2000 (1) TMI 254 - AT - Central Excise

Summary

Issues Involved:
1. Condonation of Delay (COD) in filing the appeal.
2. Classification of excisable goods.
3. Demand of differential duty and imposition of penalty.
4. Invocation of the extended period of limitation under Section 11A(1) of the Central Excises and Salt Act.

Issue-wise Detailed Analysis:

1. Condonation of Delay (COD) in filing the appeal:
The appellants filed the appeal against the order of the Additional Collector of Central Excise dated 31-3-1992 with a delay of 72 days. The delay was attributed to the appellants' bona fide belief that the appeal should be filed before the Collector (Appeals) due to the amendments introduced by the Finance Act, 1992. The Collector (Appeals) later directed the appellants to file the appeal before the Tribunal, leading to the delay. The appellants also believed that the Tribunal had impliedly condoned the delay while granting an unconditional stay. The Departmental Representative opposed the COD application, citing previous Tribunal decisions where delays were not condoned due to lack of genuine mistakes. However, the Tribunal, adopting a justice-oriented approach, condoned the delay in the interest of justice and proceeded to hear the appeal on merits.

2. Classification of excisable goods:
The appellants classified their products (H.P. Hoses, L.P. Hoses, and Push-Pull Coupling) under Tariff Sub-Heading 8431.00, which was approved by the proper officer. The Department later issued a show-cause notice alleging misclassification and proposed reclassification under Tariff Sub-Heading 4009.92, attracting a higher duty rate. The appellants argued that the classification was approved by the Department and there was confusion within the Department regarding the correct classification.

3. Demand of differential duty and imposition of penalty:
The show-cause notice proposed to recover Rs. 3,23,167/- as differential duty and imposed a penalty of Rs. 1 lac under Rule 173Q of the Central Excise Rules. The appellants contested the demand and penalty, arguing that there was no intent to evade duty and the classification was approved by the Department. The Tribunal examined the impugned order, show-cause notice, and related records, and found that the demand of differential duty was not sustainable as the classification list was approved and remained in force during the period of dispute.

4. Invocation of the extended period of limitation under Section 11A(1) of the Central Excises and Salt Act:
The Department invoked the extended period of limitation under Section 11A(1) based on alleged mis-statement by the appellants. The Tribunal referred to the Supreme Court's decision in the case of Cotspun Limited, which held that duty paid based on an approved classification list cannot be considered a short levy, and differential duty cannot be recovered on this basis. Applying this precedent, the Tribunal held that the demand of differential duty was time-barred and the imposition of penalty was unsustainable.

Conclusion:
The Tribunal allowed the COD application, set aside the impugned order, and allowed the appeal, granting consequential reliefs to the appellants. The demand of differential duty was held to be time-barred, and the penalty imposed was found unsustainable.