2024 (6) TMI 244 - AT - Central Excise

Time limitation - suppression of facts or not - Classification of goods - KARA brand wet wipes - under Chapter Sub-heading 3307.90 of the First Schedule to the Central Excise Tariff Act,1985 as other perfumery, cosmetic or toilet preparations, not elsewhere specified or included or under Tariff Item5603.9200 of the First Schedule to the Central Excise Tariff Act, 1985 as nonwovens, whether or not impregnated, coated, covered or laminated, of man-made filaments weighing more than 25 g/m2but not more than 70 g/m2? Time Limitation - HELD THAT - The classification, claim of exemption notification in respect of their product wet wipes was categorically declared before the department. Therefore, there is no suppression of facts on the part of the appellant with intent to evade payment of duty. Moreover, all these facts were on record while conducting EA-3 audit by Central Excise department during March 2014 to October 2014 for the audit period March 2012 to December 2013. The dispute of classification was raised in audit vide Audit Report No. 327/2013-14 dated 10.11.2014 and on that basis further investigation was carried out by Preventive Wing and thereafter the show cause notice came to be issued on 08.08.2018. It is also observed that prior to the aforesaid audit, the appellant have been audited from time to time but no objection was raised on the classification of wet wipes. So, in view of the above facts, there is absolutely no suppression of facts or mis-statement with intent to evade payment of duty on the part of the appellant. Therefore, the demand for the extended period is not sustainable. It is found that appellant s case is on much better footing inasmuch as the appellant have time to time declared their changes and claim of exemption notification therefore, the above judgments are directly support the case of the appellant. It is also found that since the appellant have been audited from time to time and no objection was raised, it cannot be said that the appellant have suppressed any fact. The reliance is also placed on the Hon ble Supreme Court decision in the case of COMMISSIONER OF CENTRAL EXCISE BANGALORE VERSUS M/S. PRAGATHI CONCRETE PRODUCTS (P) LTD. 2015 (8) TMI 1053 - SC ORDER . There are no doubt that there is no suppression of facts on the part of the appellant. Accordingly, the demand for the extended period is liable to be set-aside on the ground of time-bar. Accordingly, the demand for the extended period is set-aside. For the same reason, penalty corresponding to the duty for the normal period is also set-aside - The department is at liberty to re-quantify the demand of duty for the normal period and since the appellant have already paid the amount of Rs. 40,40,709/- the re-quantified demand amount may be adjusted against the same and remaining amount may be refunded to the appellant in accordance with the law on filing of appropriate refund application by the appellant. Appeal allowed in part.

Summary

Issues Involved:
1. Classification of "KARA" brand wet wipes.
2. Limitation period for the demand of excise duty.
3. Allegation of suppression of facts with intent to evade duty.

Summary:

1. Classification of "KARA" Brand Wet Wipes:
The appellant initially classified "KARA" brand wet wipes under Chapter Sub-heading 3307.90 as other perfumery, cosmetic, or toilet preparations. From August 2009, they reclassified the product under Tariff Item 5603.9200 as nonwovens, whether or not impregnated, coated, covered, or laminated, of man-made filaments. The department, however, contended that the correct classification should be under Chapter Heading 3307.

2. Limitation Period for the Demand of Excise Duty:
The demand for excise duty was raised for the period July 2013 to July 2016. The appellant argued that the demand is hit by limitation as they had informed the department about the reclassification and exemption claim through letters dated 12.08.2009 and 28.06.2013. The Tribunal found that there was no suppression of facts since the classification and exemption claims were declared to the department, and the department had conducted audits without raising objections on classification. Therefore, the demand for the extended period was set aside on the ground of time-bar.

3. Allegation of Suppression of Facts with Intent to Evade Duty:
The Tribunal held that there was no suppression of facts or misstatement with intent to evade duty. The appellant had declared their classification and exemption claims to the department, and these facts were known during the audits. The Tribunal relied on various judgments, including Apex Electricals Pvt. Limited vs. UoI and Pushpam Pharmaceuticals Company vs. CCE, to support the view that when facts are known to both parties, suppression cannot be alleged.

Conclusion:
The Tribunal set aside the demand for the extended period on the ground of time-bar and directed the department to re-quantify the demand for the normal period. The issue of classification was left open. The appeal was partly allowed, and the impugned order was modified accordingly.