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2001 (3) TMI 174
Remission of duty ... ... ... ... ..... oods processed in the warehouse is capable of condonation in terms of Rule 147 but for this rule to attract the commodity must fall under Chapter VII of the Rules in terms of a notification to be issued under Rule 139. It is likely that such loss is covered by executive instructions and therefore we do not find any force in the Commissioner s statement that there is no provision of law covering such loss. It is for the Commissioner to examine the provisions of law and in its absence the executive instructions to enable him to remit the payment of duty on the loss in refining of the sugar. For this, the proceedings will have to be remitted to the Commissioner and the assessees must assist him in determining the law. 7. In the result, the appeal is partly allowed. Confirmation of duty of Rs. 8,67,085/- is set aside. The orders of confirmation of demands of Rs. 54,570/- and Rs. 64,855/- are remitted back to the Commissioner for reconsideration in view of our observations above.
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2001 (3) TMI 173
Wrappers, labels ... ... ... ... ..... mption becomes untenable. 4. We also have seen the HSN entry on which this entry is based. The Explanatory Note thereto indicated that the coverage thereof is not limited to products based on paper. 5. Substantial case law has been produced by both sides. In view of the limited issue it may not be necessary to go into the judgments. The fact that similar products would be covered under Chapter 49 comes out in the Tribunal judgment reported in 1999 (108) E.L.T. 680 (Tribunal) in the case of Fitrite Packers v. Collector of Central Excise, Bombay as also in the case reported in 1988 (98) E.L.T. 365 (Tribunal), Collector of Central Excise v. Adhunik Plastic Industries. 6. The Supreme Court judgment in the case of Metagraphs Pvt. Ltd. v. Collector of Central Excise, Bombay 1996 (88) E.L.T. 630 (S.C.) held printed aluminium labels as finally under Chapter 49. 7. In the result, we find that the Commissioner s order does not sustain. This appeal is allowed with consequential relief.
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2001 (3) TMI 172
Issues involved: Interpretation of related persons' sale price under Section 4(1A) of the Central Excise Act.
Summary: The appeal was filed by a manufacturer, a subsidiary company of the buyer company, purchasing 100% of goods from the subsidiary. The buyer company holds 60% shares, with the remaining 40% held by a foreign investment company and others. The appellants argued that for related persons, the mutuality of interest must be established for invoking related persons' sale price under Section 4(1A). They cited legal precedents to support their case.
The Department contended that once covered by the definition clause, liability follows, regardless of mutuality of intentment, especially when 100% of goods are sold to the buyer holding 60% shares of the assessee.
After considering submissions and case laws, the Tribunal found no merit in the Revenue's contentions. They held that without proving the mutuality of interest of the assessee company in the buyer company, the related persons' sale price provision cannot be applied. Relying on binding case law, the Tribunal allowed the appeal, setting aside the lower authorities' orders and granting consequential relief, if any, as per law.
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2001 (3) TMI 171
Issues involved: Inclusion of charges paid to RITES for inspection in the assessable value and the applicability of the extended period under Section 11A for duty demand.
Inclusion of Inspection Charges: The appellant, manufacturing malleable cast iron inserts, sells them to railway or sleeper manufacturers, with mandatory inspection by RITES. The appellant contends that RITES inspection is buyer-initiated and separate from their own testing. Citing precedents, it argues that charges for third-party inspection, not affecting marketability, should not be included in assessable value. Unlike cases where buyers opt out of such inspection, here every buyer requires RITES testing before purchase, making the goods non-marketable until approved. The appellant recovers inspection charges from buyers, who are reimbursed by Railways, thus forming part of the goods' value.
Applicability of Precedents: Referring to Shree Pipes and Hindustan Development cases, the Tribunal established that charges for buyer-initiated third-party inspection should not be included in assessable value. The absence of buyer optionality and the necessity of RITES testing for every sale distinguish this case from Hindustan Development, where inspection charges were borne by Railways, the sole buyer.
Extended Period for Duty Demand: The notice demanding duty for clearances made between 1991 and 1992 invoked the extended period under Section 11A due to non-disclosure of inspection charges recovery. The appellant did not dispute the lack of communication to the Department regarding these charges, leading to the Commissioner's justified application of the extended period.
