1987 (11) TMI 193 - AT - Central Excise

Summary

Issues:
Classification of cotton fabrics with different yarn counts in weft/warp, retrospective application of Notification No. 7/78, interpretation of exemption notifications, time-barred demands under Central Excise Rules.

Classification of Cotton Fabrics:
The appeal concerns the classification of cotton fabrics with varying yarn counts in weft/warp, where the issue arose due to an audit objection regarding the determination of the average count under the statutory formula. The Collector of Central Excise (Appeals) held that fabrics with multiple yarn counts should be classified under Tariff Item No. 19(1)(2)(f) as "cotton fabrics, not otherwise specified."

Retrospective Application of Notification No. 7/78:
The department admitted difficulty in ascertaining the average count of such fabrics, which was resolved prospectively through Notification No. 7/78. The Collector granted retrospective benefit of this notification, leading the department to appeal. The Appellate Collector considered the notification as a clarification applicable to past cases, enabling the determination of average count based on the highest yarn count in weft or warp.

Interpretation of Exemption Notifications:
The Appellate Tribunal emphasized the strict interpretation of exemption notifications, stating that duties are payable as per the Tariff unless exempted. The Tribunal rejected the Collector's argument that the department's difficulty in determining the average count justified applying a different formula. Notification No. 7/78, amending the previous notification, was not considered a clarification but a new method for determining the average count.

Time-Barred Demands under Central Excise Rules:
Regarding time-barred demands, the Collector held that demands beyond 12 months prior to the demand notice issuance were time-barred under Central Excise Rules. The department contested that only 4 out of 12 demands were within the time limit, while admitting that demands beyond 21 months were barred by limitation. The Tribunal upheld the Collector's decision on time-barred demands, allowing the appeal in part.

Judgment by G. Sankaran:
Judge G. Sankaran, in a separate opinion, disagreed with the conclusions of the Appellate Collector and cited a previous Tribunal order that upheld the application of Notification No. 7/78 for determining the average count of fabrics with different yarn counts. Sankaran proposed upholding the Appellate Collector's order and dismissing the present appeal based on the earlier decision's reasoning.