1997 (4) TMI 299 - AT - Central Excise

Summary

Issues:
Stay applications for waiver of total duty amount, penalty under Section 11AC, and further penalty under Rule 173Q of Central Excise Rules.

Analysis:
The case involved a dispute regarding the classification of adhesive products manufactured by the appellants. The Department sought to classify the products as Polyurethane under sub-heading 3909.60, while the appellants argued for classification under sub-heading 3506.00 as prepared glues. The appellants had consistently filed classification lists approved by the Department and submitted monthly RT-12 returns without objection. The Central Board of Excise and Customs clarified that the appellants' products should be classified under Heading 35.06. The Assistant Collector and the Board followed this clarification. The Commissioner issued a Show Cause Notice for demanding duty and penalty, invoking a longer period, which the appellants contested. The appellants also raised financial hardship concerns due to predeposit requirements.

The Department contended that the products should be classified as Polyurethane under sub-heading 3909.60 based on the Chemical Examiners report. They argued that the Board's communication was specific to the appellants' representation and not a binding Tariff Advice. The Department justified invoking the longer period due to the alleged suppression of facts by the appellants. They also highlighted the financial stability of the appellants based on their balance sheet.

The Tribunal analyzed the competing classifications under sub-headings 35.06 and 39.09 of the Central Excise Tariff Act, considering relevant Section Notes. They found the Board's communication not equivalent to a Tariff Advice and noted that the Department's case on merits relied on the Chemical properties of the final product. The Tribunal observed that the appellants' approved classification lists and RT-12 returns indicated no suppression of facts. They directed the appellants to predeposit a specific amount by a deadline, dispensing with the rest of the duty and penalty pending appeal.

The Tribunal disposed of the Stay Applications, setting a compliance date and providing relief to the appellants regarding predeposit requirements.