1995 (2) TMI 209 - AT - Central Excise

Summary

Issues Involved:
1. Classification and eligibility for exemption of textile fabrics impregnated, coated, covered, or laminated with plastics under Heading No. 59.03.
2. Applicability of extended period under proviso to Section 11A(1) of the Central Excises and Salt Act, 1944.
3. Misdeclaration and suppression of facts by the appellants.
4. Clarificatory nature of amending Notification No. 150/89-C.E., dated 12-6-1989.
5. Issuance of two show cause notices on the same issue.
6. Limitation period for demand of duty.

Detailed Analysis:

1. Classification and Eligibility for Exemption:
The appellants were engaged in manufacturing textile fabrics impregnated, coated, covered, or laminated with plastics, classifiable under Heading No. 59.03 of the Central Excise Tariff Act, 1985. They claimed exemption under Notification Nos. 141/86-C.E. and 63/87-C.E., which provided concessional rates for fabrics with base fabrics under Chapter 52. However, the appellants used base fabrics classifiable under Chapter 60. The Tribunal noted that the exemption notifications did not cover fabrics with knitted base fabrics under Chapter 60 until the amendment by Notification No. 150/89-C.E. on 12-6-1989. The Tribunal observed that the coated fabrics with knitted base should be considered under the residuary entry of Heading No. 59.03, thus eligible for concessional rates as per the applicable notifications.

2. Applicability of Extended Period:
The Collector of Central Excise invoked the extended period under proviso to Section 11A(1) of the Act, alleging misdeclaration and intent to evade duty. The Tribunal noted that the appellants declared their base fabric under Chapter 52, which was incorrect as it fell under Chapter 60. However, the Tribunal emphasized that the issue was more about mis-construction of the exemption notification rather than a deliberate attempt to evade duty.

3. Misdeclaration and Suppression of Facts:
The department alleged that the appellants misdeclared their base fabric to unlawfully avail of the exemption. The Tribunal, however, found that the classification list approved by the department did not indicate any suppression of facts but rather a misinterpretation of the exemption notification.

4. Clarificatory Nature of Amending Notification No. 150/89-C.E.:
The appellants argued that Notification No. 150/89-C.E., dated 12-6-1989, was clarificatory in nature and should be applied retrospectively. The Tribunal did not delve deeply into this issue but remanded the case for de novo adjudication, allowing the appellants to present their arguments before the original authorities.

5. Issuance of Two Show Cause Notices:
Two show cause notices were issued for different periods, one by the Superintendent of Central Excise and another by the Collector of Central Excise. The Tribunal noted that both notices were independent and covered different periods. The Tribunal did not find any procedural irregularity in issuing multiple notices for different periods.

6. Limitation Period for Demand of Duty:
The appellants contended that the demand was time-barred as the extended period of limitation was not applicable. The Tribunal referred to various judicial precedents and noted that the extended period could not be invoked without clear evidence of suppression or misstatement. The Tribunal emphasized that the matter should be re-examined to determine the applicability of the normal limitation period.

Conclusion:
The Tribunal set aside the orders of the Collector of Central Excise, Pune, and the Collector of Central Excise (Appeals), Pune, and remanded the cases for de novo adjudication. The Tribunal directed the original authorities to re-examine the applicability of the exemption notifications, the classification of the base fabrics, and the limitation period while observing the principles of natural justice. The appellants were given the liberty to present their case afresh before the original authorities.