2017 (3) TMI 1505 - AT - Central Excise

Classification of goods - blanks for components out of CR/HR sheets/coils of iron and steel - whether the Blanks manufactured by the appellant are classifiable under Chapter 72 or CETH 8708/8714 or not? - Held that - Blanks are metal sheets cut to the specification for use in further manufacture of products. The Revenue has assumed the character of products only after manufacturing process are carried out but in case these blanks are not useable or cannot be said as motor vehicle parts. They would become only blanks/motor vehicle part after various process carried out therefore it cannot be said that these blanks are classifiable under CETH 8708/8714 - Same view has been taken by this Tribunal in the case of Colts Auto Pvt. Ltd. Vs. CCE New Delhi 1998 (9) TMI 229 - CEGAT NEW DELHI - As the Blanks in question cannot be used as part of the motor vehicle part and they are required to be further processing which has been done by the buyers of the goods. In that circumstances the appellant has correctly classified the said goods under Chapter 72 of the CETA. Extended period of limitation - Held that - the appellant has clearly stated in their ER-1 returns indicating the clearance of Blanks after classifying under Chapter 72 of CETA that fact has been admitted by the Revenue therefore extended period of limitation is not invokable. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
Classification of manufactured blanks under Chapter 72 or CETH 8708/8714, Time limitation for demand of excise duty.

Analysis:
1. Classification Issue:
The appellant, engaged in manufacturing blanks for components out of CR/HR sheets/coils, classified them under Chapter 72 and paid central excise duty at 8% or 12%. However, the department contended that the blanks should be classified under CETH 8708/8714, chargeable to 16% duty. The Ld. Commissioner upheld this view, imposing duty, interest, and penalty on the appellant. The appellant argued that the demand was time-barred, citing precedents and circulars to support their classification under Chapter 72. The Tribunal analyzed the manufacturing process of the blanks and post-supply processes, concluding that the blanks were not usable motor vehicle parts until further processing. Referring to previous judgments, including Colts Auto Pvt. Ltd. case, the Tribunal held that the blanks were correctly classified under Chapter 72, as admitted by the appellant in their ER-1 returns.

2. Time Limitation Issue:
The appellant contended that the demand was time-barred as the department had knowledge of the classification facts, and the Show Cause Notice was issued after the extended period of limitation. The Tribunal found merit in this argument, noting that the appellant's ER-1 returns clearly indicated the classification under Chapter 72, which was acknowledged by the Revenue. As the entire demand fell within the extended limitation period, the Tribunal held that the demand was not sustainable due to being time-barred. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief.

In conclusion, the Tribunal ruled in favor of the appellant, holding that the blanks were correctly classified under Chapter 72 and that the demand for excise duty was time-barred. The judgment emphasized the importance of accurate classification and timely enforcement actions in excise duty matters, providing clarity on the classification of manufactured goods and the applicability of time limitations in such cases.