1998 (5) TMI 216 - AT - Central Excise

Summary

Issues: Classification dispute under Central Excise Tariff Act, Time bar for demand, Penalty imposition

Classification Dispute:
The judgment pertains to two appeals filed against an order passed by the Addl. Collector, Aurangabad, involving a classification matter. The dispute revolves around the classification of textile fabric coated with starch, gummy matter, and inorganic siliceous material used by book binders for covering books. The Respondent, represented by Shri Satnam Singh, argued that the issue is settled by a previous decision of the Tribunal in Bhor Industries Ltd. v. C.C.E. where it was held that such fabric falls under Heading 5901 of the Central Excise Tariff Act. This decision was further confirmed by the Supreme Court. The Appellants relied on a different Tribunal decision in C.C.E. v. Sunita Textiles Ltd., which was overruled by the subsequent Bhor Industries judgment. Consequently, the Tribunal agreed with the Respondent's contention, classifying the fabric under Chapter 59 in favor of the Department.

Time Bar for Demand:
The Appellants raised the issue of limitation, claiming that the demand made in 1988 was beyond the six-month period as the classification list had been approved by the Asstt. Commissioner in 1986. They argued that since there was no suppression of facts and the Department was aware of the fabric's nature, the extended limitation period was unjustified. However, the Respondent contended that this argument was not raised before the lower authorities and should have been addressed during the adjudication proceedings, not at the appellate stage. The Tribunal examined the evidence provided by the Appellants regarding the verification of the fabric by Central Excise Officers and found no explicit certification or verification supporting the Appellants' claim. Consequently, the Tribunal dismissed the time bar argument.

Penalty Imposition:
Regarding the penalties imposed on the Federation and its Chairman, the Tribunal found the penalty of Rs. 20,000 on the Federation disproportionate in relation to the duty payment of Rs. 36,485.09. Therefore, the penalty on the Federation was reduced to Rs. 5,000. Additionally, the penalty of Rs. 10,000 imposed on the Chairman was set aside as there was no evidence implicating the Chairman in the mis-declaration under Rule 209A of the Central Excise Rules. Ultimately, the two appeals were disposed of based on the above determinations.