1998 (6) TMI 386 - AT - Central Excise

Summary

Issues Involved:

1. Classification of blockboard/timber board under Central Excise Tariff.
2. Provisional and final approval of classification lists (C/Ls).
3. Refund claims and their legality.
4. Demand for recovery of erroneously refunded amounts.
5. Limitation period for issuing show-cause notices.

Detailed Analysis:

1. Classification of Blockboard/Timber Board:

The primary issue was whether blockboard should be classified under Tariff Heading (TH) 44.08 or 44.10 of the Central Excise Tariff Act, 1985. Initially, the classification lists (C/Ls) filed by the manufacturer were approved under TH 44.06 or 44.08, which were not disputed. Later, the appellants claimed classification under TH 44.10, leading to disputes and provisional approvals. The Assistant Collector (ACCE) and the Collector (Appeals) upheld classification under TH 44.08, which was challenged by the appellants in various legal forums, including the High Court and the Supreme Court.

2. Provisional and Final Approval of Classification Lists (C/Ls):

The ACCE provisionally approved C/Ls dated 1-3-1988 and 5-4-1988 under TH 44.10 due to ongoing disputes and court orders. Subsequent C/Ls were also provisionally approved under TH 44.10 based on court directions. The appellants argued that these approvals could not be considered provisional as the necessary procedures under Rule 9B were not followed. However, the tribunal held that the ACCE was competent to approve C/Ls provisionally under Rule 173B due to the ongoing classification dispute.

3. Refund Claims and Their Legality:

The appellants filed refund claims for excess duty paid under TH 44.08, arguing that the correct classification was TH 44.10. These claims were initially sanctioned by the ACCE based on court orders. However, the Supreme Court's judgment in the Woodcraft case, which upheld classification under TH 44.08, led to the reconsideration of these refunds. The tribunal noted that the refund claims were processed and paid subject to the final decision of the Apex Court.

4. Demand for Recovery of Erroneously Refunded Amounts:

The ACCE issued show-cause notices demanding the recovery of Rs. 94,80,658.97 and Rs. 90,05,787.16, alleging that these amounts were erroneously refunded. The appellants argued that these demands were barred by limitation and that the refunds had become final upon the dismissal of the Revenue's SLP by the Supreme Court. The tribunal held that the refunds were granted based on final assessments at that time and that any recovery of erroneous refunds must comply with the limitation period under Section 11A of the Central Excise Act.

5. Limitation Period for Issuing Show-Cause Notices:

The tribunal examined whether the show-cause notices issued for the recovery of erroneous refunds were within the limitation period. The appellants contended that the notices were barred by time as they were issued beyond six months from the date of refund. The tribunal agreed with the appellants, noting that the limitation period under Section 11A must be strictly applied, and the show-cause notices were issued well beyond the permissible period.

Conclusion:

- The tribunal upheld the classification of blockboard under TH 44.08 based on the Supreme Court's judgment in the Woodcraft case.
- It held that the provisional approval of C/Ls was valid under Rule 173B due to the ongoing classification dispute.
- The tribunal set aside the demand for recovery of Rs. 94,80,658.97 as it was barred by limitation, but confirmed the demand of Rs. 90,05,787.16, noting that the department was secured by a bank guarantee for the period covered by the interim court order.