1985 (4) TMI 180 - AT - Central Excise

Issues Involved:
1. Classification of aluminium paste and medium packed as aluminium paint.
2. Introduction of a new classification ground by the Department at the appellate stage.
3. Applicability of Rule 10 of the Customs, Excise & Gold (Control) Appellate Tribunal (Procedure) Rules, 1982.
4. Jurisdiction of the Tribunal to allow new grounds not raised before lower authorities.

Issue-wise Detailed Analysis:

1. Classification of Aluminium Paste and Medium Packed as Aluminium Paint:
The primary issue was whether the aluminium paste and medium packed in a dual container and sold as aluminium paint should be classified as ready-mixed paint under sub-Item I(3)(iii) of Item 14 CET. The Assistant Collector initially held that it was ready-mixed paint. However, the Collector (Appeals) overturned this decision, stating that since the aluminium paste and medium were not mixed at the time of clearance, they could not be classified as ready-mixed paint. The Department appealed against this decision, seeking to restore the classification under Item 14-I(3)(iii) CET.

2. Introduction of a New Classification Ground by the Department at the Appellate Stage:
The Department sought to introduce a new classification ground, arguing that the goods should be classified under Item 14-1(5) CET as "Paints and enamels, not otherwise specified." The Respondent objected, arguing that this new ground was not raised before the lower authorities, and thus they had no opportunity to contest it. The Respondent cited the Delhi High Court decision in Commissioner of Income-tax, Delhi v. Anand Prasad & Ors., which held that a point not taken before the lower authorities could not be introduced at the appellate stage.

3. Applicability of Rule 10 of the Customs, Excise & Gold (Control) Appellate Tribunal (Procedure) Rules, 1982:
Rule 10 allows the Tribunal to grant leave to the appellant to urge new grounds not set forth in the appeal memorandum, provided the Respondent is given a sufficient opportunity to be heard on that ground. The Tribunal, referencing the case of Cynamid India Ltd. v. Collector of Central Excise, Bombay, noted that it would not be in the interest of justice to prevent the appellant from raising a new ground if it was relevant for a correct determination of the classification dispute.

4. Jurisdiction of the Tribunal to Allow New Grounds Not Raised Before Lower Authorities:
The Tribunal considered the Supreme Court decision in Commissioner of Income Tax, Madras v. Mahalakshmi Textiles Mills Ltd., which held that the Tribunal could pass orders on new grounds not raised before lower authorities if they related to the assessment of the assessee. The Tribunal concluded that the Department, as a party to the proceedings, should be allowed to raise new grounds if they were relevant to the correct classification of the goods. Consequently, the Tribunal allowed the additional ground to be raised and argued.

Separate Judgments:

Majority Judgment:
The majority opinion, led by G. Sankaran, allowed the Department to introduce the new classification ground under Item 14-1(5) CET. The judgment emphasized that disputes on classification should be determined based on all relevant grounds to ensure a correct and just decision. The Tribunal set a date for further hearings to consider the new ground.

Minority Judgment:
H.R. Syiem dissented, arguing that introducing a new classification ground at the appellate stage amounted to a new demand under a new Item, which should be presented before the original assessing authority. Syiem emphasized that the Tribunal should not usurp the powers of the assessing officers and that any new claim or demand must undergo the due process of law, including the issuance of a fresh show cause notice.

Concurring Judgment:
S.C. Jain concurred with the majority opinion, adding that the facts of the case were sufficient to decide the correct classification of the goods. Jain referenced the Supreme Court decision in Mahalakshmi Textiles Mills Ltd. and the Special Bench decision in Cynamid India Ltd., concluding that the Tribunal had the jurisdiction to permit new grounds if they were relevant to the case.

Conclusion:
The Tribunal allowed the Department to raise the new classification ground under Item 14-1(5) CET, setting a date for further hearings. The minority opinion, however, cautioned against allowing new grounds at the appellate stage without due process, emphasizing the need for fresh adjudication by the original assessing authority.

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