1998 (4) TMI 217 - AT - Central Excise

Summary

Issues: Classification of goods under Chapter Heading 69.07 or 69.08, Time limitation for demand of duty

Classification Issue Analysis:
The appeal centered around the classification of Ceramic wares for laboratory (Laboratory Sinks) under Chapter Heading 69.07, as claimed by the assessees, or under Chapter Heading 69.08, as held by the Department. The appellants argued that their product should be classified under Chapter Heading 69.07 since it was used in laboratories and met ISI specifications for Laboratory Wares. However, the Department contended that Ceramic Sinks, including the goods in question, fell under Chapter Heading 69.08, which specifically covered Ceramic Sinks. The Tribunal ruled that the specific heading, Chapter Heading 69.08, should be preferred over the general heading, and since the goods were described as Ceramic Sinks and previously classified under Chapter Heading 69.08, they were correctly classifiable under the same heading. The Tribunal emphasized that the intended use of the product, such as in laboratories, was irrelevant for classification purposes, focusing instead on the material and nature of the goods.

Time Limitation Issue Analysis:
Regarding the time limitation for the demand of duty, the appellants claimed that the demand was partly hit by limitation since the show cause notice was issued after a considerable period from the period in question. The appellants argued that there was no intention to evade payment of duty and cited relevant legal precedents to support their contention. Conversely, the Department argued that the change in classification was an attempt to evade duty payment, evidenced by a circular issued by the appellants to dealers and customers. The Department asserted that the longer period for demanding duty was justified due to the intentional misclassification and evasion of duty. The Tribunal agreed with the Department, noting that the change in classification from Chapter Heading 69.08 to 69.07 was intentional, as the duty rates differed significantly between the two headings. The Tribunal found that the circular issued by the appellants was for manipulation, indicating an intent to evade duty payment. Consequently, the Tribunal upheld the invocation of the longer period for demanding duty and rejected the appeal.

In conclusion, the Tribunal determined that the Ceramic Sinks in question were correctly classified under Chapter Heading 69.08 and that the demand for duty was not time-barred due to the intentional misclassification and evasion of duty by the appellants. The appeal was ultimately rejected based on these findings.