2019 (9) TMI 18 - AT - Central Excise

SSI exemption - change of classification of the products - job-work - N/N. 08/2003-CE dated 01.03.2003 - the learned Commissioner (Appeals) had given his findings on classification primarily on the ground that Heading 5911 is a residual entry and covers goods which cannot be classified under any of the Headings of Section XI of the Central Excise Tariff Act, 1985 - HELD THAT - The said Heading covers textile products and articles for technical use which would indicate that woven fabrics should be subjected to some process to convert fabric into textile product and articles for technical use, which was found absent in the case of the appellant s product. Rejecting the contention of the appellant that it had earlier intimated to the department regarding manufacturing of woven fabrics of Synthetic Filament Yarn falling under Chapter 5406 vide its letter dated 29th April 2004 and the certificate issued by the buyers concerning use of woven fabrics for industrial application, he opined that nowhere appellant had pleaded that Synthetic Woven Fabrics were intended for industrial purpose and basing on the statement of witness, primarily on the statement of proprietor Mr. Hrishikesh Mimani that they had mistakenly classified the product under Chapter 59 instead of Chapter 54, he confirmed the findings in the Order-in-Original that SSI exemption was not available to the appellant for which appropriate duty demand along with interest was made. Invocation of extended period of limitation - period from April, 2003 to July, 2004 - HELD THAT - Admittedly show-cause notice was issued on 17.04.2006 which was not within the normal period prescribed at the relevant time and the learned Commissioner (Appeals) had confirmed the justification of invocation of extended period by observing that proprietor had admitted that they had misclassified the product and therefore a clear case of suppression was established against the appellant, contrary to his own observation and acknowledgement in the order itself that vide its letter dated 29.04.2004 appellant had informed to the department that it was claiming benefit of exemption Notification No. 08/2003-CE dated 01.03.2003 and was engaged in the manufacture of woven fabrics of synthetic filament yarn falling under Chapter 5911 - no case of suppression of facts to evade duty is made out to justify imposition of duty liability against the appellant to invoke extended period though no error is noticed in the Order-in-Appeal in respect of classification of the product cleared by the appellant. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Denial of SSI exemption based on classification of products under Central Excise Tariff Act; Application of extended period for duty demand; Eligibility for CENVAT credit; Suppression of facts to evade duty.

Analysis:
The appellant contested the denial of SSI exemption by the Commissioner (Appeals) based on the classification of products, arguing that the products were meant for industrial and technical use, falling under Chapter Heading 59.11. The appellant highlighted the Board's Circular and Chapter note, emphasizing that the products were intended for industrial purposes, supported by buyers' certificates. The appellant also claimed eligibility for CENVAT credit under specific rules, aiming to reduce the duty demand significantly. Additionally, the appellant argued that the demand was time-barred due to lack of specific allegations of suppression, as they had informed the department about the classification and exemption claim.

The respondent, represented by the Authorized Representative, supported the Commissioner (Appeals)' decision, citing previous judgments to assert that the processed fabrics should be classified under Chapter 54 instead of Chapter 59. The respondent sought no interference in the Commissioner's order, maintaining the classification under Chapter 54 for duty imposition.

Upon thorough examination, the Tribunal noted the Commissioner (Appeals)' classification based on Heading 5911 as a residual entry for goods not classifiable elsewhere under the Central Excise Tariff Act. The Tribunal upheld the findings that the products lacked the necessary processing to qualify under Heading 5911, thereby confirming the denial of SSI exemption. The Tribunal also addressed the appellant's claims regarding CENVAT credit eligibility and revaluation of assessable value, referencing relevant legal precedents.

Regarding the invocation of the extended period for duty demand, the Tribunal analyzed the facts and statements provided by the appellant. Despite the Commissioner (Appeals) justifying the extended period due to admitted misclassification, the Tribunal concluded that the appellant's actions did not amount to suppression of facts to evade duty, as informing the department about the classification and exemption claim did not constitute suppression. The Tribunal, therefore, allowed the appeal, setting aside the Commissioner (Appeals)' order.

In conclusion, the Tribunal's judgment revolved around the classification of products, eligibility for exemptions and credits, and the application of the extended period for duty demand, emphasizing the importance of factual evidence and legal interpretations in determining duty liabilities and exemptions.