2001 (4) TMI 356 - AT - Central Excise

Summary

Issues Involved:

1. Classification of goods under the correct tariff heading.
2. Eligibility for exemption under Notification No. 107/88.
3. Invocation of the extended period of limitation.
4. Imposition of penalties and fines.

Issue-wise Detailed Analysis:

1. Classification of Goods:

The primary issue revolves around the correct classification of the goods manufactured by the assessee, which included various kitchen utensils and knives. The assessee initially classified these goods under Chapter Heading 8211.00, which covers "Knives with cutting blades, serrated or not." However, after learning that another manufacturer (M/s. Khanderia Engineering Works) had classified similar goods under Chapter Heading 8215.00, which includes "Spoons, forks, ladles, skimmers, cake-servers, fish-knives, butter-knives, and similar kitchen or tableware," the assessee revised their classification accordingly. The Tribunal noted that the classification list was approved by the Assistant Commissioner from 3-8-1990, although the assessee sought approval from 1-4-1990. The Tribunal concluded that the goods should be classified under Heading 8211.00, acknowledging that serrated knives fall under this specific entry.

2. Eligibility for Exemption under Notification No. 107/88:

The assessee claimed the benefit of Notification No. 107/88, which provided an exemption for certain goods. The dispute arose when the department issued show cause notices seeking to reclassify the goods and deny the benefit of this notification. The Assistant Commissioner and the Commissioner (Appeals) both upheld the reclassification and denied the exemption. The Tribunal at New Delhi also supported this decision. However, the Tribunal in the present case focused on the classification issue rather than the exemption under Notification No. 107/88, ultimately determining that the goods should be classified under Heading 8211.00.

3. Invocation of the Extended Period of Limitation:

The department invoked the extended period of limitation, alleging that the assessee had deliberately mis-stated the description of their products to avail the benefit of Notification No. 107/88. The Tribunal considered the bona fide belief of the assessee, evidenced by the classification of similar goods by another manufacturer under Heading 8215.00 and the approval of RT 12 returns at a nil rate of duty. The Tribunal concluded that the invocation of the extended period of limitation was not warranted and restricted the demand of duty to six months from the date of receipt of the show cause notice.

4. Imposition of Penalties and Fines:

The original order imposed a penalty of Rs. 15,00,000/- on the assessee, confiscated land, building, plant, etc., and imposed a redemption fine of Rs. 1 lakh. Additionally, a penalty of Rs. 1 lakh was imposed on a partner under Rule 209A of the Central Excise Rules, 1944. The Tribunal, considering the bona fide belief of the assessee and the approval of RT 12 returns, held that the imposition of penalties was unwarranted. Consequently, the Tribunal remanded the matter back to the adjudicating authority for re-calculating the quantum of the demand, excluding the extended period, and stated that the levy of penalties on both appellants did not arise.

Conclusion:

The Tribunal concluded that the goods should be classified under Heading 8211.00 but restricted the demand of duty to six months from the date of receipt of the show cause notice, thereby invalidating the extended period of limitation. The imposition of penalties was deemed unwarranted, and the matter was remanded back to the adjudicating authority for re-calculating the quantum of the demand. The appeals were disposed of accordingly.