2018 (9) TMI 491 - AT - Central Excise

Classification of goods - mono cartons - whether classified under CETH 48192020 or under CETH 48173090 of Central Excise Tariff Act, 1985? - Extended period of limitation - demand alongwith Interest and Penalty - Held that - The HSN does not throw light for proper classification of the goods but on going through the Chapter entries, it is found that the appellant are manufacturing boxes and for boxes, the Entry No. 48192020 is for boxes, therefore, the entry which is more specific, the goods are to be classified in that entry. In that circumstances, the classification on the impugned goods under Chapter Heading of 48192020 of Central Excise Tariff Act, 1985 is appropriate. Time Limitation - Held that - As in this case on 1.11.2011, the appellant wrote a letter to the department for change of their classification and also filed ER-1 return accordingly. As the said fact was in the knowledge of the department since 2011, therefore, the show cause notice issued to the appellant on 2.1.2017 is barred by limitation. For the period within limitation the appellant is liable to pay duty along with interest - penalty not warranted as the action of the appellant was in the knowledge of the department itself - appeal allowed in part.

Summary

Issues:
Classification of goods under different tariff headings, imposition of duty, interest, and penalty based on extended period of limitation.

Analysis:
The appellant, engaged in manufacturing mono cartons, changed the classification of their product from CETH 48192020 to CETH 48173090. An investigation was conducted, leading to a show cause notice issued for the extended period of limitation, demanding duty, interest, and penalty. The appellant argued that the department was aware of the classification change since 2011, challenging the sustainability of the extended limitation period and imposition of penalty. They contended that the issue revolved around the classification of the product and claimed no mala fides for non-payment of duty.

The main contention was the classification of the goods, specifically boxes, under Chapter Heading No. 48173090 by the appellant, whereas the Revenue insisted on Chapter Heading 48192020. The Tribunal examined the Tariff Entries for clarity, highlighting that Entry No. 48192020 specifically covered boxes, leading to the classification of the goods under this entry. The HSN was not conclusive, but based on the Chapter entries, the Tribunal concluded in favor of the Revenue's classification under 48192020.

Regarding the limitation period, the Tribunal noted that the department was informed about the classification change in 2011, rendering the show cause notice issued in 2017 time-barred. Consequently, the appellant was held liable to pay duty with interest for the period within limitation, but no penalty was imposed due to the department's prior knowledge. The Tribunal also allowed the appellant to avail Cenvat credit on input and input services for the confirmed demand period.

In conclusion, the appeal was disposed of in favor of the appellant on the grounds of classification and limitation period, with directions for duty payment within the limitation period and permission to avail Cenvat credit on inputs and services without penalty.