1995 (12) TMI 169 - AT - Central Excise

Summary

Issues: Classification of orthoxylene under Central Excise Tariff Act, 1985; Recovery of differential duty; Extended period under Section 11A of Central Excises and Salt Act; Allegations of wilful suppression of facts to evade duty.

The judgment pertains to the classification of orthoxylene under the Central Excise Tariff Act, 1985, and the subsequent recovery of differential duty by invoking the extended period under Section 11A of the Central Excises and Salt Act based on allegations of wilful suppression of facts to evade duty. The appellant had initially classified orthoxylene under Heading 2710.39 of the Tariff, which was approved by the Assistant Collector. However, a clarification issued by the Central Board of Excise & Customs stated that orthoxylene of purity exceeding 95% should be classified under Chapter 29 of the Tariff. Subsequently, notices were issued to the appellant for the recovery of differential duty for specific periods, alleging wilful suppression of facts regarding the purity of orthoxylene.

The Appellate Tribunal considered the arguments put forth by the advocate for the appellant, highlighting that the department itself was initially unaware of the correct classification of orthoxylene with purity exceeding 95%. The approval of the earlier classification list under Chapter 27, the issuance of the Board's circular, and the department's own testing procedures supported the appellant's position. The tribunal noted that the department had been regularly testing the product without focusing on purity, indicating a lack of awareness regarding the need for such tests.

Furthermore, the tribunal found merit in the appellant's assertion that there was no intentional suppression of the product's purity. The appellant provided test reports for each batch of orthoxylene to the department, including a report dated 31-3-1986, which indicated that the department was aware of the purity exceeding 95%. The tribunal emphasized that the appellant had not concealed this information, as the reports were available for scrutiny by higher authorities. The tribunal rejected the Departmental Representative's argument that the appellant should have submitted a fresh report after the issuance of the Board's Circular, considering the time it would have taken for the information to disseminate through the hierarchy.

In analyzing the applicability of the extended period under Section 11A, the tribunal referred to previous Supreme Court judgments, emphasizing that suppression must be wilful and with the intent to evade duty. Citing the case of Pushpam Pharmaceuticals v. Collector, the tribunal concluded that there was no evidence of deliberate intent to evade duty in this case. As a result, the demand for differential duty was considered barred by limitation, and the appeal was allowed in favor of the appellant.