1989 (2) TMI 251 - AT - Central Excise

Issues Involved:

1. Mis-declaration of millboard/greyboard as packing and wrapping paper.
2. Time-bar of the demand notice.
3. Modification of approved classification lists.

Issue-wise Detailed Analysis:

1. Mis-declaration of Millboard/Greyboard as Packing and Wrapping Paper:

The appellants were accused of removing 6,65,570 Kgs. of millboard/greyboard, valued at Rs. 17,03,939.35, by mis-declaring it as packing and wrapping paper to evade central excise duty from 15.9.78 to 31.3.81. The Collector of Central Excise and Customs, Ahmedabad, demanded differential duty under Rule 9(2) of the Central Excise Rules read with Section 11A of the Central Excises and Salt Act, 1944, invoking a five-year limitation and imposed a penalty of Rs. 1,00,000/- under Rule 173Q(1) for various contraventions.

The appellants filed seven classification lists under Rule 173B, claiming exemptions under various notifications. These lists were approved by the respective Central Excise authorities. However, based on information and subsequent investigation, it was found that the appellants manufactured and clandestinely removed millboard/greyboard, mis-declaring it as packing and wrapping paper. Statements from various persons, including purchasers, supported the Department's claim that the goods were actually millboard/greyboard and were sold as such, despite being declared as packing and wrapping paper in official documents.

The appellants argued that there was no evidence of clandestine removal and that the goods were purchased and paid for as packing and wrapping paper. They also challenged the reliance on the Deputy Director, Printing and Stationery, Ahmedabad's report, stating that the sample tested did not belong to their goods. The appellants contended that the grammage alone should not be the deciding factor for distinguishing paper from the board, citing various decisions and instructions from the Central Board of Excise and Customs.

Despite these arguments, the Tribunal found that the appellants' customers treated the goods as millboard/greyboard, and the appellants failed to account for these goods in their statutory records. The Tribunal concluded that the appellants mis-declared the goods to evade duty and upheld the Collector's decision based on trade parlance and the evidence provided.

2. Time-bar of the Demand Notice:

The appellants argued that the demand notice issued on 15.10.82 for the period from 15.9.78 to 31.3.81 was time-barred. However, the Tribunal noted that the longer period of limitation of five years was invoked under the proviso to Section 11-A(1) of the Central Excises and Salt Act and Rule 9(2) of the Central Excise Rules due to the deliberate suppression of facts and mis-declaration by the appellants. The Tribunal found that the appellants did not declare millboard/greyboard in their classification lists or RG-1 register and mis-declared the goods as packing and wrapping paper to evade duty. Therefore, the demand was not time-barred.

3. Modification of Approved Classification Lists:

The appellants contended that the approved classification lists could not be disturbed except by review proceedings and that the revised classification should take effect from the date of the show cause notice. They argued that the principle of res judicata applied and cited various decisions to support their claim.

The Tribunal, however, held that the principle of res judicata did not apply in this case as the appellants got their classification lists approved by mis-declaration and suppression of facts. The Central Excise authorities were justified in modifying the classification lists retrospectively once the mis-declaration came to light. The Tribunal referred to several decisions supporting the view that classification lists could be reopened if new facts emerged, warranting such action.

Conclusion:

The Tribunal upheld the Collector's order, confirming the demand for differential duty and the penalty of Rs. 1,00,000/-. The appellants' arguments regarding the time-bar and modification of classification lists were rejected, and the appeal was dismissed.

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