1991 (3) TMI 269 - AT - Central Excise

Summary

Issues:
1. Classification of asbestos products under Item 68 or Item 22F of Central Excise Tariff.
2. Validity of demanding differential duty under Section 11A for a period prior to the show cause notice.

Analysis:
1. Classification of Asbestos Products:
The appeal involved determining the correct classification of three asbestos products: Sleeve Packing, Hexagonal Packing Ring, and Indurated Asbestos under the Central Excise Tariff. The dispute arose when a show cause notice was issued proposing re-classification under Tariff Item 22F due to the predominance of asbestos fibers in the composition of the goods. The Assistant Collector initially classified all three products under Tariff Item 22F, but the Collector (Appeals) modified the classification, placing Sleeve Packing and Hexagonal Packing Ring under Tariff Item 68 and Indurated Asbestos under Tariff Item 22F. The Revenue challenged this decision, arguing that all three products should be classified under Item 22F based on the predominance of asbestos fibers. However, the Tribunal upheld the Collector (Appeals) decision, stating that Sleeve Packing and Hexagonal Packing Ring were identifiable as parts of instruments/machinery and therefore correctly classified under Item 68, while Indurated Asbestos, being in fiber form, was rightly classified under Item 22F.

2. Validity of Differential Duty Demand:
Regarding the demand for differential duty under Section 11A, the Revenue contended that the demand for duty was valid for six months prior to the show cause notice date. The Tribunal considered relevant case laws, including a Supreme Court judgment, which established that in cases where there was no suppression or misstatement of facts by the taxpayer, the period of limitation for demanding duty would be limited to six months. In this case, as the respondents had filed classification lists since 1975, and the duty was paid under Tariff Item 68 as approved by the proper officer, the Tribunal found no evidence of suppression or misstatement. Therefore, the demand for differential duty was upheld for a period of six months prior to the show cause notice date.

In conclusion, the Tribunal affirmed the classification of Sleeve Packing and Hexagonal Packing Ring under Tariff Item 68 and Indurated Asbestos under Tariff Item 22F. Additionally, the demand for duty was limited to six months before the issuance of the show cause notice dated 20-5-1983, as there was no evidence of suppression or misstatement by the respondents.