2005 (5) TMI 129 - AT - Central Excise

Issues Involved:
1. Whether the extended period of limitation could be invoked by the Revenue.
2. Whether the HDPE bags used for packing pasta food constituted "unit containers" under the relevant tariff heading.
3. Whether the appellant misled the department regarding the nature of the packing and removal of goods.
4. Whether the show cause notice issued was valid and whether the classification was correctly applied.

Detailed Analysis:

1. Extended Period of Limitation:
The Tribunal was tasked with determining whether the extended period of limitation could be invoked by the Revenue. The show cause notice dated 31-3-93 alleged that the appellant evaded Central Excise duty by misdeclaring pasta food packed in 20 Kgs. HDPE sacks as "bulk in loose" to avoid appropriate duty. The Commissioner found that the appellant had misled the department by stating that the pasta food was stored in unstitched HDPE bags and sold in loose condition. The Commissioner concluded that this misrepresentation justified invoking the extended period of limitation under the proviso to Section 11A(1) of the Central Excise Act, which extends the limitation period to five years in cases of fraud, collusion, or wilful misstatement.

2. Classification of HDPE Bags as "Unit Containers":
The primary issue was whether the HDPE bags containing 20 Kgs. of pasta food were "unit containers" under the relevant tariff heading. The Tribunal referred to Section IV of the Tariff Act, which defines "unit container" as a container designed to hold a pre-determined quantity, whether large or small. The evidence showed that pasta food was initially weighed and packed in 10 Kgs. LDPE bags, which were then placed in larger HDPE bags designed to hold 20 Kgs. This process indicated that the HDPE bags were indeed "unit containers" as they were designed to hold a pre-determined quantity. The Tribunal upheld the Commissioner's finding that the goods were excisable under sub-heading 1902.10, which covers goods packed in unit containers.

3. Misleading the Department:
The Tribunal examined whether the appellant misled the department regarding the nature of the packing and removal of goods. The Commissioner found that the appellant had misdeclared the pasta food as being sold in loose condition, whereas it was actually packed in pre-determined quantities of 20 Kgs. The Tribunal agreed with the Commissioner's finding that the appellant's letter dated 7-3-88, which stated that the pasta food was stored in unstitched HDPE bags and sold in loose condition, was a misstatement intended to evade duty. This misrepresentation justified the invocation of the extended period of limitation.

4. Validity of Show Cause Notice and Classification:
The appellant contended that no show cause notice for change of classification was given and that the classification list was duly approved. The Tribunal noted that the classification lists filed by the appellant mentioned standard packing sizes but did not include 10 or 20 Kgs. The Commissioner found that the appellant's classification list indicated that goods would be put up in unit containers but were removed as "bulk in loose." The Tribunal upheld the Commissioner's conclusion that the goods were cleared in unit containers and were excisable under sub-heading 1902.10. The Tribunal also found that the show cause notice was valid as it addressed the misclassification and evasion of duty.

Conclusion:
The Tribunal dismissed the appeals, upholding the Commissioner's findings that the appellant had misled the department, the HDPE bags were unit containers, and the extended period of limitation was rightly invoked. The goods were correctly classified under sub-heading 1902.10, and the show cause notice was valid.

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