2019 (9) TMI 1543 - AT - Central Excise

Classification of goods - resin rubber sheet for soles and heels - to be classified under Heading No. 4008 21 10 or under Chapter sub-heading 4008 29 10? - HELD THAT - This Tribunal in the case of Pololight Industries Ltd. v. CCE Vapi 2009 (2) TMI 493 - CESTAT, AHMEDABAD where co-ordinate Bench of this Tribunal has already laid down a principle that if the principal use of non-cellular rubber plates, sheets and strips are in manufacture of soles, heels, or soles and heals combined for footwear, same need to be classified under specific heading which have been provided under Chapter sub-heading 4008 21. In the present case, since the goods have been confirmed to be non-cellular rubber same cannot be classified under CETH 4008 29 because of the fact that there is a specific classification of non-cellular rubber sheets under CETH 4008 21 10 - since the Senior Asstt. Director of IRMRA is not an expert person to decide classification of the product under Central Excise Tariff Act, we are of the view that the classification given by him under Central Excise Tariff Heading No. 4008 29 10 is in contradiction to the findings of the test report since the test report very categorically says that it is of non-cellular rubber in the form of sheets. These sheets as per the claim of respondent-manufacturer are primarily used in manufacture of soles, heals or soles and heals combined for footwear, the correct classification of the product as discussed above falls under CETH 4008 21 10, which have rightly been classified by the respondent-manufacturer. Appeal dismissed - decided against Revenue.

Issues Involved:
1. Classification of resin rubber sheets for soles and heels.
2. Invocation of extended period for demand.
3. Adherence to principles of natural justice.
4. Correctness of the de novo adjudication by the Commissioner.
5. Cross-examination of the officer who tested the samples.

Issue-wise Detailed Analysis:

1. Classification of Resin Rubber Sheets for Soles and Heels:
The primary issue revolved around the classification of the resin rubber sheets manufactured by the respondent. The department argued that the goods should be classified under Chapter sub-heading 4008 29 10, which attracts Central Excise duty. The respondent, however, classified the goods under Heading No. 4008 21 10, which is exempt from duty. The Tribunal referred to a previous decision in the case of Pololight Industries Ltd. v. CCE Vapi, where it was held that non-cellular rubber sheets used primarily for soles and heels should be classified under 4008 21. The Tribunal upheld this classification, noting that the test report confirmed the goods were non-cellular rubber, and thus, they should be classified under 4008 21 10.

2. Invocation of Extended Period for Demand:
The Tribunal analyzed the period for which the demand was raised through the show cause notices (SCNs) dated 27-11-2010, 1-11-2011, and 3-8-2012. It was noted that most of the demand was barred by limitation, and the extended period could not be invoked as the respondent had been regularly filing their ER-1 Returns and had been audited by various audit teams. Therefore, the Tribunal found no justification for invoking the extended period.

3. Adherence to Principles of Natural Justice:
The Tribunal emphasized that the principles of natural justice were not followed by the Original Authority as the respondent was not given a complete opportunity to present their case or to cross-examine the concerned authorities who tested the samples. This lack of opportunity led to the remand of the matter for de novo adjudication. The Tribunal reiterated the importance of following natural justice principles in adjudication processes.

4. Correctness of the De Novo Adjudication by the Commissioner:
Upon de novo adjudication, the Commissioner dropped all demands raised in the previous SCNs. The department challenged this decision, arguing that the Commissioner misunderstood the classification process. However, the Tribunal found that the Commissioner correctly classified the goods under 4008 21 10, aligning with the test report and the established principle that non-cellular rubber sheets used for soles and heels should be classified under this heading. The Tribunal upheld the Commissioner's order, finding no legal infirmity.

5. Cross-examination of the Officer Who Tested the Samples:
The respondent stressed that the officer who tested the samples was not produced for cross-examination despite clear directions from the Tribunal. The Tribunal acknowledged this failure and noted that similar issues had been adjudicated favorably for other manufacturers, which were accepted by the department. The Tribunal found that the failure to produce the officer for cross-examination further weakened the department's case.

Conclusion:
The Tribunal dismissed the department's appeal, upholding the de novo adjudication that classified the goods under 4008 21 10. It also allowed the appeal filed by the respondent, setting aside the order that classified the goods under 4008 29 10. The Tribunal's decision was based on the adherence to natural justice principles, correct understanding of the classification process, and consistent application of established legal principles.

← Previous Next →