2016 (9) TMI 1132 - AT - Central Excise

Classification - motor vehicle chassis manufactured and cleared in CKD/SKD condition from various divisions of the respondent - whether to be classified under CETH 8708 as per appellant or CETH 8706 as per Revenue - Held that - a correct classification of appellant s goods for the period 15.09.2005 to 30.11.2005 will be the correct classification for the period prior to 15.09.2005 or after 30.11.2005 so long as there is no change in the relevant CET headings. Before the issue of present show cause notice dt. 01.03.2004 respondent was seeking change in the classification of the impugned goods by writing letters to the department. Once department has chosen to demand duty in show cause notice dt. 01.03.2004 then respondent had every right to contest that differential duty demand as not payable due to incorrect classification even if duty was paid with interest. We do not find anything wrong in OIA dt. 26.09.2007 of the First Appellate Authority to hold the classification of parts cleared by the respondent under CETH 8708 by relying upon the decision of Tribunal in the case of Tata Motors Limited Vs. CCE Jamshedpur 2007 (8) TMI 209 - CESTAT KOLKATA passed by this bench. It is further observed that ground (iv) taken in the grounds of appeal by the Revenue is not valid now as order rejecting Revenue s ROM has been finally upheld by Apex Court by dismissing Revenue s appeal. The apprehension of the Revenue in ground (vi) of the grounds of appeal that change in classification for the earlier period will tantamount to making re-assessment is not the correct appreciation of law. As per Rule-2(b) of the Central Excise Rules 2002 assessment includes self-assessment of duty made by the assessee and provisional assessment under Rule-7. At the same time it will also include self-assessment . Assessment or re-assessment is not restricted to only deciding classification of the goods manufactured by an assessee but will also include deciding the valuation of goods and the rate of duty applicable. It will also include demands/refunds under Section 11A and Section 11B of the Central Excise Act 1944 arising as a result of scrutiny and finalization of provisional assessments. The issue of deciding the classification of the respondent s products does not mean that all the procedural requirements of assessment/re-assessment/self assessments have been changed. The provisions of Section 11B of the Central Excise Act 1944 will have to be followed and satisfied if re-assessment has to be completed. - Decided against the Revenue

Summary

Issues:
Classification of goods for duty payment; Jurisdiction of First Appellate Authority; Applicability of Central Excise Act and Rules; Validity of classification challenge; Procedural requirements for assessment and re-assessment.

Analysis:
1. Classification of Goods for Duty Payment:
The appeal involved a dispute over the classification of goods for duty payment under the Central Excise Act, 1944. The Adjudicating Authority had confirmed a demand of ?34,80,000 under Section 11A of the Act, which the First Appellate Authority set aside. The Revenue argued that the Commissioner (Appeal) exceeded jurisdiction by deciding on the classification issue, which was not part of the original adjudication. The Respondent contended that the differential duty paid voluntarily was not applicable due to incorrect classification. The First Appellate Authority upheld the Respondent's classification under CETH 8708 based on previous orders and correspondence, leading to the dismissal of the Revenue's appeal.

2. Jurisdiction of First Appellate Authority:
The First Appellate Authority's jurisdiction to decide on the classification issue was challenged by the Revenue. They argued that the classification was not the subject matter of the original adjudication and, therefore, beyond the scope of the appeal. However, the Respondent maintained that challenging the classification was their right, especially when duty was paid voluntarily before the show cause notice was issued. The First Appellate Authority's decision in favor of the Respondent was upheld based on the grounds of correct classification and previous orders.

3. Applicability of Central Excise Act and Rules:
The case involved the interpretation and application of the Central Excise Act, 1944, and the Central Excise Rules, 2002. The dispute centered on whether the duty demand and classification challenge were in accordance with the provisions of the Act and Rules. The Respondent's argument for contesting the differential duty based on classification was supported by legal precedents and procedural requirements under the Act.

4. Validity of Classification Challenge:
The Respondent's challenge to the classification of goods manufactured and cleared in CKD/SKD condition was based on correspondence with authorities and previous orders. They argued that once the departmental adjudication confirmed the duty liability, they had the right to contest the classification issue. The Respondent's position was upheld by the First Appellate Authority and subsequently dismissed the Revenue's appeal.

5. Procedural Requirements for Assessment and Re-assessment:
The judgment clarified the procedural aspects related to assessment and re-assessment under the Central Excise Act, 1944. It emphasized that the assessment process includes deciding on the classification, valuation, and applicable rate of duty for goods. The Respondent's challenge to the classification did not alter the procedural requirements for assessment or re-assessment, and the provisions of the Act had to be followed for any changes in classification.

In conclusion, the Appellate Tribunal upheld the First Appellate Authority's decision regarding the classification of goods for duty payment, dismissing the Revenue's appeal. The judgment highlighted the importance of correct classification, procedural compliance, and the right of parties to challenge classification issues within the framework of the Central Excise Act and Rules.