2007 (1) TMI 186 - SC - Central Excise

Whether the product knitted fabric and cotton containing elastomaric yarn of width exceeding 30 cm. were, classifiable under Heading 6002.30 or under 6002.92? Held that - As the company in question and its assets/properties have already been sold and there is nothing which can be recovered by the revenue, we put an end to this litigation leaving the question of law open.

Summary

Issues:
1. Classification of knitted fabric and cotton containing elastomeric yarn under Heading 6002.30 or 6002.92.
2. Requirement of Central Excise Registration Certification under Rule 174 of the Central Excise Rules, 1944.
3. Imposition of Central Excise duty and penalty under Section 11AC of the Central Excise Act, 1944.
4. Appeal against the order of the Central Excise and Gold (Control) Appellate Tribunal.
5. Involvement of the official liquidator in the case post winding up of the company.

Analysis:
1. The main issue in this case was the classification of the product - knitted fabric and cotton containing elastomeric yarn - under Heading 6002.30 or 6002.92. The revenue contended for classification under 6002.30, but the Tribunal ruled in favor of the assessee. The Central Excise Officers confirmed the presence of elastomeric yarn in the fabric, leading to a demand for duty and penalties on the assessee. The Tribunal's decision was based on the merits of the case, without considering the extended period of limitation under Section 11A of the Act.

2. Another issue raised was the failure of the assessee to obtain Central Excise Registration Certification as required under Rule 174 of the Central Excise Rules, 1944. The assessing authority imposed penalties for contravening Rule 174, in addition to the demand for duty and penalties under Section 11AC of the Act. The Tribunal's acceptance of the assessee's appeal led to the Revenue filing further appeals before the Supreme Court.

3. The assessing authority confirmed the demand for duty and imposed penalties under Section 11AC of the Central Excise Act, 1944. The penalties were imposed for contravention of Rule 174 of the Central Excise Rules, in addition to the duty demand. The Tribunal's decision to accept the assessee's appeal against these penalties prompted the Revenue to file appeals before the Supreme Court.

4. The case proceeded to the Supreme Court as the Revenue appealed against the Tribunal's decision in favor of the assessee. The Supreme Court noted the winding up of the company and the involvement of the official liquidator post the company's sale. With no assets left for recovery by the revenue, the Supreme Court disposed of the appeals, leaving the legal question open for future cases.

5. Following the winding up of the company, the official liquidator became involved in the case. The official liquidator handled the sale of the company's assets and properties, with the proceeds used to pay off creditors. The Supreme Court acknowledged the actions taken by the official liquidator and concluded the appeals as there were no assets left for recovery by the revenue, thereby ending the litigation.