1994 (10) TMI 167 - AT - Central Excise

Summary

Issues Involved:
1. Classification of HDPE/PP Woven Sacks.
2. Legality of retrospective demand for differential duty.
3. Entitlement to MODVAT credit.

Detailed Analysis:

1. Classification of HDPE/PP Woven Sacks:
The appellants, engaged in manufacturing HDPE/PP Woven Sacks, initially classified their products under sub-heading 6301.00 of the Central Excise Tariff. However, based on Order No. 8/92 issued by the Central Board of Excise & Customs on 24-11-1992, the goods were reclassified under sub-heading 3923.90. The appellants contested this reclassification, arguing that any change should be prospective and not affect past clearances based on an approved Classification List. The Tribunal upheld the reclassification under sub-heading 3923.90, citing that excise authorities are not barred from reopening classification and raising demands under Section 11A of the Central Excises and Salt Act, 1944, even when an approved Classification List exists.

2. Legality of Retrospective Demand for Differential Duty:
The appellants argued that the demand for differential duty for the period 24-9-1992 to 15-11-1992 was illegal since it was based on an approved Classification List. They relied on various case laws, including Steel Authority of India Ltd. v. Collector of Central Excise, which held that demands due to changes in departmental stands should be prospective from the date of the Show Cause Notice. However, the Tribunal referred to multiple judgments, including Elson Machines Pvt. Ltd. v. Collector of Central Excise and I.T.C. Limited v. Union of India, which established that excise authorities could reopen classifications and raise demands retrospectively under Section 11A. The Tribunal concluded that the demand for differential duty from 24-9-1992 to 15-11-1992 was valid, as the Show Cause Notice dated 8-12-1992 sought to review the Classification List with effect from 1-4-1992.

3. Entitlement to MODVAT Credit:
The appellants contended that if the reclassification under sub-heading 3923.90 was upheld, they should be entitled to MODVAT credit for the duty paid on raw materials used in manufacturing the finished goods. The Tribunal noted that the appellants had filed a Miscellaneous Application seeking permission to raise this additional ground. Although the application was not taken up for consideration, the Tribunal acknowledged the appellants' plea during the hearing. The Tribunal directed that the differential duty recoverable should be calculated considering the MODVAT credit admissible on the inputs used in the manufacture of the final products. The matter was remanded to the Assistant Collector to work out the exact quantum of differential duty, taking into account the MODVAT credit.

Conclusion:
The Tribunal upheld the reclassification of HDPE/PP Woven Sacks under sub-heading 3923.90 and confirmed the recovery of differential duty for the period 24-9-1992 to 15-11-1992. However, it remanded the matter to the Assistant Collector to determine the exact amount of differential duty, considering the MODVAT credit admissible to the appellants. The appeal was disposed of accordingly.