Conclusion: The appeal was dismissed, affirming the inclusion of RITES inspection charges in the assessable value and the validity of the extended period for duty demand.
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2001 (3) TMI 170
Valuation (Central Excise) ... ... ... ... ..... E.L.T. 164 (S.C.) has been distinguished and TOT in terms of Section 18(3) of the Karnataka Sales Tax Act, 1957 was found to be deductible from assessable value under Section 4(4)d(ii) of the Central Excise Act. (b) We find that instructions to the same effect have been given in the Basic Manual of Department Instructions on Excisable Manufacture Product, pages 102 and 103 of the 3rd Edition, wherein the opinion of Ministry of Law has been mentioned that the Central Excise and Salt Act does not stipulate the taxes which are not included in the value are which will be passed on to the Consumer. (c) Tribunal has been consistently holding the view of eligibility of TOT based on Supreme Court s decision in the case of MRF - 1995 (77) E.L.T. 433 and Hindustan Lever Ltd. - 1997 (89) E.L.T. 720 (Trib). Following the same we find no merits in the learned Commissioner (Appeals) orders to deny the deductions on TOT. 3. In view of our findings the Order is set aside and appeal allowed.
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2001 (3) TMI 169
SSI Exemption - Brand Name - Demand - Limitation ... ... ... ... ..... No. 15/2001-B, dated 11-1-2001 that All these facts together will lead to only one conclusion that there is mutuality of interest between the two units and as held by the Supreme Court in Calcutta Chromotype Ltd., 1998 (99) E.L.T. 202 (S.C.) the corporate veil can be lifted. The person behind manufacturer and buyer are same and the financial flow back is also there in the form of interest free advances and meeting of all the expenses for sales promotions as well as after sale services. Thus we hold that M/s. LMS Marketing Pvt. Ltd. are related person of the Appellants. 10.Accordingly we uphold the demand of Central Excise duty from 1-4-1990. However, amount of duty is reduced to Rs. 6,59,724/-. We also uphold the demand of duty amounting to Rs. 10,835/-. The redemption fine of Rs. 15,000/- is not on the higher side as such is confirmed. However, taking into consideration all facts, we reduce the amount of penalty to Rs. 60,000/-. The Appeal is disposed of in the above terms.
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2001 (3) TMI 168
Issues involved: Classification of Diagnostic Reagent Kits and Strips under Tariff Heading 3822, compliance with Rule 74 of the Drugs and Cosmetics Act, 1940 regarding drawal of samples, duty demand on samples, penalty for non-maintenance of sample details in statutory registers.
Classification and Compliance with Rules: The appellants manufactured Diagnostic Reagent Kits and Strips classified under Tariff Heading 3822, requiring a licence u/s Drugs and Cosmetics Act, 1940. Compliance with Rule 74 of the Act was necessary, including drawal of samples for testing as per sub-rules (c) and (l) to ensure quality and maintain records.
Duty Demand and Penalty: Initial show cause notice demanded duty on samples drawn during a specific period, alleging non-maintenance of sample details in statutory registers u/r Central Excise Rules, invoking extended period due to alleged suppression of facts. Subsequent adjudications confirmed duty demand and penalties by Collector and Assistant Commissioner, upheld by Commissioner (Appeals).
Marketability and Duty Liability: Argument presented that samples drawn immediately after manufacture for testing were not marketable and thus not dutiable, citing precedents where marketability was deemed essential for duty liability, especially for samples not packaged for sale.
Legal Precedents and Applicability: Reference made to legal judgments emphasizing marketability as key for duty liability, including distinction between P or P medicines and miscellaneous chemical preparations, highlighting relevance of Drugs and Cosmetics Act definitions in determining dutiability.
Sample Storage and Duty Exemption: Samples stored beyond expiry date were deemed non-marketable, thus not subject to duty payment, supported by interpretation of Central Excise Rules regarding clearance from factory and captive consumption.
Penalty Imposition and Culpability: Despite proposed penalties for non-maintenance of sample records, penalties were not imposed by the Commissioner due to absence of clandestine removal and technical contravention, indicating absence of mala fides and negating suppression or misrepresentation claims.
Judgment and Relief: Tribunal ruled in favor of the appellants, finding no duty liability on samples drawn for testing or stored beyond expiry, leading to allowance of appeals and consequential relief as warranted.
