1985 (9) TMI 190 - AT - Central Excise

Summary

Issues:
1. Tariff classification and central excise duty rate for laminated jute bags.
2. Applicability of exemption notifications.
3. Limitation period for raising demand.

Issue 1: Tariff Classification and Central Excise Duty Rate
The dispute in this case revolves around the correct tariff classification and applicable central excise duty rate for laminated jute bags. The lower authorities classified the bags under the residuary item No. 68 of the Central Excise Tariff, while the appellants argued for classification under item 22A relating to jute manufactures. The appellants cited previous tribunal orders and challenged the reliance on Calcutta High Court judgments. However, the tribunal upheld the lower authorities' classification, stating that laminated jute bags correctly fell under item 68 for the relevant period.

Issue 2: Applicability of Exemption Notifications
The appellants also raised an alternative plea for exemption under notification No. 179/77-C.E., dated 18-6-1977, contending that no duty was payable due to the exemption since they did not use power in stitching the bags. The tribunal acknowledged this plea and directed the Assistant Collector to adjudicate on the exemption claim after a hearing. The tribunal emphasized the importance of verifying whether the bags were manufactured with manually operated machines to determine eligibility for the exemption.

Issue 3: Limitation Period for Raising Demand
Regarding the limitation period for raising the demand, the appellants argued that they were not guilty of suppression of information as their classification practice was known to the department. The tribunal agreed with the appellants, stating that they were entitled to the benefit of the six-month time limit under rule 10. The tribunal rejected the charge of suppression and directed a fresh adjudication considering the appellants' claim and the prevailing classification practice at the time.

In conclusion, the tribunal partially allowed the appeal by confirming the classification of laminated jute bags under item 68 for the relevant period, directing further examination of the exemption claim, and granting the benefit of the six-month time limit for any duty ultimately found payable after the fresh adjudication.