2000 (2) TMI 165 - AT - Central Excise

Summary

Issues:
1. Classification of the product under Chapter Heading 52.06 or 52.05.
2. Demand of Countervailing Duty (CVD) on the cleared yarn.
3. Sustainability of the demand of Rs. 22,77,900/- under Section 3 of the Customs Tariff Act.

Classification Dispute:
The appellant, an Export Oriented Unit (EOU), contested the demand of duty amounting to Rs. 22,77,900/- imposed by the Commissioner. The disputes revolved around the classification of the product ANTHRA under Chapter Heading 52.06 by the Department and 52.05 as claimed by the appellant. The appellant did not challenge the classification under Chapter Heading 52.06 but disputed the demand of CVD. The appellant argued that only duty chargeable under Section 12 of the Customs Act was payable, not the demanded amount. The Commissioner upheld the demand, leading to the appeal.

Demand of CVD:
The appellant argued that the demand of Rs. 22,77,900/- was not sustainable as it was based on the Customs Tariff Act, not Section 12 of the Customs Act. The appellant contended that only duty payable under Section 12 of the Customs Act was applicable for clearances in the domestic tariff area. The appellant sought to set aside the demand, emphasizing the legal insustainability of the amount demanded.

Legal Analysis and Decision:
The ld. Counsel for the appellant cited the judgment in the case of C.C.E. Baroda v. Cotspun Ltd., highlighting that demands beyond six months should be prospective from the date of the show cause notice (SCN) issuance. The Tribunal noted the unsustainable nature of the demand for differential duty due to reclassification based on the Cotspun Ltd. judgment. Regarding the demand of Rs. 22,77,900/-, the Tribunal found that the admission by the appellants did not establish evidence of duty escapement. The Tribunal concurred with the appellant's argument that the demand was for CVD under the Customs Tariff Act, not in line with the provisions of the Central Excise Act, 1944. Consequently, the Tribunal allowed the appeal, emphasizing that any consequential relief should be granted to the appellants as per the law.

In conclusion, the Tribunal ruled in favor of the appellant, setting aside the demand of Rs. 22,77,900/- and providing relief in accordance with the law.