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2001 (3) TMI 167
Fabrics processed with glue, starch, pigment ... ... ... ... ..... judication order only has assumed that it may be stiffened textile fabrics without giving any clear findings for classifying the impugned product under 59.01. As the same is used as backing materials for the coated abrasives and for this purpose they were using the starch, glue etc., we do not agree with the findings that the impugned goods used as backing material for the coated abrasives could be treated as textile fabric of a kind used for the outer covers of the books or the like. It does not satisfy the criteria laid down in Tariff Heading 59.01. The ld. Counsel has rightly relied upon the decision in the case of Swastik Coaters P. Ltd. (supra) and Solapur Zilla Vinkar Sahakari Federation (supra) where the cotton fabrics though processed with starch and dolomite has been classified under Heading 52.06. Following the ratio of these two decisions, we set aside the impugned order and hold that the impugned product is classifiable under Heading 52.06 of the said Tariff Act.
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2001 (3) TMI 166
Valuation (Central Excise) ... ... ... ... ..... at deduction could be allowed based on the comparable position of other manufacturers. In the present case, the appellants competitors were being given deduction of 28 from the retail price for the purpose of fixing the assessable value of their goods. The goods manufactured by the appellants are also photocopiers. We, therefore, find it appropriate that deduction at the same rate be allowed to the appellants also. This is all the more so, since deduction is being allowed at standard rates by the Revenue in the case of all goods which are being assessed on the basis of MRP. There is no justification for not giving deduction at the same rate to all manufacturers in the same industry. It is, accordingly, ordered that the photocopiers manufactured by the appellants be assessed to duty after allowing 28 deduction from retail price. Consequential relief, if any, shall be allowed upon such reassessment of the goods. Appeal is, thus, allowed after setting aside the impugned orders.
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2001 (3) TMI 165
Valuation (Central Excise) ... ... ... ... ..... any grounds or reason on part of the Revenue to have not accepted the order if the Assistant Commissioner, who had granted the TOT deductions this advise, not only binding on Revenue, is the correct position in law. TOT deductions are eligible. (c) We have perused the decision of M/s Bata India Ltd. 1996 (84) E.L.T. 164 (S.C.) and find that the issues decided therein are not deductions of TOT, held as permissible, by the Constitutional Bench of Supreme Court in the case of M/s Bombay Tyres International (P) Ltd. case, but deductions for purposes of interpreting the exemption notification. The ratio of that decision is not applicable in this case. We also rely on Tribunal s decision reported in 2000 (118) E.L.T. 530 and 1997 (89) E.L.T. 720 . 4. When we find that the Commissioner (Appeals) has relied on a decision, ratio of which is not applicable and the deductions are permissible, we set aside the order, restore the order of the Assistant Commissioner and allow this appeal.
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2001 (3) TMI 164
Issues involved: Alleged contravention of Central Excise Rules and demand for duty, jurisdiction of authority in issuing show cause notice to a 100% E.O.U., confiscation of seized granite slabs, penalty imposition, and compliance with Circulars related to E.O.Us.
Summary: The case involved a Hundred per cent. Export Oriented Unit (E.O.U.) manufacturing polished granite slabs under Central Excise Tariff Act, 1985. The appellant's premises were visited, and granite slabs were seized, leading to allegations of contravention of various Central Excise Rules and duty evasion. The Commissioner's order included confiscation of seized slabs, penalty imposition, and duty demands, prompting the appeal.
Upon review, the Tribunal found that the authority's jurisdiction to issue a show cause notice to a 100% E.O.U. was in question, citing Circulars requiring referral to the Development Commissioner before adjudication. The Tribunal emphasized the importance of the proviso to Section 3(1) of the Central Excise Act, highlighting differences in levies for goods sold by E.O.Us in the Domestic Tariff Area (DTA) and the necessity for permission from the Development Commissioner for sales exceeding 25% of production.
Regarding confiscation, the Tribunal noted discrepancies in the Collector's findings and lack of evidence correlating seized slabs with those cleared from the factory, leading to the rejection of confiscation. The Tribunal also addressed discrepancies between RG.1 and Bank Statements, emphasizing that RG.1 entries are not statutory for E.O.Us and cannot solely establish clandestine clearance. Consequently, the Tribunal set aside the order, ruling against duty demands, confiscations, and penalties, finding no sufficient grounds for confiscation under Rule 209(2).
