2014 (12) TMI 992 - AT - Central Excise

Exemption Notification No. 7/2003-C.E., dated 1-3-2003 - Manufacture of Buckram - rate of duty - 8% or 16% - Held that - The impugned order passed by the Commissioner (Appeals) is based on a verification report submitted by the Jurisdictional Central Excise Superintendent who has reported that since November, 2002, the respondent had stopped the manufacture of starch based stiffened fabrics called Buckram and had switched over to manufacture of interlining fabric by LDPE powder coating method. Therefore, just because during June, 2003, the respondent had described the goods in the ER-1 return as Buckram by mistake, the same cannot be treated as Buckram in view of the report of the Range Superintendent affirming that during that period the respondent were manufacturing LDPE powder coated interlining fabrics. In the grounds of appeal, the Department has not disputed the report dated 11-8-2005 of the Range Superintendent explaining the process of manufacture and reporting that since November, 2002, the respondent have discontinued the manufacture of starch based stiffened fabrics called Buckram and have switched over to manufacture of LDPE powder coated fabrics to be used as interlining cloths. In view of this, we do not find any merits in the Revenue s appeal. - Decided against Revenue.

Summary

Issues: Classification of processed fabrics under Central Excise Tariff Act, 1985; Applicability of duty rates under Notification No. 7/2003-C.E.; Jurisdictional Range Superintendent's report verifying manufacturing process.

In this case, the respondent was engaged in manufacturing processed fabrics, including a type known as Buckram, classified under Chapters 52, 55, and 59 of the Central Excise Tariff Act, 1985. The respondent cleared Buckram in June 2003, valuing it at &8377; 3,68,178/-, paying duty at 8% ad valorem instead of the correct rate of 16% ad valorem as per Notification No. 7/2003-C.E. A show cause notice was issued for recovery of duty, interest, and penalty. The Deputy Commissioner confirmed the duty demand, imposing a penalty. On appeal, the Commissioner (Appeals) obtained a report from the Range Superintendent, concluding that the goods were appropriately classifiable under Heading 5903 as interlining fabrics coated with plastic. The Commissioner (Appeals) allowed the appeal, setting aside the Deputy Commissioner's order. The Revenue filed an appeal against this decision.

During the hearing, the respondent did not appear, and the matter was decided ex parte. The Departmental Representative argued that the goods were Buckram, chargeable at 16% ad valorem, not interlining fabrics. The Tribunal examined the records and the Range Superintendent's report, which confirmed that the respondent had switched to manufacturing interlining fabric by LDPE powder coating method since November 2002. Despite the misclassification in the ER-1 return, the Tribunal held that the goods were correctly classified as interlining fabrics based on the manufacturing process. The Tribunal dismissed the Revenue's appeal, upholding the Commissioner (Appeals) decision.

Therefore, the Tribunal affirmed that the respondent's processed fabrics were rightly classified as interlining fabrics coated with plastic, eligible for the lower duty rate under Notification No. 7/2003-C.E. The decision was based on the manufacturing process verified by the Range Superintendent, emphasizing the importance of accurate classification and duty payment in accordance with the Central Excise Tariff Act, 1985 and relevant notifications.