2000 (8) TMI 121 - AT - Central Excise

Summary

Issues Involved:
1. Classification of the product 'Extruded Plastic Meshes/Nets'.
2. Applicability of Rule 2(a) of the Interpretative Rules.
3. Consideration of the Harmonised System Committee's opinion.
4. Invocation of the extended period of limitation u/s 11A(1) of the Central Excise Act.

Summary:

1. Classification of the product 'Extruded Plastic Meshes/Nets':
The primary issue was whether the product manufactured by M/s. Netlon India, described as 'Extruded Plastic Meshes/Nets', should be classified under sub-heading 3926.90 as declared by the appellants, or under sub-headings 3925.30 and 3925.99 as 'Plastic Insect Screen'/Interior Screen and Fencing/Barriers respectively. The Tribunal concluded that the extruded plastic mesh in running length is a finished product by itself and is appropriately classifiable under sub-heading 3926.90 of CETA. The Tribunal noted that the product could be used for various purposes and did not acquire the essential character of a complete or finished good.

2. Applicability of Rule 2(a) of the Interpretative Rules:
The Revenue invoked Rule 2(a) of the Interpretative Rules, arguing that the extruded plastic meshes possess the essential characteristics of the final articles. However, the Tribunal held that Rule 2(a) is not applicable as the extruded plastic mesh in running length is a finished product and does not fall within any of the clauses of Note 11 to Chapter 39. The Tribunal emphasized that Rule 1 of the Interpretative Rules should be applied first, and only if the classification cannot be determined, should the other Interpretative Rules be considered.

3. Consideration of the Harmonised System Committee's opinion:
The Tribunal gave weight to the classification opinion of the Harmonised System Committee (HSN), which classified extruded nets under sub-heading 3926.90. The Tribunal referenced the Delhi High Court's decision in Manisha Pharma Plasto Pvt. Ltd. v. U.O.I., which stated that the opinion of the Harmonised Systems Committee should ordinarily be taken as binding. The Tribunal rejected the Revenue's argument that the background of the reference to the HSN was not available, affirming that the HSN's opinion is relevant and applicable.

4. Invocation of the extended period of limitation u/s 11A(1) of the Central Excise Act:
The Tribunal found that the demand for duty was time-barred. The show cause notice was issued on 5-1-1993 for the period from 1-3-1989 to 31-3-1991. The Tribunal noted that the appellants had filed the necessary declarations and intimations with the Range Superintendent, and these could not be dismissed by merely stating that the Superintendent was a junior functionary. The Tribunal held that the appellants were not required to inform the Department about the various uses of their product, and thus, the extended period of limitation could not be invoked.

Conclusion:
The appeal was allowed both on merit and on the ground of time-limit, with the Tribunal holding that the impugned products are classifiable under sub-heading 3926.90 of CETA and that the demand was time-barred.