2018 (12) TMI 11 - AT - Central Excise

Time limitation - no malafide intent - Classification of goods - carved articles of Marbles - whether classified under CETH 2504.90 or under CETH 6802 2190? - Held that - It is clear that the issue was highly debatable as the adjudicating authority by analyzing the tariff entries given a detail finding and dropped the classification claim by the appellant. Subsequently, the Commissioner (Appeals) on the basis of the tribunal decision in the case of Nitco Tiles Ltd. 2003 (10) TMI 467 - CESTAT, MUMBAI reversed the order. These proceedings itself shows that the issue involved was not free from doubt, therefore, malafide intention cannot be alleged against the appellant. Also, the department itself accepted in the year 1997 that product Carved Marble Product is classifiable under Chapter heading 2504.90. The facts regarding the claim of classification under 2504.90 and exemption there on was well within the knowledge of the department, therefore, nothing prevented the department from issuing the SCN within the normal period which department failed to do so - the appellant had neither any malafide intention nor they have suppressed any fact from the department. Accordingly, the SCN issued after almost six years of the period for which demand pertains is clearly time barred. Appeal allowed - decided in favor of appellant.

Summary

Issues involved: Classification of carved marble articles under CETH 2504.90 or 6807 for the period from 01.02.2002 to 28.02.2005; Time bar for issuing SCN; Allegation of malafide intention against the appellant.

Classification Issue Analysis: The dispute centered around whether carved marble articles should be classified under CETH 2504.90 or 6807 during the period in question. The Additional Commissioner accepted the appellant's classification under CETH 2504.90, dropping a significant demand. However, the Revenue's appeal before the Commissioner (Appeals) led to the demand being confirmed and penalties imposed. The appellant argued that the issue was a matter of grave interpretation of the law due to the change in classification post-2005. They contended that there was no suppression of facts, citing historical documents where they consistently declared the classification under 2504.90. The Tribunal noted the debatable nature of the issue and found in favor of the appellant, emphasizing the absence of malafide intention.

Time Bar Issue Analysis: The appellant raised the issue of the demand being time-barred, as the SCN was issued almost six years after the relevant period without any alleged suppression of facts. The Tribunal agreed, highlighting the appellant's consistent declaration of the classification under 2504.90, which was well-known to the department. The Tribunal concluded that the delay in issuing the SCN rendered it time-barred, setting aside the impugned order solely on this ground without delving into the case's merits.

Malafide Intention Analysis: The Tribunal considered the appellant's actions and historical declarations, finding no evidence of malafide intention or suppression of facts. The appellant's consistent classification under 2504.90, supported by documentation and historical records, indicated a bona fide belief in their classification approach. The Tribunal's decision to set aside the order based on the time bar implicitly rejected any allegations of malafide intention against the appellant.

In conclusion, the Appellate Tribunal CESTAT Ahmedabad ruled in favor of the appellant, primarily on the grounds of the demand being time-barred due to the absence of malafide intention and the debatable nature of the classification issue. The judgment emphasized the importance of historical declarations and the department's knowledge of the appellant's classification approach in determining the time bar for issuing the SCN.