2000 (11) TMI 970 - AT - Central Excise

Summary

Issues Involved:
1. Classification of Ready Mix Concrete (RMC) under heading 3823.00.
2. Demand of duty and penalty.
3. Invocation of larger period of limitation.
4. Compliance with principles of natural justice.

Summary:

1. Classification of Ready Mix Concrete (RMC) under heading 3823.00:
The appellants argued that RMC should not be classified under sub-heading 3823 as it is not a chemical product. They contended that the excise department had never previously levied duty on RMC and that the Board's circulars indicated doubts about the classification and exigibility of RMC. The Tribunal observed that the classification under heading 3823.00, which pertains to chemical products, was inappropriate for RMC, a construction material. The Tribunal concluded that RMC does not fall under heading 3823.00, as it is not a chemical product.

2. Demand of duty and penalty:
The demands were Rs. 8,26,43,586/- and Rs. 41,69,103/- with equal penalties. The appellants argued that the department had no legislative backing to classify RMC under 3823.00 and that the burden of proof for classification lies with the department, which was not met. The Tribunal agreed, stating that the department failed to provide sufficient evidence to justify the classification and the penalties imposed.

3. Invocation of larger period of limitation:
The appellants argued that the invocation of the larger period of limitation was unjustified due to the existing doubts about the classification of RMC. The Tribunal noted that the Board's circulars and internal communications indicated a long-standing practice of not levying duty on RMC and acknowledged the existence of doubts regarding its classification. Consequently, the Tribunal held that the invocation of the larger period of limitation was not justified and set aside the demands for the disputed periods.

4. Compliance with principles of natural justice:
The Tribunal found that the show cause notices lacked proper material evidence and did not comply with the principles of natural justice, specifically the principle of audi alterum partem. The Tribunal emphasized that any quasi-judicial proceedings must provide grounds and evidence in the show cause notice, which was absent in this case.

Conclusion:
The Tribunal allowed the appeals, setting aside the impugned orders and the penalties imposed. It concluded that RMC should not be classified under heading 3823.00 and that the demands and penalties were unjustified due to the improper invocation of the larger period of limitation and non-compliance with principles of natural justice.