1999 (3) TMI 359 - AT - Central Excise

Summary

Issues Involved:
1. Stay application filed against the Order dated 17-12-1998 passed by the Collector (Appeals), Bhopal.
2. Classification of two products - Tem Adhesive and Criss-cross patches.
3. Imposition of penalty under Section 11AC.
4. Correct classification of vulcanised rubber patches.
5. Classification of criss-cross patches.
6. Interpretation of Chapter Note (9) of Chapter 40 for classification.
7. Deposit of duty demanded by the Asstt. Commissioner.
8. Prima facie case for penalty.
9. Consideration of bank guarantee and deposited amount.
10. Disposal of stay application.

Detailed Analysis:

1. The stay application was filed concerning the Order dated 17-12-1998 by the Collector (Appeals), Bhopal. The Asstt. Commissioner had confirmed the demand and imposed a penalty on the applicants. The issues revolved around the classification of Tem Adhesive and Criss-cross patches, with the Commissioner (Appeals) deciding in favor of the applicants regarding Tem Adhesive, reducing the balance duty amount. The appellants had already deposited a portion of the duty and furnished a bank guarantee for the remaining amount.

2. The appellants argued that the penalty under Section 11AC was illegal as the dispute was solely a classification issue without any misstatement of facts. They contended that no further deposit should be ordered as 30% of the duty had already been paid. Additionally, they started paying duty under protest as per the Asstt. Commissioner's classification decision. The correct classification of vulcanised rubber patches and criss-cross patches was also debated, citing previous decisions in favor of the appellants.

3. The department's case for classification was based on Chapter Note (9) of Chapter 40, arguing that the product should fall under Heading 40.08 instead of the residuary Heading 40.16. The department believed they had a strong case for classification and requested the appellants to deposit the duty in question. The Tribunal observed that the issue was arguable on merits and that the penalty seemed more like a classification dispute.

4. Considering the submissions, the Tribunal acknowledged the arguable nature of the issue and the stronger case regarding the penalty as a classification dispute. They noted the deposit made by the appellants and the bank guarantee provided, deciding that no further deposit was necessary. The stay application was disposed of with the requirement to maintain the bank guarantee during the appeal's pendency, and the recovery of the remaining duty and penalty was stayed based on the order.