2006 (7) TMI 12 - AT - Central Excise

Central Excise - Clandestine manufacture and removal - SSI unit manufacturing mattresses, polyurethance etc. - Revenue cannot produce any concrete reason for classification and marketability of product - Matter remanded for passing orders on issues

Summary

Issues:
Classification of goods under Central Excise Tariff Act - Benefit of Small Scale Notification - Demand of duty, penalty, interest, confiscation - Marketability of intermediate goods - Imposition of penalty on Director.

Analysis:
1. Classification of Goods: The case involved the classification of goods manufactured by the respondent under the Central Excise Tariff Act. The Revenue contended that the goods were articles of Polyurethane Foam and not entitled to the benefit of a specific notification. The Commissioner, however, ruled in favor of the respondent, stating that the goods fell under Chapter 94 and were eligible for the notification, based on HSN Notes and classification lists submitted by the appellant.

2. Demand of Duty, Penalty, Confiscation: The show cause notice issued to the assessee demanded Central Excise duty, penalty, interest, and confiscation of goods. The Commissioner adjudicated the notice, dropping the demands related to the denial of notification benefits and intermediate goods cleared under another notification. The Commissioner confirmed a demand for short accounted goods and imposed a penalty under Rule 223A.

3. Marketability of Intermediate Goods: The Revenue contested that intermediate foam blocks were marketable and should be accounted for. However, the Tribunal found no concrete evidence of marketability presented by the Revenue. Relying on a Supreme Court decision, the Tribunal held that the onus to prove marketability was on the Revenue, and without evidence, the foam blocks were not excisable.

4. Imposition of Penalty on Director: The Revenue contested the imposition of a penalty on the Director, which was not addressed in the Commissioner's order. The Tribunal found this contention valid and remanded the matter for further consideration by the Commissioner (Appeals).

In conclusion, the Tribunal upheld the classification of goods under Chapter 94, dismissed certain demands raised in the show cause notice, rejected the marketability of intermediate goods, and remanded the issue of penalty on the Director for further review. The Revenue's appeal was disposed of accordingly.