2000 (11) TMI 165 - AT - Central Excise

Summary

Issues:
- Eligibility for concessional rate of duty under Notification No. 63/87-C.E.
- Correctness of order-in-original No. 416/CEX/93
- Dispute regarding show cause notice and limitation
- Withdrawal of proceedings by Collector of Central Excise and Customs
- Entitlement to claim benefit of Notification No. 63/87-C.E.
- Interpretation of the notification and relevant entry
- Duty payable on finished goods under Tariff sub-heading 5903.19
- Base fabric classification and duty calculation
- Liability for duty payment on finished products
- Stand of the Revenue on base fabric classification and duty calculation

Analysis:

The case involves a dispute over the eligibility for a concessional rate of duty under Notification No. 63/87-C.E. The manufacturer, engaged in the production of impregnated textiles, claimed the concessional rate of duty, which was challenged by the Revenue. The Revenue contended that the manufacturer wrongly availed the concessional rate by using knitted cotton fabrics falling under a different chapter than required by the notification. A duty amount was claimed by the Revenue based on this discrepancy.

The manufacturer disputed the claims made by the department, asserting that there was no suppression of material facts and that the show cause notice issued after a significant period was barred by limitation. The Collector of Central Excise and Customs, Aurangabad, in the impugned order, withdrew all proceedings initiated based on the show cause notice, stating that the duty paid by the manufacturer was correct and that there was no concealment of material facts.

The main issue in the appeal was whether the manufacturer was entitled to claim the benefit of Notification No. 63/87-C.E. The department argued that the base fabric used did not fall under the required chapter, thus making the manufacturer ineligible for the concessional rate. However, the Tribunal analyzed the notification and relevant entry, emphasizing that the duty payable on finished goods falling under a specific sub-heading was determined by the base fabric used, irrespective of its classification under a different chapter.

The Tribunal clarified that as long as the base fabric was cotton, the duty payable on the finished product was fixed, regardless of the specific chapter classification. The duty liability was calculated based on the duty paid on the base fabric plus an additional amount per square meter. The Tribunal referenced a Supreme Court decision and concluded that the department's stance on base fabric classification and duty calculation was incorrect, rendering their appeal unsustainable.

Ultimately, the Tribunal answered the referred question and dismissed the appeal, affirming the manufacturer's entitlement to the concessional rate of duty under Notification No. 63/87-C.E.