2017 (3) TMI 166 - AT - Central Excise

Natural justice - classification of Corespun Sewing Thread - classified under CETH 5606.00 by Revenue without giving any opportunity to assessee - Held that - Law is well settled that when a proceeding is ill founded denying the course of natural justice to the aggrieved, that is unsustainable - Revenue did not even go into detail to examine the character, nature as well as composition of such thread. In absence of any reason stated to the assesse to disturb the classification, the proceeding is devoid of merit - appeal allowed - decided in favor of appellant.

Summary

Issues: Classification of goods under Tariff headings 5401.01, 5606.00, and 5606.00 post-amendment

In this judgment by the Appellate Tribunal CESTAT CHENNAI, the issue revolved around the classification of goods manufactured by the appellant under different Tariff headings. The appellant contended that the goods were "Corespun Sewing Thread" under Tariff heading 5401.01, while the Revenue alleged that post-amendment, the goods should be classified under the new Tariff heading 5606.00. The department previously classified the goods under CETH 5606.00, which the appellant accepted after an appeal dismissal. However, the amendment to the law changed the classification, leading to a dispute.

The appellant argued that they were not given a proper notice and opportunity to defend their classification under Tariff heading 5401.01. The Revenue issued a show cause notice without questioning the character, composition, and nature of the goods, solely focusing on the change in classification. The appellant claimed that the impugned order should be set aside due to the lack of proper notice and hearing.

The Tribunal observed that both parties agreed on the previous classification under Tariff heading 5606.00. However, the Revenue's show cause notice lacked reasons for disputing the appellant's classification, denying them the opportunity to rebut the allegations. The impugned order failed to delve into the basis of the classification sought by the Revenue, violating the principles of natural justice.

Upon examination, it was found that the goods were indeed corespun sewing thread, and the Revenue did not adequately assess the character, nature, and composition of the goods before disputing the classification. As the Revenue failed to provide reasons for disturbing the classification and the proceeding lacked merit, the impugned order was set aside. The Tribunal relied on the precedent set by the Apex Court in the case of Rajasthan Spinning and Weaving Mills Ltd. Vs. Commissioner to allow the appeals in favor of the appellant.