2019 (5) TMI 446 - AT - Central Excise

Mis-declaration of goods - cotton and Polyester Cotton blended textile fabrics and yarn - Section 4(b) of Central Excise Act, 1944 - HELD THAT - Appellants have not been able to substantiate their claim that the demand of duty as determined by the Commissioner is not in accordance with the evidence available of record, nor have they been able to produce any document/ record to dispute the quantification of demand as made by the Commissioner. In absence of any tangible evidence in form of record or documents we do not find any merits in the submissions made by the appellants to this effect. Penalty under Rule 173Q, 9(1), 52(A), 210 and 226 of Central Excise Rules - HELD THAT - Since penalty was set aside by the earlier order of Tribunal we are not in position to uphold the imposition of penalty this time. Appeal allowed in part.

Summary

Issues Involved:
1. Classification of goods under the Central Excise Tariff.
2. Valuation of goods for duty purposes.
3. Allegations of clandestine removal of goods.
4. Imposition of penalty.

Issue-wise Detailed Analysis:

1. Classification of Goods:
The appellants, manufacturers of cotton and polyester cotton blended textile fabrics and yarn, classified their fusible interlining fabrics under Tariff Item 19i(b) of the First Schedule of the erstwhile Central Excise Tariff from 1982 to 28.02.1986, and under Chapter 52 (5206) or Chapter 55 post-1st March 1986. This classification was approved by the jurisdictional Assistant Commissioner. However, a show cause notice dated 05.08.1988 alleged misclassification, stating the correct classification should have been TI 19(iii) prior to 01.03.1986 and 5903 thereafter. The Tribunal, in its remand order, observed that the fabric could not be considered as coated fabric based on precedents from the High Courts of Allahabad and Gujarat, which stated that coating should cover virtually the entire surface.

2. Valuation of Goods:
The valuation issue revolved around the inclusion of additional considerations such as the cost of coating and amortized machine costs in the assessable value. The Commissioner, using Rule 5 of the Central Excise Valuation Rules, 1975, added notional charges of 10% of the cost of powder to the value of fabrics, arriving at a reasonable aggregate value. The Tribunal had earlier noted that the department had accepted no mutuality of interest between the appellants and M/s Mafatlal Apparel Mfg Co Ltd for the earlier period. The Commissioner reworked the duty payable to ?43,01,403/- for 1983-84 to 1986-87 and ?12,51,428/- for 1987-88 to 1988-89. The appellants failed to substantiate their claims regarding errors in the duty quantification.

3. Allegations of Clandestine Removal:
The show cause notice accused the appellants of clandestinely removing goods without payment of duty. The Tribunal, in its remand order, found merit in the appellants' contention that the goods were within the factory premises and their request for additional space was pending. The Tribunal set aside the confiscation and penalty imposed by the lower authority, emphasizing the need for fresh adjudication.

4. Imposition of Penalty:
The Commissioner initially imposed a penalty of ?50,000/- under various rules of the Central Excise Rules, 1944. This penalty was set aside by the Tribunal in its order dated 21st December 2005, which remanded the matter for quantification of duty. Despite this, the Commissioner re-imposed the same penalty in the remand proceedings. The Tribunal found no justification for re-imposing the penalty, given that it had been set aside earlier, and thus, set aside the penalty again.

Conclusion:
The Tribunal modified the impugned order by setting aside the penalty imposed by the Commissioner, while upholding the quantification of duty as determined by the Commissioner. The appeal was disposed of accordingly, with the order pronounced in the open court.