2001 (2) TMI 626 - AT - Central Excise

Summary

Issues: Classification of goods under different headings, retrospective application of classification change, denial of benefit under Notification 67/82, applicability of Modvat credit, compliance with departmental instructions.

Classification of Goods:
The case involved the classification of printed paper cups and lids manufactured by the appellant under different headings of the tariff. Initially classified under Heading 4819.90 at nil rate of duty, subsequent show cause notices proposed changes to Heading 4823.90 and later to Heading 4819.12. The Assistant Collector modified the classification to Heading 4819.12 retrospectively, leading to a demand for duty for a specific period. The appellant appealed to the Collector (Appeals) seeking the benefit of Notification 67/82, which was denied based on non-compliance with the notification's condition regarding Modvat credit.

Retrospective Application and Denial of Benefit:
The Assistant Collector's retrospective classification change and denial of Notification 67/82 benefit were contested by the appellant. The appellant argued that the classification changes were made at the department's instance, and it followed instructions despite disagreement. The appellant's compliance with departmental directions regarding classification and duty payment was highlighted to support the claim for exemption under Notification 67/82.

Applicability of Modvat Credit:
The appellant's entitlement to Modvat credit and the denial of Notification 67/82 benefit based on Modvat credit availed were key points of contention. The appellant's compliance with departmental instructions and payment of duty with Modvat credit under departmental guidance were emphasized to support the claim for exemption despite the subsequent classification changes.

Compliance with Departmental Instructions:
The appellant's adherence to departmental instructions regarding classification and duty payment, even under protest, was a significant factor in the case. The appellant's argument that it followed the department's guidance in changing the classification and paying duty, and hence should not be denied the benefit of Notification 67/82, was central to the appeal.

Conclusion:
The Tribunal allowed the appeal, holding that the benefit of Notification 67/82 should be extended to the appellant for specific clearances subject to the appellant paying an amount representing the Modvat credit taken on inputs. The decision emphasized the appellant's compliance with departmental instructions and the equitable consideration of the circumstances leading to the classification changes and benefit denial under Notification 67/82.