1995 (4) TMI 152 - AT - Central Excise

Summary

Issues Involved:
1. Competency of the Assistant Collector to issue a notice under Rule 10 for demanding back the refund amount.
2. Classification of printed cartons as products of the printing industry eligible for exemption under Notification No. 55/75 as amended.

Issue-wise Detailed Analysis:

1. Competency of the Assistant Collector to Issue Demand Notice under Rule 10:

The appellants contended that the Assistant Collector was not competent to issue a notice under Rule 10 for demanding back the refund amount, arguing that such an order could only be reviewed under Section 35A of the Central Excises & Salt Act, 1944. They cited the Delhi High Court decision in J.K. Synthetics Ltd. v. Union of India, which stated that the department cannot change its stand on classification capriciously and reopen past assessments. The appellants also argued that Rule 10 had been deleted without any saving clause, and the General Clauses Act would not apply to Rules, which are subordinate legislation.

The Tribunal, however, referred to the Larger Bench decision in M/s. Atma Steels, which held that proceedings initiated under a validly subsisting Rule could continue despite its repeal or substitution. The Tribunal also cited the Supreme Court's decision in Ballarpur Industries Ltd. v. Assistant Collector of Customs & Central Excise, which clarified that show cause notices under Section 11A could relate to past periods and that the department could recover duties or charges short-levied or erroneously refunded. Therefore, the Tribunal found no infirmity in the show cause notice issued under Rule 10 and rejected the appellants' contention.

2. Classification of Printed Cartons:

The appellants argued that printed cartons should be classified as products of the printing industry and thus eligible for exemption under Notification No. 55/75 as amended. They pointed out that the Assistant Collector was bound by the Government of India's order in revision, which held that cartons are products of the printing industry. The appellants also cited various case laws, including the Supreme Court decision in Padmini Products v. Collector of Central Excise, to argue that a change in classification should only be prospective and that the department cannot raise demands for past periods if the appellants had a bona fide belief about the exemption.

The Tribunal noted that the issue of whether printed cartons are products of the printing industry was referred to a Larger Bench, which concluded that the issue was covered by the Supreme Court decision in Rollatainers Ltd. v. Union of India. The Supreme Court had held that printed cartons are products of the packaging industry, not the printing industry. Consequently, the Tribunal found no substance in the appellants' argument regarding the classification of printed cartons.

Conclusion:

The Tribunal upheld the orders passed by the Assistant Collector for the recovery of erroneous refunds and duty demands. The appeals were rejected on both the merits of the case and the competency and validity of the notice issued by the Assistant Collector. The Tribunal confirmed that printed cartons are classified as products of the packaging industry and that the Assistant Collector was competent to issue the demand notice under Rule 10.