1994 (11) TMI 213 - AT - Central Excise

Summary

Issues involved: Classification of goods under Tariff Item 15A, time bar for duty recovery, suppression of facts and misdeclaration.

Classification under Tariff Item 15A:
The appeal concerned the classification of goods under Tariff Item 15A by the ld. Collector, who confirmed duty and imposed a penalty based on this classification. The appellants contended that their products were wrongly classified under Tariff Item 15A and should have been classified under Tariff Item 68. The ld. Collector rejected their contentions, holding that the goods fell under Tariff Item 15A, leading to duty recovery and penalty imposition. However, the appellate tribunal found that the ld. Collector's classification was incorrect, as the Chemical Examiner's report and the composition of the products indicated a different classification. The tribunal observed discrepancies in the classification and set aside the ld. Collector's order, allowing the appeal.

Time bar for duty recovery:
The issue of time bar for duty recovery was raised in the appeal, with the appellants arguing that the show cause notice issued by the department was beyond the permissible time limit. The ld. Advocate pointed out that the notice was issued after the department had obtained the Chemical Examiner's report, which should have triggered the issuance of the notice within six months. The tribunal agreed with this argument, stating that the demands for duty recovery were time-barred due to the delayed issuance of the show cause notice, leading to the setting aside of the ld. Collector's order.

Suppression of facts and misdeclaration:
The ld. Collector had alleged that the appellants suppressed facts and misdeclared goods, leading to duty recovery and penalty imposition. However, the tribunal found no evidence of suppression or misdeclaration based on the correspondence and interactions between the appellants and the department. The tribunal noted that the department officials had visited the factory and checked records, indicating transparency on the appellants' part. As a result, the tribunal concluded that there was no suppression or misdeclaration, ultimately allowing the appeal.

Separate Judgment by S.K. Bhatnagar, Vice President:
In a separate judgment, Vice President S.K. Bhatnagar highlighted that the appellants had informed the department before commencing product manufacture, filed necessary declarations, and obtained the Central Excise License. He emphasized that the appellants' products, although commercialized under the name "Acrenol," were a combination of various chemicals with different properties. Vice President Bhatnagar criticized the ld. Collector's classification under Tariff Item 15A, pointing out inconsistencies in applying the Chemical Test Report and descriptions to all products. He also questioned the classification of certain products under Tariff Item 15A without sufficient technical basis. Additionally, Vice President Bhatnagar agreed with the time bar aspect, noting that the appellants had not suppressed material facts and that the demands were indeed time-barred.