval of classification list by the revenue authorities was done-away, but during the period in question i.e. from June 1995 to December 1997, there was a system of filing declaration of the products manufactured with cross reference of approved classification list. This system was introduced in order to check that none of the products are removed without appropriate classification and the knowledge of the Revenue. If that be so, we find strong force in the arguments put forth by the learned Counsel that the demands are hit by limitation. Since the issue involved in this case is of classification dispute, to our mind no penalty needs to be imposed on any of the appellants as the classification lists were approved by the department and there was no dispute during the material time. Accordingly, penalties imposed are set aside. Demand confirmed only for the normal period of limitation - Decided partly in favor of assessee.

Summary

Issues:
Classification of products under Chapter 29 or Chapter 39, Limitation period for duty demand.

Classification Issue Analysis:
The main issue in this case revolves around the classification of products by the appellant under Chapter 29, while the Revenue contends they should be classified under Chapter 39. The investigation revealed that the appellant had mis-declared the products, leading to a demand for differential duty and penalties. The appellant argued that they had filed classification lists as understood by them, and no samples were drawn during the relevant period. The Revenue, on the other hand, claimed that the products were mis-classified to evade duty, supported by the chemical analysis report identifying the products as falling under Chapter 39. The Tribunal considered both sides' arguments and the evidence presented.

Limitation Period Analysis:
Regarding the limitation period for duty demand, the appellant asserted that the demands for the period from April 1993 to December 1997 should be set aside due to the limitation. They argued that the classification lists were approved finally by the Revenue authorities, and no objections were raised during the relevant period. The Tribunal noted that the classification lists were approved without any provisional approval or seeking further details from the appellant. It was observed that the appellant had provided relevant information on the manufacturing process and end-use of the products, and the Revenue's claim of lack of information seemed presumptive. The Tribunal held that for the period up to June 1995, the demands were hit by limitation as the classification lists were approved, and from June 1995 to December 1997, the demands were also set aside due to the system of filing declarations with cross-references.

Judgment Outcome:
The Tribunal upheld the duty liability on reclassification of the products under Chapter 39 for the six months before the issuance of the show-cause notice. However, demands for the period from April 1993 to March 1997 were set aside as they were hit by limitation. No penalties were imposed on the appellants as the classification lists were approved by the department without dispute during the relevant period. The appeals were disposed of accordingly.

This detailed analysis of the judgment highlights the key issues of classification and limitation period for duty demand, providing a comprehensive overview of the Tribunal's decision and the arguments presented by both parties.