In conclusion, the Tribunal set aside the Commissioner's order and allowed the appeal, emphasizing compliance with Circulars, proper jurisdiction, and the specific regulatory framework applicable to E.O.Us in determining duty liabilities and confiscations.
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2001 (3) TMI 163
Valuation (Customs) ... ... ... ... ..... ractors Ltd v. CC, 2000 (122) E.L.T. 321. In the judgment, the Court has said that in the absence of an applicability of any of the exports contained in sub-rule (2) of rule 4 of the Customs Valuation the transaction value has to be accepted. The Tribunal in its order in CC v. Nippon Bearings (P) Ltd., 1991 (55) E.L.T. 68, while considering imports of such bearing from Hungary had not accepted the plea of the department that value should be enhanced, noting that there was no evidence of contemporary imports. This order has been upheld by the Supreme Court in 1996 (82) E.L.T. 3. The judgemert of the Supreme Court in Sharp Business Machine v. CCE, 1990 (49) E.L.T. 640, cited by the departmental representative has to be distinguished. The Court in that case took note of the fact that there was a special relationship between the importer and the manufacturer. That is not the case before us. 3. We therefore allow the appeals and set aside the impugned order. Consequential relief.
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2001 (3) TMI 162
Smuggling - Silver bullion - Burden of proof ... ... ... ... ..... n respect of small manufacturers and dealers. The circular further stipulated that if in smaller cases investigation was considered essential, the permission of the Asstt. Commissioner should be obtained. The proceedings in the present cases have been taken entirely contrary to the policy on investigation contained in the circular of the Government. Therefore, the seizure and the subsequent confiscation and imposition of penalty have to be held as bad as done by this Tribunal in an identical case of Shri N.S. Allaudeen v. CC, Trichy (supra). Consequently, the appeal succeeds. The impugned order is set aside in its entirety with consequential relief to the appellants. The confiscated goods shall be returned immediately to the appellants. For hearing of the appeal, appellants had made a pre-deposit of Rs. 10,000/- constituting part of the penalty of Rs. 20,000/-. In view of our setting aside the penalty, that amount of pre-deposit shall also be returned to appellants forthwith.
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2001 (3) TMI 160
EPABX System ... ... ... ... ..... of other statutory provisions which is not permissible under the law. He had relied upon some decisions to the effect that exemption notification has to be construed strictly, the words used in the provisions, imposing taxes or granting exemption should be understood in ordinary parlance the notification must be read as a whole in the context of other relevant provisions and notification should be given their due effect, keeping in view the purpose underlying. We feel that the Tribunal in Maruti Udyog extended the benefit keeping in view the purpose underlying in issuing the Notification. This decision has also been followed by the Tribunal in the case of Wipro G.E. Medical Systems, supra, observing that this view creates a harmonious reading between the Interpretative Rule as well as the Notification. In view of this the exemption under Notification will be available to the impugned goods. 11.Accordingly the impugned Order is set aside and all the three appeals are allowed.
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2001 (3) TMI 158
SSI Exemption - Brand name - Valuation (Central Excise) ... ... ... ... ..... bstantial financial transaction between the two. The ratio of the Narendra Machine Works order will, therefore, squarely apply on this aspect also, and hence we hold that the appellants of the Marketing Co. are related persons and therefore, the price at which the Marketing Co. sold the goods is the assessable value of goods in question. 4. The duty demand is, therefore, required to be requantified on the above basis, after extending the benefit of SSI Notification No. 175/86 and for this purpose, we remand the case to the jurisdictional Commissioner. The confiscation of five pieces of CAM Dobby Heads is set aside in the light of our finding on the first issue. Penalty is also sustainable in view of our finding that the appellants and M/s. L.M.S. Marketing P. Ltd. are related persons however, considering the fact that we have accepted the plea of the appellants regarding availability of SSI benefit, we reduce the penalty to Rs. 20,000/-. 5. The appeal is thus partly allowed.
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2001 (3) TMI 157
Issues Involved: 1. Classification of Dessert Mixes. 2. Validity of differential duty demand based on classification. 3. Correct classification under Chapter Heading 04.04 or 19.01.
