2005 (3) TMI 118 - SC - Central Excise

Demand - Change in classification - Collector (Appeals) set aside the demand on the ground that the Board s Circular made it clear that these goods were classifiable under Tariff Item 4008.29 and the goods were to be cleared at nil rate of duty - Tribunal upheld duty demand - Held that - The classification list had been revised under protest. Once the Board clarified that these goods were classifiable under Tariff Item 4008.29, the Appellant become entitled to clear the goods under that Tariff Item. At the highest, the Appellants could have been penalised for not filing a classification list under Rule 173. No duty could have been demanded from them under Rule 9(2) - Decided in favour of assessee.

Summary

Issues: Classification of goods under Tariff Item, Duty demand for not filing a fresh classification list, Appeal against Tribunal's decision

In this case, the Appellants, who are manufacturers of Grooved Rubber Sole Plates, initially classified their products under Tariff Item 4008.29. However, the Respondent insisted on classifying the goods under Tariff Item No. 4016.99. Eventually, the Appellants agreed to classify the goods under Tariff Item 4019.99 under protest but claimed the benefit of Circular No. 175/86. Subsequently, a clarificatory circular was issued by the Board stating that the goods were classifiable under Tariff Item 4008.29. The Appellants then started clearing their goods under Tariff Item 4008.29 without filing a fresh classification list until November 1992.

A show cause notice was issued to the Appellants for clearing the goods without filing a fresh classification list, demanding duty. The demand was confirmed, but the Collector (Appeals) set it aside based on the Board's Circular, clarifying that the goods were to be cleared at nil rate of duty under Tariff Item 4008.29. The Respondent appealed to the Tribunal, which held that since a fresh classification list was not filed, the Appellants were liable to pay the duty as demanded.

The Supreme Court, upon review, found that the Appellants had revised the classification list under protest and were entitled to clear the goods under Tariff Item 4008.29 following the Board's clarification. The Court noted that the Appellants could have been penalized for not filing a classification list under Rule 173 but could not be demanded duty under Rule 9(2). Therefore, the Court set aside the Tribunal's judgment and restored the Collector (Appeals) order, allowing the appeal with no order as to costs.