1996 (10) TMI 230 - AT - Central Excise

Summary

Issues: Classification of Waste & Scrap under Central Excise Tariff Act, 1944; Validity of duty payment and credit taken under protest; Compliance with prescribed procedure for refund claim; Imposition of penalty for irregular credit taken.

Classification of Waste & Scrap:
The appeal challenged the classification of Waste & Scrap of Polyurethane Foam under the Central Excise Tariff Act. Initially, the appellants classified the Waste & Scrap under Tariff Heading No. 39.15, paying duty at 40% ad valorem. Subsequently, after clarifications by the Department, the appellants reclassified the Waste & Scrap as 'Waste Parings and Scrap of Plastic' under Tariff Heading 3915.90, with a Nil rate of duty. The Commissioner upheld the classification under Heading 39.15, making the goods eligible for exemption under Notification No. 53/88. The Tribunal confirmed the classification, stating that duty paid provisionally on the Waste & Scrap would be admissible for refund due to their eligibility for exemption.

Validity of Duty Payment and Credit Taken Under Protest:
The appellants made clearances of Waste Parings and Scrap of Plastic at a Nil rate of duty, but were later directed to pay duty provisionally at Rs. 40 per kg. The Commissioner confirmed the demand for the duty paid under protest from the appellants' Personal Ledger Account and RG 23A Part II. The Commissioner also imposed a penalty for unauthorized utilization of the amount taken in PLA and RG 23A. The Tribunal found that the duty payment was provisional and admissible for refund, but criticized the appellants for taking credit without following the proper refund procedure under Section 11B.

Compliance with Prescribed Procedure for Refund Claim:
The appellants argued that they were entitled to take credit as a consequential refund following the Commissioner's classification order. However, the Tribunal emphasized that the appellants should have filed a refund claim under Section 11B instead of taking credit on their own in PLA and RG 23A. The Tribunal noted that the appellants' failure to follow the prescribed procedure for filing a proper refund claim warranted a penalty, albeit reduced to Rs. 50,000 from Rs. 1,000 initially imposed by the Commissioner.

Imposition of Penalty for Irregular Credit Taken:
The Tribunal held that while the appellants were eligible for the refund amount, their unauthorized action of taking credit without proper direction or permission from the proper officer necessitated a penalty. The Tribunal reduced the penalty to Rs. 50,000, considering the appellants' lapse in following the prescribed procedure for filing a refund claim under Section 11B. The appeal was disposed of with the appellants being granted the refund amount, subject to the reduced penalty.