1999 (11) TMI 264 - AT - Central Excise

Summary

Issues Involved:
1. Classification of pasta products under sub-headings 1902.10 and 1902.90 of the Central Excise Tariff Act, 1985 (CETA).
2. Legality of the demand for excise duty and imposition of penalty.
3. Applicability of the extended period of limitation for issuing show cause notices.

Summary of Judgment:

1. Classification of Pasta Products:
The appellants, engaged in the manufacture of pasta food under Chapter 19 of CETA, classified their products under sub-heading 1902.10 when put up in unit containers and under sub-heading 1902.90 when cleared in bulk. The Preventive Staff of Central Excise, upon inspection, found that the appellants were clearing pasta food in LDPE and HDPE bags, each weighing 10 and 20 kgs respectively, but describing these clearances as "bulk in loose" to evade duty. The Tribunal held that the expression "put up in unit containers and ordinarily intended for sale" in sub-heading 1902.10 includes both small and large containers. Therefore, the clearances in LDPE and HDPE bags fall under sub-heading 1902.10 and are liable to excise duty.

2. Legality of Demand and Penalty:
The Commissioner confirmed the duty demand of Rs. 1,18,40,271/- and imposed a penalty of Rs. 20,00,000/- for the period March 1988 to December 1992, and a duty demand of Rs. 1,31,91,175.23 with a penalty of Rs. 2.5 lakhs for the period January 1993 to April 1993. The Tribunal upheld these demands and penalties, rejecting the appellants' argument that their clearances were correctly classified under sub-heading 1902.90. The Tribunal emphasized that the appellants' classification as "bulk in loose" was a deliberate misdescription to avoid duty.

3. Extended Period of Limitation:
The Tribunal found that the appellants had suppressed material facts and misdeclared their clearances, justifying the invocation of the extended period of limitation u/s 11A(1) of the Central Excise Act, 1944. The show cause notices dated 6-4-1993 and 30-6-1993 were deemed valid, and the demands were not time-barred. The Tribunal noted that the true facts came to light only during the investigation and inspection of the appellants' factory.

Conclusion:
The appeals were dismissed, and the Tribunal confirmed the duty demands and penalties imposed by the Commissioner. The classification of pasta products in LDPE and HDPE bags under sub-heading 1902.10 was upheld, and the extended period of limitation for issuing show cause notices was justified due to the appellants' suppression of facts.