2018 (5) TMI 532 - AT - Central Excise

Scope of SCN - Classification of note book cover / wrapper - whether classifiable under CETA 4820 or under CETA 4901? - Held that - Department has suo motu gone ahead attempting to change classification without issue of SCN. Further, even after the original authority had negatived department s change in classification, at the appeal stage before Commissioner (Appeals), yet another classification under CETA 4805 was proposed by the department - appeal dismissed - decided against Revenue.

Summary

Issues involved: Classification of note book cover/wrapper under Central Excise Tariff Act (CETA) 1985.

Analysis:
1. The issue in this appeal revolves around the classification of note book covers manufactured by M/s. Mahalaxmi Offset Printers. The items were initially classified under Chapter Heading 4820 of CETA 1985. However, the classification was revisited with permission from the Commissioner of Central Excise, Tirunelveli, without issuing a show cause notice to the appellant.

2. The original authority, after a personal hearing, reclassified the note book covers under Chapter Heading 4901 instead of 4820. The Department disagreed and appealed to the Commissioner (Appeals), suggesting a classification under CETA Heading 4805. The lower appellate authority upheld the original decision, prompting the Department to appeal to the forum.

3. During the hearing, the Department reiterated its grounds of appeal and cited a CESTAT decision in the case of B.K Paper Mills. On the other hand, the respondent's counsel argued that no show cause notice was issued for the change in classification. Additionally, they contended that proposing a new classification under CETA 4805 at the appeal stage was improper, making the entire proceeding by the Department unsustainable.

4. After considering both sides, the Bench found merit in the respondent's contentions. The Department attempted to change the classification without issuing a show cause notice and proposed a new classification at the appeal stage. The lower appellate authority thoroughly analyzed the applicability of Chapter headings 4820, 4901, and 4805, concluding that only Chapter Heading 4901 was appropriate. The Tribunal distinguished the cases cited by the Department, leading to the dismissal of the appeal due to lack of merit.