1995 (11) TMI 202 - AT - Central Excise

Summary

Issues:
Classification of PVC Compound and PVC Master batch under different sub-headings based on color content.

Detailed Analysis:
The judgment by the Appellate Tribunal CEGAT, New Delhi involved two appeals concerning the classification of PVC Compound and PVC Master batch under sub-headings 3904.21/22 and 3204.19, respectively. In the first case (No. E/789/95-C), the Department contended that the product declared as PVC Master batch was actually PVC Compound due to the low color concentrate content of 2%, below the required 10% for Master batch classification. The Collector (Appeals) upheld the classification under sub-heading 3204.19, stating that the product met all criteria for Master batch classification. The Revenue appealed this decision.

In the second case (No. E/529/95-C), the assessees were accused of evading duty by misrepresenting the color composition of the PVC Master batch, which had a color content of 3 to 5%, below the 10% threshold for Master batch classification. The Collector confirmed the demand and imposed a penalty of Rs. 40,000 on the appellants. The assessees argued that the product was specialized and priced higher than PVC Compound, widely used for color dispersion in PVC Compounds. However, their contentions were rejected.

Upon examination of the records and arguments presented, the Tribunal found merit in the assessees' claim that the disputed products, despite having less than 10% color content, could still be considered Master batch. The Collector's reliance on a circular prescribing the 10% colorant threshold was deemed insufficient, as the circular itself acknowledged the possibility of Master batch with less than 10% colorant. The Tribunal emphasized the need to consider the nature, use, and trade understanding of the product in question before classification.

Consequently, the Tribunal set aside the impugned orders and remanded the matters to the adjudicating authorities for a fresh assessment in accordance with the law, ensuring the assessees are granted a personal hearing. The appeals and cross-objection were disposed of accordingly.