2009 (10) TMI 247 - AT - Central Excise

Classification- Notification No. 67/95-C.E., dated 16-3-1995- the appellants manufacture what are known as Slag Pots or Slag Ladle Cups by using casting technology through casting of liquid steel in Heavy Steel Casting Section of foundries. During the period from September, 1999 to September, 2004, the appellants manufactured 125 numbers of Slag Pots/Slag Ladle Cups, out of which 119 numbers were used for captive consumption without payment of duty. They initially classified the said goods under Chapter Heading 7325.10 of the Central Excise Tariff Act, 1985 and availed the benefit of Notification No. 67/95-C.E., dated 16-3-1995. Subsequently, they classified the said product under Chapter Heading 8454.10 and availed the benefit of the said Notification. The Department issued a show cause notice alleging wilful misclassification by the appellants and proposing classification under Chapter Heading 8609.00 and proposing recovery of duty and proposing for imposition of penalty. The Commissioner vide the impugned Order upheld the classification as proposed in the show cause notice and held that they are not eligible for the benefit of the Notification No. 67/95-C.E. and confirmed the demand of duty along with the interest and imposed an equal amount of penalty. In the light of the decision of Larsen & Toubro Ltd. v. CCE, Bhubaneswar reported in 2001 (136) E.L.T. 562 (Tri.-Kolkata), held that- In as much as we are accepting the classification as claimed by the Appellants, we do not propose to go into other issues raised by the Appellants. The Appeal is allowed with consequential relief as per law. The Cross Objection filed by the Department, which is basically in support of the impugned Order passed by the Commissioner, is also disposed off.

Summary

Issues Involved:
1. Classification of Slag Pots/Slag Ladle Cups.
2. Eligibility for benefit under Notification No. 67/95-C.E.
3. Imposition of penalty under Section 11AC.

Detailed Analysis:

1. Classification of Slag Pots/Slag Ladle Cups:

The primary issue is whether the Slag Pots/Slag Ladle Cups should be classified under Chapter Heading 8609.00 as proposed by the Department or under Chapter Heading 8454.10 as claimed by the appellants. The appellants manufacture Slag Pots/Slag Ladle Cups using casting technology and initially classified them under Chapter Heading 7325.10, later under Chapter Heading 8454.10, availing the benefit of Notification No. 67/95-C.E. The Department issued a show cause notice alleging misclassification and proposed classification under Chapter Heading 8609.00, demanding duty and imposing penalties. The Tribunal noted the specific use of the products in metallurgy and foundries, designed to handle high temperatures (1400-1450 degrees Centigrade), and compared them with similar products classified under 8454.00 in previous cases (e.g., Larsen & Toubro Ltd. v. CCE, Bhubaneswar). The Tribunal concluded that the products are more appropriately classified under 8454.10, which specifically covers ladles used in metallurgy or metal foundries.

2. Eligibility for Benefit under Notification No. 67/95-C.E.:

The appellants initially availed the benefit of Notification No. 67/95-C.E. under the classification of 7325.10 and later under 8454.10. The Department's reclassification under 8609.00 led to the denial of this benefit. However, since the Tribunal upheld the classification under 8454.10, the eligibility for the benefit under Notification No. 67/95-C.E. stands affirmed.

3. Imposition of Penalty under Section 11AC:

The Department imposed a penalty equal to the duty demanded, alleging wilful misstatement or suppression of facts. The appellants argued that there was no wilful misstatement or suppression, and the demand confirmed was higher than proposed. The Tribunal, having accepted the appellants' classification, did not find it necessary to delve into the penalty issue, implicitly rejecting the basis for the penalty under Section 11AC.

Conclusion:

The appeal by the appellants was allowed, affirming the classification under Chapter Heading 8454.10, making them eligible for the benefit under Notification No. 67/95-C.E., and providing consequential relief. The cross-objection by the Department, supporting the impugned order, was disposed of accordingly.