2002 (3) TMI 103 - AT - Central Excise

Summary

Issues: Classification of impregnated filter paper under Central Excise Tariff before and after 1-3-97, applicability of exemption notifications, penalty imposition.

The judgment by the Appellate Tribunal CEGAT, New Delhi, dealt with the classification of impregnated filter paper under the Central Excise Tariff before and after 1-3-97, the applicability of exemption notifications, and the imposition of a penalty. The respondents were engaged in manufacturing various products and availing Modvat credit. The dispute arose when the Department alleged that impregnated filter paper was not classifiable under a specific sub-heading post 1-3-97 and was not covered by certain exemption notifications. The Deputy Commissioner adjudicating the case confirmed a demand and imposed a penalty, which was upheld by the Commissioner (Appeals).

The Revenue argued that impregnated filter paper should be classified under a particular heading based on previous tribunal decisions and chemical examiner reports. On the other hand, the respondents contended that they were not provided with the chemical examiner's reports and that the penalty was excessive for a mere classification issue. The Tribunal noted the restructuring of the Central Excise Tariff post 1-3-97 to align with the Harmonized System of Nomenclature (HSN). It referenced previous tribunal decisions and the Apex Court's ruling emphasizing alignment with HSN for tariff classification disputes.

The Tribunal analyzed the classification of the product before and after 1-3-97. It found that the impregnated filter paper should be classified under different sub-headings based on the weight and impregnation process. The Commissioner (Appeals) was criticized for not following HSN notes and wrongly concluding the product was decorative laminate. The Tribunal set aside the impugned order, classifying the product under specific sub-headings and reducing the penalty imposed.

In conclusion, the Tribunal ruled that the impregnated filter paper should be classified under distinct sub-headings pre and post 1-3-97, denying the benefit of certain notifications during a specified period. The penalty imposed was reduced considering the circumstances. The appeal by the Revenue and the Cross-Objection by the respondents were disposed of accordingly, emphasizing alignment with HSN for tariff classification disputes and proper interpretation of classification criteria under the Central Excise Tariff.