2004 (5) TMI 73 - SC - Central Excise

Fabrics - Appeal to Appellate Tribunal - Demand - Limitation - Suppression - Classification of goods

Summary

Issues: Classification of water-proofed fabrics under Central Excise Tariff Schedule; Invocation of extended period of limitation under proviso to Section 11A of Central Excise Act; Imposition of penalty under rule 173Q of Central Excise Rules.

Classification of Water-Proofed Fabrics:
The appeal concerned the classification of water-proofed fabrics under the Central Excise Tariff Schedule. The main issue was whether the fabrics should be classified under Heading 52.07 or Heading 59.06. The Tribunal held that the fabric manufactured by the appellants was impregnated with a visible coating, thus falling under Heading 59.06. The Tribunal analyzed various headings and concluded that fabrics with a visible coating should be assessed under Heading 59.06. The appellants' plea for re-testing their fabrics was rejected by the Tribunal, and this decision was upheld.

Invocation of Extended Period of Limitation:
Another issue was the invocation of the extended period of limitation under the proviso to Section 11A of the Central Excise Act. The appellants argued that they believed the fabrics were classifiable under Heading 52.07, and thus, there was no deliberate intention to suppress information. The Tribunal rejected this contention, stating that department officials were aware of the manufacturing process. The Supreme Court disagreed with the Tribunal's decision to invoke the extended period of limitation, as there was no evidence of deliberate suppression of information by the appellants.

Imposition of Penalty under Rule 173Q:
Regarding the imposition of a penalty under rule 173Q of the Central Excise Rules, the Tribunal's decision was maintained. The Tribunal had held that the fabric manufactured by the appellants was impregnated, and therefore, should be considered as fabric impregnated with materials other than those mentioned under Tariff 59.02 and 59.05. As this finding was based on factual analysis, the Supreme Court did not interfere with it. The appellants' contention that the fabric should not be classified under Heading 59.06 due to the visibility of the impregnation or coating was rejected.

Conclusion:
The Supreme Court partly allowed the appeals by setting aside the Tribunal's decision to invoke Section 11A of the Act. However, in all other respects, the Tribunal's order was maintained. The Court did not examine the contention regarding the charging of excise duty on the price of the product without treating it as cum-duty price, as this issue was not specifically raised before or considered by the Tribunal.