1998 (10) TMI 162 - AT - Central Excise

Summary

Issues Involved:
1. Classification of Sugar Coated Fabrics and Adhesive Coated Fabrics under the Central Excise Tariff Act, 1985.
2. Allegations of suppression of facts and evasion of Central Excise duty.
3. Applicability of extended period for demand under Section 11A of the Central Excises and Salt Act, 1944.
4. Eligibility for exemptions under various notifications.

Detailed Analysis:

1. Classification of Sugar Coated Fabrics and Adhesive Coated Fabrics:
The Principal Collector classified Sugar Coated Fabrics under Heading 5903.11 and reclassified Adhesive Coated Fabrics under Heading 5906.90 of the Central Excise Tariff Act, 1985. The appellant argued that Adhesive Coated Fabrics should be classified under Heading 5909.00, as indicated in their classification list and supported by a Board Circular. The Tribunal majority concluded that Adhesive Coated Fabrics fall under Heading 5909.00, citing the Board's Circular and previous Tribunal decisions.

2. Allegations of Suppression of Facts and Evasion of Duty:
The Collector alleged that the appellant suppressed facts by not declaring the use of Adhesive Coated Fabrics in the shoe industry, resulting in the evasion of Central Excise duty. The appellant contended that they had declared the goods as suitable for industrial use and had been paying duty accordingly. The Tribunal found that the appellant had adequately described the goods in their classification list and that the department was aware of their use in the shoe industry. Thus, no suppression of facts was established.

3. Applicability of Extended Period for Demand:
The Collector invoked the extended period under the proviso to Section 11A of the Act, citing suppression of facts. The Tribunal majority disagreed, noting that the classification list was approved by the department, and there was no evidence of willful suppression. The dissenting member agreed that the demand beyond six months was time-barred, as the department had sufficient information to classify the goods correctly.

4. Eligibility for Exemptions:
The appellant claimed eligibility for exemptions under Notifications No. 77/85-C.E., 175/86-C.E., and others, arguing that they had availed these exemptions based on their classification. The Tribunal majority supported the appellant's claim, noting that the goods were correctly classified under Heading 5909.00 and eligible for the stated exemptions. The dissenting member did not address this issue directly but agreed on the time-bar aspect of the demand.

Conclusion:
The Tribunal majority concluded that Adhesive Coated Fabrics should be classified under Heading 5909.00, as claimed by the appellant, and set aside the impugned order. The appeal was allowed, and the demand for duty beyond six months was deemed time-barred.