2019 (1) TMI 1695 - AT - Central Excise

Change in Classification of goods - Ivarez Parting W - the classification of impugned goods, manufactured and sold under the tradename of Ivarez Parting W by M/s IVPL Ltd, changed from heading no. 2931 to heading no. 3910 of the First Schedule to Central Excise Tariff Act, 1985 - rule 173B of Central Excise Rules, 1944. HELD THAT - It is seen that the original classification adopted, and approved, was the residual entry within organo-inorganic compounds under the broader heading of Organo-inorganic compounds, heterocyclic compounds, nucleic acids and their salts, and sulphonamides that was preceded by the specific subheading for organo-sulphur compounds while the subsequent approvals classified the impugned goods as silicones in primary forms . Extended period of limitation - HELD THAT - The approval of the declaration in the classification list was to be a deliberated consequence of due ascertainment and, in the context of specific description of the manufactured goods, the responsibility thereof cannot be wished away by alleging mis-declaration on the part of the assessee. There is no evidence that the information provided therein was insufficient for such ascertainment - thus with the approval of classification list, extended period cannot be invoked. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Classification of impugned goods under Central Excise Tariff Act, 1985; Liability for differential duty; Compliance with approved classification lists; Invocation of extended period under section 11A of Central Excise Act, 1944; Benefit of exemption notifications; Inordinate delay in disposal of show cause notice.

Analysis:
1. The dispute arose from the reclassification of goods from heading no. 2931 to heading no. 3910 of the Central Excise Tariff Act, 1985, manufactured under the tradename 'Ivarez Parting W'. The central excise authorities concluded that the goods were liable to standard duty rates of 60% based on chemical testing, leading to a demand for differential duty.

2. The appellant contended that the direction to discharge differential duty was complied with as per approved classification lists, yet a show cause notice was issued for recovery of duty for a period beyond the statutory limit. The Assistant Commissioner confirmed the demand and penalty, upheld by the Commissioner of Central Excise (Appeals), leading to the current challenge.

3. The primary argument presented was that the duty was discharged as per approved lists and specific directions from jurisdictional officers, barring the invocation of the extended period under section 11A. The appellant claimed compliance with exemption notifications even if goods were manufactured from 'silicone emulsion' derived from 'chlorosilanes'.

4. The appellant further contended that even if the conditional rate did not apply, the alternative effective rate should have been considered. The delay in disposing of the show cause notice and the competence of the original authority to invoke the extended period were also challenged.

5. The Tribunal noted that the original classification was altered without considering the option of extending the effective duty rate. The failure to evaluate the source of 'silicone emulsifier' and the approval of classification lists were highlighted as deficiencies in the adjudication process.

6. Citing legal precedents, the Tribunal emphasized the importance of due approval of classification lists and the inability to invoke the extended period if duty was discharged as per approved lists. The decisions underscored that the department cannot take advantage of an assessee's ignorance and must extend benefits available even if not claimed.

7. In conclusion, the Tribunal set aside the impugned order, ruling in favor of the appellant due to the lack of comprehensive assessment by lower authorities, failure to consider approved classification lists, and the discharge of duty liability in accordance with specific directions from central excise authorities.

Judgments:
- In Tata Iron & Steel Co Ltd v. Union of India: Limited the period for demand to six months prior to the service of notice in the absence of suppression or misstatement of facts.
- In Collector of Central Excise v. Muzzaffarnagar Steels: Emphasized the active role of authorities in approving classification lists and extending benefits even if not claimed by the assessee.
- OK Play (India) Ltd v. Commissioner of Central Excise: Stressed the importance of due ascertainment before approving classification lists and the inability to invoke the extended period if all facts were known to the department.