2001 (9) TMI 345 - AT - Central Excise

Summary

Issues: Classification of Thermoplastic Elastomer Synthetic Rubber and Thermo Plastic Elastomer Synthetic Rubber Compound under sub-headings 40002.00 and 40005.00 vs. sub-heading 3902.90. Differential duty confirmation of Rs. 92,67,570.

Classification Issue:
The appellants manufactured Thermoplastic Elastomer Synthetic Rubber and Thermo Plastic Elastomer Synthetic Rubber Compound, claiming classification under sub-headings 40002.00 and 40005.00, respectively. However, a show cause notice alleged classification of the substances under sub-heading 3902.90, relying on the opinion of the Dy. Chief Chemist and extracts from a textbook. The notice did not indicate whether the report was furnished to the assessees. Despite protests about the non-supply of the report, the chemical examiner's report certified the products to fall under Chapter 40, referencing Chapter No. 4(a) for classification. The Dy. Chief Chemist later declared the goods as Synthetic Rubber, nullifying the chemical examiner's opinion. The Assistant Commissioner confirmed the classification, leading to an appeal and subsequent dismissal by the Commissioner, prompting the filing of an appeal before the Appellate Tribunal.

Differential Duty Confirmation Issue:
Following the classification decision, the Assistant Commissioner confirmed a differential duty of Rs. 92,67,570. The Commissioner (Appeals) upheld this order, resulting in an appeal before the Tribunal. The complexity of the proceedings, including discrepancies in opinions and the absence of certain reports, raised concerns about the fairness of the process. The Tribunal noted the importance of scientific testing in classification matters and criticized the unsatisfactory conduct of the proceedings, emphasizing the need for adherence to principles of natural justice.

Judgment:
Given the deficiencies in the proceedings and the absence of the Dy. Chief Chemist's report, the Tribunal allowed the appeals and remanded the case back to the Assistant/Dy. Commissioner. The Commissioner was directed to conduct examinations of remaining samples at specified laboratories, provide the reports to the assessees for submissions, and then issue a reasoned order based on the findings. This decision aimed to address the shortcomings in the initial classification process and ensure a more thorough and just determination based on scientific analysis and procedural fairness.