1997 (1) TMI 259 - AT - Central Excise

Summary

Issues Involved:
1. Correct classification of unprocessed cotton/nylon woven Carcass.
2. Reopening of approved classification list under Section 11A.
3. Allegation of suppression of facts and extended period of limitation under Section 11A.

Detailed Analysis:

1. Correct Classification of Unprocessed Cotton/Nylon Woven Carcass:

The appellants claimed classification under Chapter Heading 5408.00, which covers "Fabrics of man-made filament yarn (including fabrics obtained from materials of Headings 5406 & 5407) - (a) woven and (b) not subjected to any process - nil." The department, however, argued for classification under Chapter Heading 5909.00, which includes "All other textile products and articles of a kind suitable for industrial use."

The Tribunal examined the nature of industrial fabrics, referencing definitions from ISI specifications, various textile dictionaries, and encyclopedias. It was established that industrial fabrics are non-consumer fabrics used for specific industrial purposes. The product described as 'carcass' was found to be exclusively used in manufacturing flame-proof conveyor belts for collieries, thus fitting the description under Chapter Heading 5909.00. The Tribunal concluded that the product should be classified under Chapter Heading 5909.00 due to its specific use in industrial applications.

2. Reopening of Approved Classification List Under Section 11A:

Section 11A of the Central Excise Act deals with the recovery of duties not levied, short-levied, or erroneously refunded. The proviso allows for an extended period of five years in cases of fraud, collusion, or willful misstatement or suppression of facts.

The Tribunal noted that the appellants had been submitting classification lists (C/List) and that the Assistant Collector had approved these lists after careful verification. The department's argument was that the appellants had misled the approving officer by not incorporating certain portions of the description in the C/List submitted on 1-3-1986, thereby intending to evade duty. However, the Tribunal found that the department was aware of the manufacturing process and the products, as the appellants had been consistently submitting C/Lists. Consequently, the Tribunal held that the demand beyond six months was not sustainable.

3. Allegation of Suppression of Facts and Extended Period of Limitation Under Section 11A:

The department alleged that the appellants had suppressed the detailed description of the goods to avail a lower rate of duty. The Tribunal scrutinized the descriptions given in the C/Lists before and after 1-3-1986. It was observed that the description had been partly given post-1-3-1986. The appellants argued that they had curtailed the description to suit the tariff requirements.

The Tribunal determined that since the department was already aware of the manufacturing process and the products, and given that the C/Lists were approved, there was no intentional suppression of facts. Therefore, the extended period of limitation under Section 11A was not justified.

Conclusion:

The Tribunal concluded that the product in dispute should be classified under Chapter Heading 5909.00. It also held that the demand beyond six months was not sustainable due to the lack of intentional suppression of facts. The penalty was reduced to Rs. 50,000. The appeal was disposed of accordingly.