2001 (1) TMI 680 - AT - Central Excise

Summary

Issues Involved:
1. Classification of Liner Fabric under the Central Excise Tariff Act.
2. Applicability of extended time limit for demanding duty.
3. Imposition of penalty and confiscation of goods.

Issue-Wise Detailed Analysis:

1. Classification of Liner Fabric:
The primary issue is whether the Liner Fabric manufactured by the appellant should be classified under sub-heading 5406.29, as claimed by the appellant, or under sub-heading 5911.90 (59.09 before 25-5-1995), as confirmed by the Commissioner. The appellant argued that their product is a textile fabric, not a textile article, and falls under Chapter 54. They contended that the product is used merely as a liner or separator between rubberized plies and does not undergo any further processing to become an article. The appellant emphasized that the product is not suitable for industrial use but is used for storage purposes, which does not qualify as an industrial use. They referred to various definitions and explanatory notes to support their argument that the product does not meet the criteria for classification under Heading 59.11. The Revenue, however, argued that the product is an industrial fabric meant for industrial use and classified it under Chapter 59 based on the appellant's partner's statement and other references. The Tribunal concluded that the product is a fabric and not a made-up article, and its use as a separator does not qualify as industrial use. Therefore, the product does not meet the criteria for classification under Heading 59.11, and the appeal was allowed on this ground.

2. Applicability of Extended Time Limit for Demanding Duty:
The appellant argued that the extended period for demanding duty is not applicable as they were following the classification based on an Order issued under Section 37B of the Central Excise Act and a Trade Notice. They contended that there was no deliberate intention to evade duty. The Revenue argued that the appellant did not declare the goods to the Department, and the extended period is applicable due to suppression of facts. Since the appeal was allowed on merit, the Tribunal did not consider the issue of the extended period.

3. Imposition of Penalty and Confiscation of Goods:
The appellant argued that the penalty under Section 11AC is not imposable as most of the period for which the demand was confirmed is prior to the section coming into force, and there was no deliberate intention to evade duty. The Revenue argued that the appellant admitted to manufacturing industrial fabrics and did not declare the goods, justifying the penalty and confiscation. The Tribunal, having allowed the appeal on merit, did not address the penalty and confiscation issue separately.

Conclusion:
The Tribunal concluded that the Liner Fabric manufactured by the appellant is a textile fabric and not a made-up article. Its use as a separator does not qualify as industrial use, and therefore, it does not meet the criteria for classification under Heading 59.11. The appeal was allowed on this ground, and the impugned order was set aside. The issues regarding the extended period for demanding duty and the imposition of penalty and confiscation were not considered as the appeal was allowed on merit.