2017 (7) TMI 515 - AT - Central Excise

Manufacture of imitation jewellery - It was alleged that appellant failed to get registered with Central Excise Department and follow Central Excise procedures in spite of having been engaged in the manufacture of dutiable goods viz. Imitation Jewellery - effects of amendment - validity of SCN - Held that - the amendment that was brought in as on 13.05.2005 by insertion of words of base metal, whether or not plated with precious metal was not applicable for the clearance of chains of base metal on which there was no plating with precious metal for the period prior to 13.05.2005 therefore the demand for the period prior to 13.05.2005 is not sustainable - for the period from 13.05.2005 to 10.10.2005 neither the said Show Cause Notice nor the findings by Original Authority could establish that the chains of base metal on which there was no plating with precious metal and for which duty was demanded and confirmed were capable of being any small object of personal adornment. Therefore, the said Show Cause Notice even for the period 13.05.2005 to 10.10.2005 is not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Applicability of Central Excise duty on Imitation Jewellery.
2. Interpretation of Tariff Item No. 71179090.
3. Validity of Show Cause Notice dated 23.03.2006.
4. Assessment of duty for the period prior to 13.05.2005.
5. Assessment of duty for the period from 13.05.2005 to 10.10.2005.

Analysis:
1. The case involved the issue of the applicability of Central Excise duty on Imitation Jewellery manufactured by the appellant falling under Tariff Item No. 71179090. The appellant was alleged to have evaded duty by not registering with the Central Excise Department and not following procedures despite manufacturing dutiable goods. The Show Cause Notice detailed the duty rates for different periods and the alleged evasion amount.

2. The interpretation of Tariff Item No. 71179090 was crucial in determining the liability of the appellant. The Original Authority held that both plated and un-plated Imitation Jewellery fell under Chapter Heading 7117, supported by the definition of Imitation Jewellery. The appellant contested this interpretation, arguing that the duty liability changed with the amendment in 2005, and un-plated jewellery was not dutiable before that.

3. The validity of the Show Cause Notice dated 23.03.2006 was challenged by the appellant, claiming that the duty demand for the period prior to 13.05.2005 was not sustainable as the duty liability for un-plated jewellery did not exist before the mentioned date. The appellant argued that the Notice failed to establish that un-plated jewellery constituted objects of personal adornment as per the definition.

4. The assessment of duty for the period prior to 13.05.2005 was deemed unsustainable by the Tribunal. The amendment introducing duty on un-plated jewellery was not applicable retroactively, rendering the demand for that period invalid. The Tribunal agreed with the appellant's contention that the duty demand was not justified before the effective date of the amendment.

5. Similarly, the assessment of duty for the period from 13.05.2005 to 10.10.2005 was found to be unsupported by the Show Cause Notice or the findings of the Original Authority. The Tribunal concurred with the appellant's argument that the Notice did not establish that un-plated jewellery qualified as objects of personal adornment, as required for duty imposition. Consequently, the Tribunal ruled the Show Cause Notice for this period as unsustainable.

6. In conclusion, the Tribunal held the entire Show Cause Notice to be unsustainable, leading to the setting aside of the impugned Order-in-Original dated 25.07.2006, and allowing the appeal in favor of the appellant.