2019 (6) TMI 679 - AT - Central Excise

Re-classification of goods - laminated and non-woven coated fabrics - demand alongwith Interest and penalty - issue of classification disputed by erstwhile partner of dissolved firm - HELD THAT - The duty liability has been discharged in full. With the partnership firm having been dissolved, an erstwhile partner, in the person of the present appellant, cannot insist that a classification which is not in dispute before us, or was not agitated before the first appellate authority, be taken up for resolution. The classification and, consequent determination of differential duty, will have to be taken as a given. Demand of interest - HELD THAT - The demand pertains to the period prior to September 1996 and, from circular no. 655/46/2002-CX dated 26th June 2002 of Central Board of Excise Customs, it would appear that interest under section 11AB of Central Excise Act, 1944 is not payable on clearances effected by the assessee. The interest liability is therefore non-existent. Penalty - HELD THAT - The final classification was not that which was proposed in the show cause notice but one which had been decided by higher appellate authorities in different proceedings. In these circumstances, the invoking of section 11AC of Central Excise Act, 1944 does not appear to be proper. The penalty confirmed in the impugned order is, therefore, set aside. Appeal disposed off.

Issues:
1. Classification of goods under Central Excise Tariff Act, 1985
2. Reduction of duty liability
3. Dissolution of partnership firm and impact on liability
4. Interest liability under section 11AB of Central Excise Act, 1944
5. Imposition of penalty under section 11AC of Central Excise Act, 1944

Classification of goods under Central Excise Tariff Act, 1985:
The appeal involved a dispute regarding the classification of 'laminated' and 'non-woven' coated fabrics. The appellant sought classification under heading no. 5903 99, while the jurisdictional central excise authorities proposed heading no. 5603.00. However, the original authority decided on heading no. 8546 00 based on a judicial order. The duty liability was reduced to &8377; 97,749 from the initial differential duty amount, considering the observations of the competent reviewing authority and grounds of appeal by the Revenue.

Reduction of duty liability:
The duty liability was reduced to &8377; 97,749 from the initial amount after considering the observations of the competent reviewing authority and grounds of appeal by the Revenue. The reduction in duty liability had a corresponding effect on interest and penalty imposed, leading to modifications in the impugned order.

Dissolution of partnership firm and impact on liability:
The partnership firm, in which the present appellant was a partner, was dissolved before the completion of adjudication proceedings by the original authority. With the dissolution of the firm, the liability for the differential duty was attributed to the present appellant, who could not contest the classification decided by the higher appellate authorities. The classification and duty determination were considered final due to the dissolution of the partnership firm.

Interest liability under section 11AB of Central Excise Act, 1944:
The demand for interest pertained to a period before September 1996. Referring to circular no. 655/46/2002-CX, it was established that interest under section 11AB of the Central Excise Act, 1944 was not payable on clearances effected by the assessee. Therefore, the interest liability was deemed non-existent in this case.

Imposition of penalty under section 11AC of Central Excise Act, 1944:
The final classification of goods differed from the one proposed in the show cause notice, as it had been decided by higher appellate authorities in separate proceedings. Due to this discrepancy, the imposition of penalty under section 11AC of the Central Excise Act, 1944 was deemed improper. Consequently, the penalty confirmed in the impugned order was set aside, resulting in modifications to the confirmation of interest and penalty.

In conclusion, the appeal was disposed of with modifications to the confirmation of interest and the imposition of penalty, considering the various aspects of the case, including classification, duty liability, partnership firm dissolution, interest liability, and penalty imposition.

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