1996 (10) TMI 203 - AT - Central Excise

Summary

Issues Involved:
1. Classification of Low Density Polyethylene (LDPE) Sheets.
2. Eligibility for exemption under Notification No. 132/86 and 269/86.
3. Invocation of extended period for demand beyond six months.
4. Confiscation and penalty imposed on the appellant.

Detailed Analysis:

1. Classification of Low Density Polyethylene (LDPE) Sheets:
The classification dispute centered on whether the LDPE sheets manufactured by the appellant should be classified under sub-heading 3921.12 of the Central Excise Tariff Act, 1985. The appellant did not contest the classification adopted by the department, which was confirmed by both the Collector and the appellate authority. The judgment upheld that the impugned goods were rightly classifiable under sub-heading 3921.12.

2. Eligibility for Exemption under Notification No. 132/86 and 269/86:
The appellant claimed exemption from excise duty under Notification No. 132/86, which was initially accepted by the Superintendent of Central Excise. However, the department later contended that the exemption was not applicable as the product did not meet the criteria specified in the notification. The appellant also sought the benefit of Notification No. 269/86, which was not claimed at the time of clearance. The Tribunal noted that the Central Board of Excise & Customs had clarified that the criteria of thickness below 0.25 mm did not apply to cellular sheets under sub-heading 3921.12. The matter was remanded to the Collector for de novo consideration to verify if the goods were manufactured from duty-paid materials, which was essential for claiming the exemption.

3. Invocation of Extended Period for Demand Beyond Six Months:
The department issued a show cause notice for the period March 1986 to December 1986, invoking the extended period under Section 11A(1) of the Central Excises and Salt Act, 1944. The appellant argued that there was no suppression of facts as they had corresponded with the department and received confirmation of exemption. The Tribunal agreed with the appellant, noting that the correspondence with the Superintendent of Central Excise indicated no suppression or mis-declaration. Consequently, the demand for the period beyond six months was set aside.

4. Confiscation and Penalty Imposed on the Appellant:
The Collector had ordered the confiscation of the seized goods and imposed a penalty on the appellant. The Vice President, however, set aside the confiscation and penalty, noting that the goods were no longer available and that the department had already extended the benefit of another notification. The Tribunal, in its majority opinion, remanded the matter to the Collector to reconsider the aspect of confiscation and penalty during the de novo proceedings, depending on the decision on the merits of the case.

Conclusion:
The Tribunal allowed the appeals in part, confirming the classification under sub-heading 3921.12, setting aside the demand for the period beyond six months, and remanding the matter to the Collector for reconsideration of the eligibility for exemption under Notification No. 269/86 and the issues of confiscation and penalty.