2000 (1) TMI 189 - AT - Central Excise

Summary

Issues: Classification of goods under Central Excise Tariff, Application of duty exemptions for 100% EOU, Time-barred demand, Justification for penalty

Classification of Goods under Central Excise Tariff:
The main issue in this case was the classification of goods under Heading No. 52.02 or Heading No. 52.03 of the Central Excise Tariff. The appellants claimed the goods should be classified under Heading No. 52.02, while the Revenue argued for classification under Heading No. 52.03. The Commissioner of Central Excise, Bhopal, determined that the goods were correctly classifiable under Heading No. 52.03, which covers cotton carded or combed. The tribunal noted the differences in tariff rates for these classifications under the Customs Tariff, with Heading No. 52.02 having a 25% duty rate and Heading No. 52.03 having a 40% duty rate.

Application of Duty Exemptions for 100% EOU:
The discussion also revolved around the application of duty exemptions for goods produced or manufactured by a 100% Export Oriented Unit (EOU) and allowed to be sold in India. The tribunal highlighted the provisions under Section 3 and Section 5A of the Act, emphasizing that even if the tariff rate was nil, duty could still be levied on goods manufactured by a 100% EOU and allowed to be sold in India. The tribunal analyzed Notification No. 13/98-C.E., dated 2-6-1998, which provided exemptions for finished products, rejects, and waste produced in a 100% EOU wholly from raw materials produced in India.

Time-Barred Demand and Penalty Justification:
The appellants argued that the demand was partly time-barred due to the issuance date of the show cause notice. They also contested the imposition of penalties, citing the issue as an interpretation matter without justification for penalty imposition. On the other hand, the Revenue defended the correctness of the analysis by the adjudicating authority regarding both the merits of the case and the limitation aspect. The tribunal, after careful consideration, found that the matter required further examination. It remanded the case back to the Commissioner of Central Excise for re-adjudication after ascertaining the actual nature of the goods in dispute and providing the appellants with an opportunity to present their case. Both appeals were allowed by way of remand for a fresh decision.