1998 (7) TMI 323 - AT - Central Excise

Summary

Issues: Classification of gaskets under Central Excise Tariff - Differential duty imposition - Penalty imposition - Appeal against reclassification.

In this judgment by the Appellate Tribunal CEGAT, New Delhi, the issue revolved around the classification of gaskets under the Central Excise Tariff. The case involved a situation where the Assistant Collector proposed to reclassify two varieties of gaskets from Chapter 6805.10 to Chapter 8484, along with charging a differential duty for the period mentioned. The contested products were described as a spiral wound gasket and jacketted gaskets. The Assistant Collector reclassified the products, imposed differential duty, and penalties on the assessees, leading to an appeal by the assessee. The Collector (Appeals) observed that Heading 6805 specifically covered articles of asbestos, which the gaskets in dispute contained. He noted that Heading 8484.00 was a general classification, while the products were specifically covered under Heading 6805, leading to the appeal being allowed based on the principle that a specific tariff entry prevails over a general entry.

The appeal memorandum relied on Explanatory Notes to H.S.N. under Heading 8484, emphasizing the previous approval of classification lists by the Assistant Collector and the incompetence to revise the classification subsequently. The contention was made that the demand could not be sustained without a finding on this aspect by the Collector (Appeals). The defense of classification under 6805.10 was based on trade understanding, arguing that the use of asbestos justified the classification suggested by the assessee. The tribunal found that the Collector erred in considering Heading 8484 as a general heading of a residuary nature. It was clarified that gaskets made of metal could be classified under Heading 8484, even when combined with other materials, while gaskets with asbestos fell under Heading 6805.10. The distinction was based on the constituent material used, leading to the decision to set aside the Collector's order and restore the classification approved by the Assistant Collector. However, the issue of whether the demand was maintainable when previous classification lists were approved was remanded back to the Collector (Appeals) for further determination.

In conclusion, the tribunal allowed the appeal, corrected the classification error, and addressed the issue of maintainability of the demand, providing a comprehensive analysis of the classification of gaskets under the Central Excise Tariff and the principles governing specific and general tariff entries.