2006 (5) TMI 1 - SC - Central Excise

Central Excise Classification (1) Difference between Polished ceramic tiles and Glazed tiles (2) Limitation Demand

Summary

Issues Involved:
Classification of manufactured tiles and consequential duty liability, applicability of limitation under Section 11-A of the Central Excise Act.

Classification of Tiles:
The appeal involved a dispute regarding the classification of ceramic tiles manufactured by the appellant. Initially, the tiles were classified under heading 6901.90, but the Department later contended that polished tiles should be classified under heading 6906.10 with a higher excise duty rate. The Commissioner held the tiles to be glazed tiles under heading 6901.10, imposing duty, interest, penalty, and ordering confiscation of assets. The Tribunal, however, ruled in favor of the assessee, stating that the tiles were not glazed tiles based on the absence of a coating of glaze material. The Supreme Court agreed, emphasizing the distinction between glazing and polishing, citing industry standards and expert definitions. The Court concluded that the tiles did not qualify as glazed tiles, supporting the Tribunal's decision.

Limitation under Section 11-A:
The Commissioner had invoked Section 11-A to recover differential duty, interest, and penalty, contending that the assessee's initial classification was incorrect. The Tribunal, however, found no suppression of facts, thus rejecting the extended period of limitation under the proviso to Section 11-A. The Supreme Court concurred, citing a previous Supreme Court judgment that required positive actions beyond mere inaction for the extended period to apply. As the Department had full knowledge of the manufacturing process, there was no suppression. The Court upheld the Tribunal's decision on the limitation issue, dismissing the appeal and emphasizing that the assessee did not manufacture glazed tiles.

In conclusion, the Supreme Court upheld the Tribunal's decision, ruling in favor of the assessee on both the classification of tiles and the limitation issue. The Court emphasized the distinction between glazed and polished tiles, citing industry standards and expert definitions to support the finding that the tiles in question were not glazed. Additionally, the Court agreed with the Tribunal that there was no suppression of facts to warrant the application of the extended limitation period under Section 11-A, leading to the dismissal of the appeal.