1997 (7) TMI 291 - AT - Central Excise

Summary

Issues: Classification of goods (ice cream cones) under Tariff Heading 1905.90 or 1905.11, and application of longer period of limitation.

Classification of Goods (Ice Cream Cones):
The appeal before the Appellate Tribunal CEGAT, Madras involved the classification of goods described as ice cream cones under Tariff Heading 1905.90 or 1905.11. The lower authority classified the goods under 1905.90, while the revenue sought classification under 1905.11. The department argued that ice cream cones fell under the description of waffles and wafers, as per the Harmonized System of Nomenclature (HSN), which influenced the Central Excise Tariff. The department relied on the HSN definition, including products made by extruding waffle dough, such as ice cream cones. The department emphasized that the HSN should guide classification, as supported by a Supreme Court decision. In contrast, the respondents contended that waffles and wafers were distinct from ice cream cones, and internationally, cones were classified under 1905.90. The Tribunal noted that waffles and wafers were not defined in the Central Excise Tariff, and in case of doubt, the HSN and its notes could be relied upon. Considering the HSN coverage of ice cream cones under waffles and wafers, the Tribunal classified the goods under 1905.11, aligning with the department's argument.

Application of Longer Period of Limitation:
Another issue raised in the appeal was the imposition of a longer period of limitation on the appellants. The lower authority invoked the longer period based on a letter from the appellants dated 31-8-1987, where they informed the department about manufacturing ice cream cones under Tariff Heading 1905.90. The department did not seek clarification or take action based on this information. The appellants argued that showing the wrong classification did not constitute a misstatement of fact, as classification was a legal question with differing views. The Tribunal agreed, stating that projecting a wrong legal view did not amount to a misstatement of fact. Therefore, the revenue's plea for invoking a longer period of limitation was deemed legally unsustainable. Consequently, the appeal was partially allowed in favor of the appellants on this issue.