1999 (2) TMI 241 - AT - Central Excise

Summary

Issues Involved:
Classification of goods under Central Excise Tariff (CET) sub-headings, time bar aspect of the demand, valuation of goods, eligibility for Small Scale Industries (SSI) exemption, financial hardship waiver for pre-deposit of duty and penalty.

Classification of Goods:
The dispute revolves around the classification of knitted fabrics containing elastomeric yarn manufactured by the appellants under CET sub-heading 6002.30 instead of 6002.90 as claimed. The appellants argue for classification under 6002.90 based on the predominance of cotton over elastomeric yarn, citing relevant sub-heading notes and the predominance test under Note 2 of Section XI.

Time Bar Aspect:
The appellants claim the demand is time-barred due to disclosure of goods' description in shipping bills as cotton knitted fabrics with cotton predominance, thereby arguing against suppression. However, the authorities find the disclosure insufficient for classification verification, emphasizing the absence of a classification list during the relevant period.

Valuation of Goods and SSI Exemption:
The appellants contest the valuation of goods under Section 4(4)(d)(ii) of the Central Excise Act and seek SSI exemption, which could reduce the duty liability. The authorities counter that the goods' classification under 6002.30 does not align with the SSI notification during the period, hence denying the exemption.

Financial Hardship Waiver:
Considering the appellants' declaration as a sick unit by the BIFR and significant financial losses, the Tribunal grants a waiver of pre-deposit of duty and penalty due to financial hardship. The decision is based on the bleak financial position of the appellants, as evidenced by substantial losses reported, aligning with the precedent set by the Calcutta High Court in a similar case.

In conclusion, the Tribunal finds the classification and valuation issues debatable and subject to further examination during the appeal hearing. While the demand is not prima facie time-barred, the financial hardship faced by the appellants justifies the waiver of pre-deposit of duty and penalty, leading to the stay of recovery pending the appeal.