2003 (2) TMI 92 - AT - Central Excise

Summary

Issues Involved:
1. Classification of fluorescent paper and paperboard under the Central Excise Tariff Act, 1985.
2. Applicability of extended period of limitation for demand of differential duty.
3. Allegations of suppression of facts and misdeclaration by the assessee.

Detailed Analysis:

1. Classification of Fluorescent Paper and Paperboard:

The primary issue in these appeals was the correct classification of fluorescent paper and paperboard. The appellant contended that the products should be classified under sub-heading 4810.10, while the Commissioner (Appeals) and the Assistant Commissioner classified them under sub-heading 4811.90. The Assistant Commissioner initially approved the classification under 4810.10, but a subsequent show cause notice sought reclassification under 4811.90. The Tribunal, in its final order, remanded the matter for fresh determination based on the Chemical Examiner's report and principles of natural justice.

Upon re-examination, the Assistant Commissioner confirmed the classification under 4811.90, which was upheld by the Commissioner (Appeals). The Tribunal found that the fluorescent paper was coated with a substantial percentage of organic substances, specifically fluorescent pigments, which imparted special qualities such as fluorescence or luminescence to the paper. The Tribunal agreed with the Commissioner (Appeals) that the product did not fit the description under 4810.10 as it involved significant organic coating, thus classifying it under 4811.90.

2. Applicability of Extended Period of Limitation:

The second issue was whether the extended period of limitation was applicable for demanding differential duty. The Commissioner concluded that the department had access to the manufacturing process and the classification lists were approved after due verification, thus finding no suppression of facts by the assessee. The Revenue appealed against this finding, arguing that there was a misstatement and suppression of facts regarding the use of organic substances in the coating.

The Tribunal found no merit in the Revenue's appeal, noting that the fluorescent paper's coating with organic pigment was declared in the Modvat declaration and the Assistant Commissioner had the duty to verify the classification lists. The Tribunal upheld the Commissioner's finding that the extended period of limitation was not applicable, rejecting the Revenue's appeal on this ground.

3. Allegations of Suppression of Facts and Misdeclaration:

The Revenue alleged that the assessee had suppressed facts and misdeclared the nature of the coating material to evade duty. The Commissioner found that the department had access to the necessary information and the classification lists were approved after due verification, thus dismissing the allegation of suppression of facts. The Revenue argued that the assessee misrepresented the use of organic substances, which materially altered the product's classification.

The Tribunal, after considering the evidence and submissions, concluded that the fluorescent pigment was used in substantial quantities and not merely as a coloring agent. The Tribunal found that the product was correctly classified under 4811.90, as the substantial organic coating imparted special characteristics to the paper, excluding it from 4810.10. The Tribunal dismissed the appeals filed by the appellants regarding classification and upheld the lower authorities' decisions.

Conclusion:

The Tribunal dismissed all three appeals, upholding the classification of fluorescent paper and paperboard under sub-heading 4811.90 and rejecting the Revenue's appeal on the applicability of the extended period of limitation. The Tribunal found no suppression of facts or misdeclaration by the assessee, affirming the decisions of the lower authorities.