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2019 (4) TMI 172 - AT - Central ExciseClassification of goods - product CG 005 cleared by the Appellant - whether classifiable under CSH 27090000 attracting Nil rate of duty or classification under CSH 27101990 of CETA 1985 attracting duty at 16%? - scope of SCN - Held that - Neither the Dy.Chief Chemist s report nor the report of Director CRCL, New Delhi are having any consistency nor the findings of the Adjudicating Commissioner is in line with the proposal in the SCN. Besides, the report obtained from Director, CRCL dt.28.10.2009 and 03.12.2009 obtained during the course of personal hearing were not subjected to any cross examination even though requested by the Appellant. Since the classification of the product rests on the analysis of the sample by respective chemical examiners, their conflicting view do not lend support to the findings of the Commissioner in arriving at a conclusion that the de-hydrated crude oil after process of distillation, which undisputedly remains at the bottom, is classifiable under CSH 2710.1990, a classification which is different from the proposed classification in the SCN i.e. fuel oil under CSH 27101950 of CETA, 1985. Scope of SCN - Held that - The learned Commissioner has travelled beyond the scope of SCN and relied upon material which are conflicting in nature and without any further verification or re-test and hence the classification arrived at by the learned Commissioner cannot be sustained. The classification under a different sub-heading to the one proposed in the Show Cause Notice is not permissible. Appeal allowed - decided in favor of appellant.
Issues Involved:
Classification of product GC-005 under CSH 27090000 or CSH 27101990 of CETA 1985. Violation of natural justice due to denial of cross-examination of chemical examiner. Scope of Show Cause Notice (SCN) and permissible classification by Commissioner. Consistency in chemical test reports and classification of the product. Applicability of relevant legal judgments in determining classification. Issue 1: Classification of product GC-005 The appeal involves determining whether the product GC-005 is classifiable under CSH 27090000 attracting Nil rate of duty or under CSH 27101990 of CETA 1985 attracting duty at 16%. The Appellant argued that the product is crude oil itself, classified under CSH 2709.0000, while the Revenue relied on test reports to classify it under CSH 2710. The Adjudicating Commissioner classified it under CSH 27101990, differing from the proposed classification in the SCN. The conflicting views of chemical examiners and lack of cross-examination led to the conclusion that the classification by the Commissioner was not sustainable. Issue 2: Violation of Natural Justice The Appellant contended that the denial of cross-examination of the chemical examiner resulted in a violation of natural justice. They argued that conflicting reports and the Commissioner's reliance on such reports without further verification or re-testing were unjust. The Appellant sought to establish the correct classification through cross-examination, which was denied, impacting the fairness of the adjudication process. Issue 3: Scope of Show Cause Notice and Permissible Classification The judgment highlighted that the Commissioner's classification under a different sub-heading than proposed in the SCN was impermissible. Citing legal precedents, including the Precision Rubber Industries case, it emphasized that the classification must align with the SCN. The judgment underscored the importance of adhering to the scope of the SCN and not deviating from the proposed classification without issuing a fresh notice to the assessee. Issue 4: Consistency in Test Reports and Classification The inconsistency between the test reports of chemical examiners and the Commissioner's classification raised doubts about the accuracy of the classification. The judgment noted that conflicting views and lack of cross-examination undermined the reliability of the classification under CSH 27101990. The failure to verify the reports and the deviation from the proposed classification in the SCN rendered the Commissioner's decision unsustainable. Issue 5: Applicability of Legal Judgments The Appellant referenced various legal judgments to support their argument regarding classification and adherence to the scope of the SCN. The judgment highlighted the relevance of legal precedents in guiding the classification process and ensuring procedural fairness. The Precision Rubber Industries case was particularly cited to emphasize the importance of aligning the classification with the SCN and avoiding arbitrary deviations. In conclusion, the judgment set aside the impugned order, allowing the appeal with consequential relief, emphasizing the need for consistency in classification, adherence to the scope of the SCN, and upholding principles of natural justice in the adjudication process.
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