2004 (6) TMI 82 - AT - Central Excise

Classification of goods - 'Blind Rivets' under Chapter heading 7318.29 or 8308.00 - Demand - Limitation - Extended period - Suppression - HELD THAT - In view of the Commissioner's finding of the impugned order, we hold that the impugned goods are classifiable under Chapter Heading 8308.00 and are leviable to duty accordingly. There is no denial by the appellant that the goods are made of aluminium alloys and also that they are black mandrel blind rivets or tubular rivets. Rivets made out of aluminium alloy are not covered under Chapter 73 of CETA which covers product made out of iron and steel. These omissions and commissions on the part of the appellant constitute misdeclaration and therefore we hold that larger period of limitation has been correctly invoked. We, therefore uphold the demand of Rs. 19,31,569/- (Nineteen lakhs thirty-one thousand five hundred sixty-nine) for the period March 1994 to July 1997. We are however unable to uphold the imposition of penalty u/s 11AC read with Rule 173Q of the Central Excise Rules, 1944 for two reasons. For one thing Section 11AC has come into the statute book only w.e.f. 28-9-1996 whereas the demand pertains to a period prior to this date at least partly and for another a composite penalty u/s 11AC and Rule 173Q is not permissible. Interest on Section 11AB has also been demanded on the entire differential duty. The provision came into force on 28-9-1996 and is well settled that this provision has no retrospective effect. Therefore interest can be demanded only on that portion of the differential duty which relates to the period from 28-9-1996 to July 1997. We order that interest is payable by the appellant at the appropriate rate accordingly. Thus, the appeal is partly allowed.

Summary

Issues involved: Classification of goods described as blind rivets under Chapter heading 7318.29 or 8308.00 of the Central Excise Tariff Act, 1985; invocation of larger period of limitation, imposition of penalty, and demand of interest.

Classification Issue:
The Commissioner held that the blind rivets manufactured by the appellant, made of aluminium alloy, fall under Chapter Heading 8308.00, not 7318.29 as claimed by the appellant. The Commissioner's decision was based on the nature of the rivets and their classification under the Central Excise Tariff Act, 1985. The Tribunal upheld this classification, stating that the goods are indeed classifiable under Chapter Heading 8308.00.

Larger Period of Limitation and Penalty Issue:
The appellant challenged the invocation of a larger period of limitation and imposition of penalty. The appellant argued that there was no misdeclaration or suppression of facts, as the goods were correctly described as blind rivets in their classification lists. However, the Commissioner found that the appellant misdeclared the product by not disclosing that the rivets were break mandrel blind rivets or tubular rivets, with an intention to evade duty. The Tribunal agreed with the Commissioner's observation and upheld the demand for differential duty for the period in question.

Penalty Imposition Issue:
The Tribunal, however, did not uphold the imposition of penalty under Section 11AC of the Central Excise Act, as this provision came into force only from September 1996 and does not have retrospective effect. The Tribunal also noted that a composite penalty under Section 11AC and Rule 173Q is not permissible.

Interest Demand Issue:
Interest under Section 11AB was demanded on the entire differential duty. The Tribunal clarified that this provision has no retrospective effect and interest can only be demanded on the portion of the duty relating to the period from September 1996 to July 1997. Accordingly, the Tribunal ordered the appellant to pay interest at the appropriate rate for this period.

In conclusion, the Tribunal partly allowed the appeal, upholding the classification of the goods under Chapter Heading 8308.00, confirming the demand for differential duty, rejecting the penalty imposition under Section 11AC, and ordering the payment of interest only for the relevant period.