2020 (2) TMI 1163 - AT - Central Excise

Benefit of reduced rate of duty - N/N. 10/2006-CE dated 01.03.2006 - Denial of benefit on the ground that paver blocks are different from building blocks - HELD THAT - Going by the show-cause notice, it would appear that an artificial distinction is made by the respondent-department between hollow and solid concrete blocks and paver blocks by taking reference from Indian Standard Specifications and paver blocks were excluded from the purview of the notification on the ground that those were primarily used in the parking area of a building, road junctions, warehouse terminal, foot-path etc. and not used as concrete mason building blocks, for which the same is distinguishable from concrete blocks and this forms the basis of the duty demand. A close scrutiny of Notification No. 10/2006-CE, would reveal that all goods covered under Chapter Heading 68 except Heading 6804, 6805, 6811, 6812, 6813 are covered in the said notification for concessional rate of duty @ 8% and not 16% - Therefore, even if it is accepted that appellant had classified the same under Chapter Heading 68101990 and puts the same in others category, still the same is covered under Notification No. 10/2006-CE for reduced rate of duty and comparison of the same with solid and hollow building blocks by the Commissioner (Appeals) in denying such concessional rate of duty appears to be irregular. Extended period of limitation - HELD THAT - The appellant company has placed it on record vide letter dated 01.04.2007 that on the advised of its Chartered Accountant, they have reduced payment of Excise duty from 16% to 8% as they are covered under the said notification. Therefore, invocation of extended period on the ground that said letter was replied back by the respondent-department with a negative note, without its reference been cited in the order of the Commissioner (Appeals), cannot be said to be in conformity to the statutory provisions for invocation of extended period also. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Denial of reduced rate of duty under Notification No. 10/2006-CE to the appellant for paver blocks, classification under Chapter Heading 6810, duty demand confirmation, penalty imposition on appellant company and its AGM.

Analysis:

1. Denial of Reduced Rate of Duty:
The appellant, engaged in manufacturing paver blocks under Chapter Heading 6810, sought the reduced rate of duty under Notification No. 10/2006-CE. The dispute arose when the preventive officer objected to the clearance at a reduced rate of duty. The Commissioner (Appeals) confirmed a duty demand of ?12,48,698 along with penalties. The appellant contended that paver blocks are eligible for exemption under the said notification, citing precedents. The Tribunal observed that all goods under Chapter Heading 68, except specific exclusions, are covered under the notification for a concessional rate of duty. The Commissioner's denial based on classification and usage distinctions was deemed irregular.

2. Classification Dispute and Penalty Imposition:
The appellant's classification under Chapter Heading 68101990 was challenged by the Commissioner, leading to the denial of the concessional rate of duty. The appellant argued that the classification issue was not raised in the show-cause notice, and the extended period for penalty imposition was unjustified. The Tribunal noted that the appellant had voluntarily informed the department about availing the benefit of the notification. The invocation of the extended period without proper reference in the order was considered non-compliant with statutory provisions.

3. Tribunal's Decision:
After hearing both parties and examining the case records, the Tribunal found that the appellant's products fell within the ambit of Notification No. 10/2006-CE for the reduced rate of duty. The distinction made by the department between paver blocks and building blocks was deemed artificial. The Tribunal set aside the Commissioner of Central Excise (Appeals) order, allowing both appeals in favor of the appellant.

In conclusion, the Tribunal's decision favored the appellant, emphasizing that the classification dispute and denial of the reduced rate of duty were unfounded. The judgment highlighted the importance of statutory provisions and precedents in determining excise duty benefits, ultimately leading to the setting aside of the Commissioner's order.