2000 (9) TMI 535 - AT - Central Excise

Summary

Issues Involved:
1. Classification of PVC/HDPE/LDPE/LLDPE pipes.
2. Applicability of exemption Notification No. 46/94.
3. Imposition of duty and penalty.

Summary:

1. Classification of PVC/HDPE/LDPE/LLDPE pipes:
The primary issue was whether the PVC/HDPE/LDPE/LLDPE pipes manufactured by the appellants should be classified under Chapter Heading 84.24 as parts of Drip Irrigation/Sprinkler Irrigation systems or under Chapter Heading 39.17 as plastic pipes. The department contended that these pipes were not solely or principally used with Drip Irrigation Systems (DIS) and thus should be classified under Chapter 39.17. However, the appellants argued that these pipes were specifically manufactured for DIS, supported by ISI specifications and technical literature, and should be classified under Chapter 84.24.

2. Applicability of exemption Notification No. 46/94:
The appellants claimed the benefit of full exemption u/s Notification No. 46/94 dated 1-3-1994, arguing that their products were correctly classified under Chapter 84.24. The Tribunal referred to a previous case (Elgi Ultra Appliances Ltd.) where similar items were classified under Chapter 84.24, granting the benefit of the said Notification. The Tribunal found that the items in question were indeed parts of DIS and thus eligible for the exemption.

3. Imposition of duty and penalty:
The Commissioner of Central Excise had confirmed a duty demand of Rs. 17,41,377/- u/r 9(2) of Central Excise Rules, 1944 read with proviso to Section 11A of Central Excise Act, 1944, and imposed a penalty of Rs. 1,00,000/- u/r 9(2), 52A, 173Q, and 226 of Central Excise Rules. The Tribunal, however, set aside the impugned order, applying the ratio of the Elgi Ultra Appliances Ltd. case, which was upheld by the Hon'ble Apex Court, thereby allowing the appeal and negating the duty demand and penalty.

Conclusion:
The Tribunal concluded that the PVC/HDPE/LDPE/LLDPE pipes manufactured by the appellants were indeed parts of Drip Irrigation Systems and should be classified under Chapter Heading 84.24, making them eligible for the exemption u/s Notification No. 46/94. Consequently, the duty demand and penalty imposed by the Commissioner were set aside, and the appeal was allowed.