1998 (7) TMI 325 - AT - Central Excise

Issues Involved:
1. Classification of the treated wood as "densified wood" under Chapter 44 of the Central Excise Tariff Act, 1985.
2. Adequacy of evidence to support the classification.
3. Applicability of the extended period for issuing the show cause notice.
4. Valuation and calculation of duty.

Issue-wise Detailed Analysis:

1. Classification of the treated wood as "densified wood" under Chapter 44 of the Central Excise Tariff Act, 1985:
The primary issue was whether the wood treated by the respondents fell under the classification of "densified wood" as per Chapter Note 2 of Chapter 44 of the Central Excise Tariff Act, 1985. The statutory description of densified wood includes wood subjected to chemical or physical treatment, resulting in increased density, hardness, improved mechanical strength, or resistance to chemical or electrical agencies. The Department argued that the respondents' wood treatment process, which involved pressure impregnation with ASCU compound, resulted in densified wood. The respondents contended that their treatment did not increase the density or hardness of the wood but merely preserved it.

2. Adequacy of evidence to support the classification:
The Department relied on test reports from the National Test House, Alipore, and the Central Revenue Control Laboratory, which indicated that the treated wood samples showed increased density, hardness, and strength in certain cases. The respondents' commercial literature also suggested enhanced electrical resistance and strength of the treated wood. The Tribunal noted that the definition of densified wood included various alternatives, such as chemical or physical treatment and improved mechanical strength or resistance to chemical or electrical agencies. The Tribunal found that the criteria in Chapter Note 2 were satisfied based on the test reports and commercial literature, thus supporting the classification as densified wood.

3. Applicability of the extended period for issuing the show cause notice:
The respondents argued that the show cause notice was barred by limitation under Section 11A(1) of the Central Excise Act, as the Department was aware of their activities since 1978. The Tribunal agreed, noting that the Department had not shown any suppression or misstatement of facts with the intent to evade duty. Consequently, the extended period for issuing the show cause notice was not applicable. The notice issued on 3-12-1992 covered the period from 6-1-1987 to 31-12-1991, but only the period within the normal six-month timeframe was valid.

4. Valuation and calculation of duty:
The respondents raised concerns about the valuation and calculation of duty, arguing that the basis for these calculations was not disclosed. The Tribunal acknowledged that no detailed arguments were presented on this issue and that the Collector's order did not address this grievance. As a result, the Tribunal remanded the matter to the Commissioner for re-determination of the duty amount, ensuring that the respondents were given an opportunity to be heard before any order was passed.

Conclusion:
The Tribunal set aside the Collector's order and remanded the case to the Commissioner for re-determination of the duty amount, considering the normal period of six months for issuing the show cause notice. The classification of the treated wood as densified wood was upheld based on the test reports and commercial literature, but the extended period for issuing the show cause notice was not applicable due to the Department's prior knowledge of the respondents' activities.

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