1995 (8) TMI 129 - AT - Central Excise

Summary

Issues:
- Classification of goods under the Central Excises and Salt Act, 1944
- Time bar for demanding central excise duty
- Allegations of suppression of facts and contraventions of rules
- Interpretation of Item No. 15A(2) of the Tariff
- Exemption under Notification No. 182/82-C.E.
- Exemption under Notification No. 68/71-C.E.

Classification of Goods:
The appeal concerns M/s. Orissa Plastics challenging an order demanding central excise duty on plastic polythene bags. The Collector of Central Excise, Bhubaneswar confirmed the duty liability under Item No. 68 of the Old Tariff. The appellant argued for a different classification based on previous tribunal decisions. The bags manufactured were low-density polythene bags, and the duty was calculated at 8% ad valorem, presumed to be under Item No. 68. The Tribunal found the demand unjustified based on the manufacturing process and previous classifications.

Time Bar:
The Tribunal noted that the demand was hit by the time bar, considering the original show cause notice issued in 1982 and the subsequent notice in 1988 alleging suppression without providing details. The second notice invoked penal provisions beyond the 5-year period without specifying the alleged suppression adequately. Representative samples and classifications made by the department in 1981 supported the finding of time bar.

Allegations of Suppression:
The appellant argued against the order on the grounds of time bar and merit. The Collector's findings were questioned, and the appellant contended that the order lacked justification for demanding duty under Item No. 68. The bags were manufactured using duty-paid raw materials, and the process did not align with the classification under Item No. 68. The Tribunal agreed with the appellant's arguments and set aside the order, emphasizing the lack of discussion on how the goods fit the description under the Tariff.

Interpretation of Tariff Items:
The Tribunal analyzed the classification under Item No. 15A(2) of the Tariff, considering previous tribunal decisions and notifications. The scope of the item was crucial in determining the correct classification for the plastic bags manufactured by the appellant. The changes in the descriptions of items and exemptions under various notifications were examined to ascertain the appropriate classification, ultimately leading to the decision to accept the appeal.

Exemptions under Notifications:
The Tribunal referenced Notification No. 182/82-C.E. and Notification No. 68/71-C.E. regarding exemptions for articles made of plastics produced from duty-paid materials falling under specific items. The interpretations of these notifications in previous tribunal cases were discussed to support the appellant's position and challenge the duty demand under Item No. 68.

In conclusion, the Tribunal set aside the order demanding central excise duty on plastic polythene bags manufactured by M/s. Orissa Plastics, citing classification discrepancies, time bar limitations, and lack of adequate justification for the duty demand under Item No. 68. The detailed analysis of the manufacturing process, previous classifications, and relevant tariff items led to the decision to accept the appeal.