2005 (12) TMI 97 - SC - Central Excise

Demand of differential duty - Classification of goods - Classification under Heading 3926.90 or Heading 7616.90 - Held that - levy of excise duty on the basis of approved classification list is not a short levy and differential duty could not be recovered on the ground that the classification list had already been approved by the department - Pending the appeal, the law has been amended allowing the reopening of the approved classification list. The said amendment was brought out by Act 10 of 2000 with retrospective effect from 17-11-1980. The said amendment was challenged and ultimately this Court in ITW Signode India Limited v. Collector of Central Excise reported in 2003 (11) TMI 114 - SUPREME COURT OF INDIA upheld the validity of the Amending Act with retrospective effect stating therein that the law laid down in Cotspun Limited case (1999 (9) TMI 87 - SUPREME COURT OF INDIA) does not exist after the amendment and consequently the said decision is no longer operative and binding as a precedent - Matter remitted back - Decided in favour of Revneue.

Summary

Issues: Classification of product under Central Excise Tariff Act, 1985; Application of extended period of limitation; Validity of amendment allowing reopening of approved classification list.

In the present case, the assessee, a manufacturer of plastic flanged bobbins, classified its product under Heading 3926.90, which was approved by the department. However, a show cause notice was issued questioning the classification under Heading 7616.90 and demanding differential duty for a specific period. The assessee contended that there was no misrepresentation and objected to the department invoking the extended period of limitation. The adjudicating authority confirmed the demand, leading to an appeal before the Collector (Appeals) and subsequently before the Tribunal.

The Tribunal, after considering the merits, held that the product should be classified under sub-heading 7616.90 as other articles of aluminium due to the essential character provided by the aluminium tube. Regarding the objection on limitation, the Tribunal relied on a previous court decision to conclude that excise duty could not be levied based on an approved classification list. However, during the appeal process, a law was amended allowing the reopening of approved classification lists with retrospective effect. The validity of this amendment was challenged but upheld by the Supreme Court in a previous case.

Considering the change in law due to the amendment and the subsequent invalidation of the previous court decision relied upon by the Tribunal, the Supreme Court allowed the appeal. The Court directed the Tribunal to reexamine the case on merits in a detailed and reasoned order, as the previous decision was no longer valid. The appeal was allowed in the interest of justice, and the case was remitted back to the Tribunal for a fresh decision. The judgment highlighted the impact of legislative amendments on legal precedents and emphasized the need for a fresh assessment based on the current legal framework.