1980 (10) TMI 77 - CGOVT - Central Excise

Summary

Issues:
1. Classification of goods under the Central Excise Tariff
2. Applicability of time-bar rules in the case

Detailed Analysis:

1. Classification of Goods:
The case involved the classification of P.V.C. conveyor beltings under the Central Excise Tariff. The petitioners contended that their product should not be classified as cotton fabrics under Item 19(iii) of the Tariff. They argued that the product, manufactured using duty paid fabrics with a P.V.C. coating, was not marketed or known as cotton fabrics in commercial parlance. The petitioners emphasized that the end product, the conveyor belting, did not retain the identity of cotton fabrics after the manufacturing process. They supported their argument by referencing the test of commercial parlance set by the Supreme Court for classification purposes and a judgment from the High Court of Gujarat in a similar case. The lower authorities had classified the goods under Item 19(iii) and demanded differential duties, which the petitioners challenged through revision applications.

2. Applicability of Time-Bar Rules:
The petitioners also raised the issue of time-bar in the case. They argued that Rule 9(2) or Rule 10A, which deal with time-bar provisions, were not applicable to their situation. The petitioners claimed that they had cleared the goods with the knowledge of the Central Excise authorities and not clandestinely. Therefore, they asserted that Rule 10 of the Central Excise Rules, which pertains to time-bar in such cases, should be applied. They contended that the demands made by the authorities should be considered time-barred based on Rule 10.

The Judgment:
The Government, after considering the revision applications and submissions, found merit in the petitioners' arguments regarding the classification of the goods. They agreed that the P.V.C. beltings should not be classified as cotton fabrics under Item 19(iii) of the Central Excise Tariff. The Government concurred with the petitioners that the product, not marketed or recognized as cotton fabrics, did not fall under the said classification. Additionally, even if the extended meaning of cotton fabrics was considered, the end product lost its identity as cotton fabrics during the manufacturing process. As the lower authorities had ruled out classification under Item 18(2) and switched to Item 19(iii) for issuing demands, the Government classified the goods under Item 68 of the Tariff from a specific date. Consequently, the Government allowed the revision applications, setting aside the demands, without delving into the time-bar issue raised by the petitioners.