1998 (2) TMI 268 - AT - Central Excise

Summary

Issues:
Classification of goods under Tariff Item 15A(2) or 22F, applicability of proforma credit, retrospective demand of duty, reliance on trade notices and departmental instructions.

Analysis:
The case involves a dispute regarding the correct classification and duty rate applicable to the appellant firm's product, "Fibreglass Reinforced Polyester Translucent Corrugated Roofing." The appellant had a history of disagreements with the Department over classification and duty rates. Initially, the product was classified under Tariff Item 15A(2) with proforma credit under Rule 56A. However, a new Tariff Item 22F was introduced, leading to confusion. The Department directed the appellant to classify the product under Tariff Item 22F and cease availing proforma credit. Subsequently, show cause notices were issued demanding duty for clearances made during specific periods.

The appellant argued that they followed the Department's instructions and trade notices, believing their product fell under Tariff Item 22F. They cited the Tribunal's decision in a similar case to support their position. The appellant contended that any demand for duty should only apply prospectively from the date of the show cause notice proposing a change in classification. They relied on Supreme Court judgments to argue against retrospective demands based on the Department's changing stance.

The Department asserted that the product should be classified under Tariff Item 15A(2) and denied the benefit of certain notifications. They argued that duty should have been paid on the goods as per the correct classification during the relevant period.

The Tribunal considered the conflicting views and the Department's changing positions. It noted the appellant's compliance with the Department's directives and the uncertainty caused by the shifting classifications. Citing Supreme Court precedents, the Tribunal held that demands for duty should not be enforced retrospectively when the appellant acted in accordance with the Department's instructions. The Tribunal set aside the demand for duty against the appellant, ruling in favor of the appellant's argument.

In conclusion, the Tribunal decided that the product was correctly classifiable under Tariff Item 15A(2) based on precedent. The demand for duty against the appellant was overturned due to the Department's inconsistent positions and the appellant's reliance on official instructions. The appeal was disposed of in favor of the appellant.