Summary:
1. Classification of Dessert Mixes: M/s. Nestle India Ltd. sought to classify their Dessert Mixes (Nestle Milkmaid Kesar Kulfi Mix, Nestle Milkmaid Shahi Rabri Mix, and Nestle Milkmaid Kalakand Mix) under Chapter Heading 04.04 for the period from 1-5-1996 to 18-9-1996. The adjudicating authority classified these products under Chapter sub-heading 2108.90, leading to a demand for differential duty. The appellate authority disagreed with this classification but did not uphold the classification under Heading 04.04 either, directing a re-examination.
2. Validity of Differential Duty Demand Based on Classification: The Tribunal noted that the show cause notice demanded differential duty on the basis that the products were classifiable under Chapter sub-heading 2108.90. The appellate authority found this classification untenable. It is settled law that recovery of duty under a different Tariff Heading than proposed in the show cause notice is not permissible (Collector of Central Excise v. Bright Brothers Ltd.). Therefore, the differential duty claimed in the show cause notice was irrecoverable without issuing a new show cause notice for classification under Heading 19.01.
3. Correct Classification Under Chapter Heading 04.04 or 19.01: The Tribunal examined the ingredients of the products and the relevant Tariff sub-headings. Chapter 4 covers dairy produce and products consisting of natural milk constituents, even with added sugar, sweetening matter, or flavoring. The Tribunal found that the products did not contain any ingredients that would exclude them from Heading 04.04. The presence of starch below 5%, sugar, almond bits, pistachio bits, or saffron bits did not disqualify the products from this heading. Citric and tartaric acids, being flavoring agents, also did not affect this classification.
Chapter Heading 19.01 applies to food preparations of milk and cream not elsewhere specified or included. Since the products did not contain ingredients not permitted by Chapter Headings 04.01 to 04.04, they could not be classified under Heading 19.01. The Tribunal rejected the argument that the products were not edible as such and thus could not be classified under Heading 04.04, agreeing with the appellate authority's interpretation of "edible."
The Tribunal also dismissed the reliance on the decision in Collector of Central Excise v. Frozen Foods Pvt. Ltd., as the products in question were different in character and composition. The Tribunal concluded that the products were classifiable under Heading 04.04, and the duty demanded under Chapter Heading 21.08 could not stand.
Conclusion: The Tribunal held that the Dessert Mixes (Nestle Kalakand Mix, Nestle Rabri Mix, and Nestle Kesar Kulfi Mix) are classifiable under Heading 04.04. The appeal was allowed with consequential reliefs, if any.
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2001 (3) TMI 155
Issues involved: Duty demand under Notification No. 208/83, limitation period, suppression of facts by respondents.
Duty Demand under Notification No. 208/83: The appeal was filed by the Revenue against the Order-in-Original dropping the duty demand of Rs. 69,73,171.81 against the respondents for wrongly availing the benefit of Notification No. 208/83. The Collector confirmed the demand, stating that the respondents were not entitled to the benefit as their inputs were not duty paid. The Tribunal affirmed this finding but remanded the case to the Collector to re-examine the issue of limitation.
Limitation Period: After the remand, the Collector held the duty for the period in question as time-barred, stating that there was no suppression of facts by the respondents. The Revenue challenged this decision, arguing that the Collector went beyond the scope of the remand order by considering new evidence. The Tribunal found that the Collector's findings were beyond the scope of the remand and that the burden of proving the Revenue's knowledge was on the respondents, which they failed to discharge.
Suppression of Facts by Respondents: The Collector did not record specific findings on the suppression of material facts by the respondents. Merely showing invoices to the Audit Party during a visit was deemed insufficient to prove the Revenue's knowledge of the benefit availed by the respondents. The Tribunal highlighted previous judgments emphasizing the need for specific knowledge on the part of the department regarding the activities of the assessee.
Decision: The impugned order of the Collector was set aside, and the matter was remanded for a fresh decision on the question of limitation, with an opportunity for both sides to present their case. The appeal of the Revenue was allowed by way of remand.
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2001 (3) TMI 153
Issues involved: The issues involved in this judgment relate to duty demands and penalties in respect of cigarettes manufactured by job worker manufacturers on behalf of a principal company.
