2018 (10) TMI 1249 - AT - Central Excise

Classification of goods - flexible plastic hollow corrugated board - whether classified under CETH 3920.39 or CETH 3916 of the Schedule to the Central Excise Tariff Act, 1985? - Benefit of N/N. 15/94-CE dated 1st March 1994 and N/N. 4/97-CE dated 1st March 1997 - Scope of SCN - Validity of proceedings. Held that - The show-cause notice proposed the classification as 3020.39 of the Schedule to the Central Excise Tariff Act, 1985 instead of 3926.90 which would have entitled them to the benefit of notification no.15/94-CE dated 1st March 1994 at serial no.21. The proposed classification of goods under heading no. 3920.39 of Schedule to Central Excise Tariff Act, 1985 would also have denied them to the benefit of the said exemption. The classification of the said goods under heading no.3916 of the Schedule to the Central Excise Tariff Act, 1985 has attained finality which cannot be re-opened. Consequently, the proposal in show-cause notice to subject goods to the burden of duty, as well as fiscal deterrent, from a revised classification is beyond the scope of proceedings under Central Excise Act, 1944. The proceedings for the proposed classification being without authority of law, the denial of exemption notification is, in consequence, without authority of law - appeal allowed - decided in favor of appellant.

Summary

Issues: Classification of goods under Central Excise Tariff Act, 1985, applicability of exemption notifications, validity of proposed classification in show-cause notice, dispute regarding denial of exemption notification, correct classification determination, duty liability based on classification, relook at facts regarding dutiability, issue of limitation, authority of proposed classification in show-cause notice.

Classification of Goods:
The appeal involved a dispute over the classification of 'flexible plastic hollow corrugated board' under the Central Excise Tariff Act, 1985. The Commissioner of Central Excise, Mumbai-V, had classified the goods under heading no.3920.39 and imposed duty and penalties. The appellant contended that a previous Tribunal decision had classified similar goods under heading no.3916, which was upheld by the Supreme Court. The Authorized Representative argued that the exemption notification was limited to plastic only, and the goods did not qualify for the exemption under heading no.3916. The Tribunal referred to a case involving flock printing fabric to emphasize the importance of correct classification even if not mentioned in the show-cause notice. The Tribunal remanded the case to determine the correct classification under Chapter 52/54/55 and assess dutiability based on the method of flock printing.

Validity of Proposed Classification:
The show-cause notice proposed a different classification from the one previously determined for the goods, which would have denied the appellant the benefit of exemption notifications. The Tribunal held that the final classification under heading no.3916 could not be reopened, and proposing a revised classification in the show-cause notice was beyond the scope of the proceedings under the Central Excise Act, 1944. As a result, the denial of the exemption notification based on the proposed classification was deemed unauthorized, leading to the setting aside of the impugned order and allowing the appeals.

Authority of Proposed Classification in Show-Cause Notice:
The Tribunal emphasized that the proposed classification in the show-cause notice, which differed from the final classification, lacked authority of law. Consequently, the denial of the exemption notification based on this unauthorized proposed classification was deemed invalid. The Tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeals.

Conclusion:
The Tribunal's judgment focused on the correct classification of goods under the Central Excise Tariff Act, 1985, the applicability of exemption notifications, and the validity of the proposed classification in the show-cause notice. By emphasizing the importance of accurate classification and the limitations on revisiting final classifications, the Tribunal remanded the case for a fresh determination of the correct classification and dutiability, while also highlighting the issue of limitation. Ultimately, the Tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeals.