2005 (2) TMI 242 - AT - Central Excise

Summary

Issues: Classification of nylon tyre cord under different headings, penalty imposition under Rule 173Q of the Central Excise Rules, 1944.

Classification Issue Analysis:
The appeals involved a dispute regarding the classification of nylon tyre cord under different headings. The assessee claimed classification under Heading 5607.90, while the department classified it under Heading 5402.10. The appellants initially filed classification lists claiming the cord under Heading 5404.10, but the Superintendent raised doubts about the claimed classification. Subsequently, the appellants revised the claim to classify the cord under Heading 5607.90. The rates of basic duty were found to be the same under both headings, except for the levy under the Additional Duties of Excise Act, 1978. The legal representative did not contest the classification arrived at under Heading 5404.10, shifting the focus of the case to the liability for penalty.

Penalty Imposition Analysis:
Regarding the penalty issue, it was established that for an incorrect classification claimed in the classification list, no penalty could be imposed on the assessee. Citing precedents such as CCE v. Smithline Beecham Consumer Health Care Ltd. and Indabrator Ltd. v. CCE, Mumbai, it was clarified that attempting to change classification to gain benefits was not punishable under the Act or Rules. In the present case, where the classification claim was initially made under one heading and later changed due to queries raised by the Superintendent, it was deemed that no penalty should be imposed under Rule 173Q of the Central Excise Rules, 1944. Consequently, the penalty imposed and confirmed in one appeal was set aside, and another appeal by the Revenue was required to be rejected. As the classification under Heading 5404.10 was not being pursued, one appeal of the assessee was disposed of as not pressed, while another appeal was partially allowed only concerning the penalty issue.

In conclusion, the appeals were disposed of based on the above analysis, with the penalty being a significant point of contention and resolution in the judgment.