Duty liability of brand name holders and job workers: The appellants argued that brand name holders who engage job workers for manufacturing cannot be held liable for duty on products made by the job workers. They contended that job workers are responsible for duty payment on goods they manufacture. The appellants relied on a previous decision regarding ITC brand cigarettes to support their position. They also argued that duty demands against job workers, except one, were time-barred. The appellants emphasized that there was no evidence of job workers' involvement in any fraud, hence extended duty demand could not be raised against them.
Revenue's stance and justification for duty demand: The Revenue contended that duty evasion was a result of deliberate fraud by the principal company in collaboration with job workers. They argued that job workers were closely associated with the principal company and had full control exercised over them. The Revenue cited previous tribunal orders and Supreme Court dismissal of appeals to support their position on duty demand and penalty imposition.
Legal position on duty liability of job workers and brand name holders: The Tribunal referred to Supreme Court and previous tribunal decisions establishing that job workers are considered manufacturers and solely responsible for duty payment on goods they produce. They noted that the duty demand against the principal company in this case could not be sustained based on settled legal principles.
Control and relationship between principal company and job workers: The Revenue argued that the principal company should be held liable for duty payment as they provided instructions, drawings, and specifications to job workers and maintained control over them. However, the Tribunal held that close relationship and control by the principal company does not alter the legal standing of job workers as manufacturers under Central Excise law.
Absence of evidence for duty evasion by job workers: The Tribunal found no evidence that job workers suppressed facts to evade duty payment on goods manufactured under the principal company's brand name. They cited a previous decision regarding duty demands on job workers of another company to support their conclusion that duty demands on the job workers in this case were not legally sustainable.
Penalties in absence of duty demand: It was established that in the absence of duty demand, penalties cannot be imposed. Therefore, since duty demands were not sustainable, penalties on both the job workers and the principal company were set aside.
Final decision: One appeal was dismissed as not pressed, while the other appeals were allowed with consequential relief, if any, after setting aside the impugned orders.
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2001 (3) TMI 151
Issues involved: Classification of activity of fabricating body on duty paid chassis as manufacture of Motor Vehicle, applicability of extended period of limitation for demanding duty u/s 11A(1) of the Central Excise Act.
Summary: In the case before the Appellate Tribunal, the common issue was whether fabricating body on duty paid chassis constitutes the manufacture of a Motor Vehicle, classifiable under specific headings of the Central Excise Tariff Act or under a different heading. The Tribunal considered arguments from various parties and reviewed relevant legal precedents, including a decision by the Supreme Court in the matter of Kamal Auto Industries. The Tribunal noted that the classification of bodies built on chassis falls under a specific heading of the Tariff.
Regarding the demand for duty within the specified time limit, the Tribunal examined each appellant's case individually. It was observed that demands within the six-month period were upheld, while demands beyond that period were set aside. The Tribunal also addressed the issue of penalties, concluding that no penalty was imposable on the appellants due to the nature of the classification dispute and the actions taken by the Department.
Furthermore, the Tribunal confirmed that the appellants were eligible for Modvat credit of the duty paid on inputs, subject to providing necessary documentation. The Tribunal also clarified the determination of assessable value based on the cum duty price, as established in a previous decision by the Larger Bench of the Appellate Tribunal.
In conclusion, the Tribunal disposed of all appeals based on the above considerations and rulings, providing specific directives for each appellant's case.
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2001 (3) TMI 149
Printed plastic sheets ... ... ... ... ..... contested by TSA . 6. We are not able to accept the logic that the Commissioner advances. We agree that the plastic sheet containing the advertising matter is, so to speak, the heart of the advertising signs. The entire object of such signs is to display these sheets. This does not however mean that the process of printing of text of these sheets by itself makes them the signs as the Commissioner seems to suggest. However vital the plastic sheet is for making these signs, it cannot by itself comprise such a sign. It is to be placed in a frame and provided illumination for the text contained in it and displayed with the desired effect. It would therefore not be correct to say that merely by the process of printing a new product emerges. Such an interpretation would also render redundant the words not elsewhere specified occurring in Heading 84.05 (sic.). We therefore hold that the sheets were correctly classifiable under Chapter 49. 7. Appeal allowed. Impugned order set aside.
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