1991 (1) TMI 153 - HC - Central Excise

Summary

Issues Involved:
1. Classification of plastic sets under Tariff Item No. 15A or Tariff Item No. 68.
2. Recovery of excise duty for the period prior to six months from the date of the notice.

Issue-wise Detailed Analysis:

1. Classification of Plastic Sets under Tariff Item No. 15A or Tariff Item No. 68:

The petitioner, engaged in manufacturing plastic administration sets, blood administration sets, blood donor sets, tubes, and catheters, argued that these products should be classified under Tariff Item No. 15A(2) as articles made from plastic, which were exempt from excise duty per Exemption Notification No. 68/71 dated May 29, 1971. However, the introduction of Tariff Item No. 68 in 1975, a residuary entry for goods not elsewhere specified, led the Superintendent of Central Excise to doubt this classification. The department, after examining samples and gathering information, concluded that the plastic administration sets were composite articles not wholly made of plastic material, thus falling under Tariff Item No. 68.

The court noted that the petitioner and the department initially treated these goods as falling under Tariff Item No. 15A until 1975. However, the court held that the department's understanding or conduct, even for a long period, cannot amount to estoppel against the operation of a statute. The court emphasized that the administration sets consisted of plastic tubes fitted with a catheter, metal needle, and aluminium clamp, making them composite articles with a distinct name and use, not merely articles of plastic. Therefore, they were rightly classified under Tariff Item No. 68.

2. Recovery of Excise Duty for the Period Prior to Six Months from the Date of the Notice:

The petitioner contended that even if the goods were classifiable under Tariff Item No. 68, the department could not recover excise duty for the period prior to six months from the date of the notice, as there was no evasion of duty by fraud, collusion, wilful mis-statement, or suppression of facts. The court accepted this contention, noting that the petitioner's factory was regularly inspected by excise officers, and the department was aware of the manufacturing processes and products. The court found no evidence of fraud or suppression of facts by the petitioner. The show cause notice did not allege any fraud or breach of rules by the petitioner.

The court concluded that the proviso to Rule 10 was not applicable in this case and declared that the department could recover duty only for a period of six months prior to the date of the notice, not from March 1, 1975. The rule was made absolute accordingly, with no order as to costs, and the ad interim relief granted by the court was vacated.