2000 (3) TMI 246 - AT - Central Excise

Summary

Issues:
Misdeclaration of product composition in classification lists, Benefit of Notification No. 224/79, Extended period of limitation, Fraud on Revenue department.

Analysis:
The appeal was filed against an order confirming duty demand and imposing a penalty on the appellants for misdeclaration of the product composition. The appellants were engaged in manufacturing blended yarn but misrepresented the composition in their records. They supplied worsted yarn with a composition of 70% wool and 30% nylon to a government department, contrary to their declarations of 70% wool and 15% nylon. The Collector confirmed the duty demand and penalty, leading to the appeal.

The appellants argued that their goods were under approved classification lists, and there was no misdescription. They claimed that samples tested always matched the declared composition. However, the Revenue department contended that the appellants suppressed material facts and misdeclared the product. The Tribunal analyzed the evidence and found that the appellants indeed supplied yarn with the actual composition of 70% wool and 30% nylon, contradicting their declarations.

The Tribunal rejected the appellants' defense that the chemical examiner's test reports supported their claims. It was deemed a clear case of fraud as the appellants concealed the true composition to evade duty. The Revenue department discovered the fraud during a raid on the factory premises. The appellants failed to produce invoices or evidence supporting their misdeclarations, leading to the dismissal of their appeal.

The Tribunal invoked the extended period of limitation due to the appellants' fraudulent actions. It was established that the appellants deliberately misled the Revenue department and maintained incorrect records to benefit from a notification. The principle of equity was cited, emphasizing that those engaging in fraud cannot seek refuge in legal technicalities. Ultimately, the appeal was dismissed, affirming the duty demand and penalty imposed on the appellants for their fraudulent activities.