2010 (4) TMI 316 - AT - Central Excise

Limitation- The Respondents are engaged in the manufacture of goods such as Auto Leaf Spring, show cause notice came to be issued requiring the respondents to show cause as to why the goods should not be classified under sub-heading 8201.00. The respondents filed appeal before the Commissioner (Appeals) which came to be allowed by the impugned order. Held that- The impugned order to the extent it classifies the goods manufactured by the respondents under chapter sub-heading 8424 is set aside and classification under sub-heading 8201.00 is hereby confirmed. The respondents are entitled to the benefit of SSI exemption Notification No. 38/97 dated 27-6-1997. The appeal is accordingly partly allowed with consequential relief in the above terms.

Issues: Classification of goods under Central Excise Tariff Act, 1985; Entitlement to SSI exemption; Demand of duty for the period prior to show cause notice issuance.

Classification of Goods:
The case involved a dispute over the classification of goods manufactured by the Respondents under the Central Excise Tariff Act, 1985. The Adjudicating Authority had classified the goods under sub-heading 8201.00, while the Respondents contended that the goods should be classified under sub-heading 8424. The Commissioner (Appeals) allowed the appeal filed by the Respondents, setting aside the classification under sub-heading 8424 and confirming the classification under sub-heading 8201.00. The Tribunal upheld the classification under sub-heading 8201.00, emphasizing that the goods, such as hoes, axes, sickles, and parts of chaff cutters, were agricultural implements and hand tools, not mechanical appliances. The Tribunal found that the Adjudicating Authority's classification was correct, and the Commissioner (Appeals) had not provided sufficient justification for overturning it. Therefore, the Tribunal set aside the Commissioner (Appeals) order and restored the Adjudicating Authority's classification.

Entitlement to SSI Exemption:
Another issue in the case was the entitlement of the Respondents to the Small Scale Industry (SSI) exemption under Notification No. 38/97 dated 27-6-1997. The Respondents claimed the SSI exemption, which was admitted by the department in the show cause notice dated 30-11-1998. The Tribunal acknowledged the entitlement of the Respondents to the SSI exemption and upheld the Commissioner (Appeals) decision in confirming the SSI exemption. Therefore, the Tribunal partly allowed the appeal, granting the Respondents the benefit of the SSI exemption under Notification No. 38/97 dated 27-6-1997.

Demand of Duty for the Period Prior to Show Cause Notice Issuance:
The case also involved a dispute regarding the demand of duty for the period prior to the issuance of the show cause notice. The department argued that duty could be demanded for the period before the notice since the Respondents had benefited from paying nil rate of duty due to the wrong classification of the goods. The Tribunal agreed with the department on this point, stating that the Commissioner (Appeals) erred in denying the collection of duty for the period before the show cause notice issuance. The Tribunal found that the Respondents had availed the benefit of nil rate of duty based on the incorrect classification of the goods and that the findings of the Adjudicating Authority on this matter should be restored. Therefore, the Tribunal set aside the Commissioner (Appeals) decision on this issue and restored the Adjudicating Authority's findings, allowing the collection of duty for the period prior to the show cause notice issuance.

In conclusion, the Tribunal upheld the classification of goods under sub-heading 8201.00, confirmed the entitlement of the Respondents to the SSI exemption, and allowed the collection of duty for the period before the show cause notice issuance, thereby partly allowing the appeal in favor of the Appellant.

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