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2015 (1) TMI 445 - AT - Central ExciseManufacture of R.C. Mattresses (Rubberised Coir Mattresses) - coir products or not - Denial of benefit of Notification No.6/2006-CE dated 01.03.2006 up to 28.02.2011 and for the benefit of Notification No.1/2011 dated 01.03.2011 for the remaining period - Imposition of penalty - Held that - CBEC Circular No.23/14/86-CX-1 dated 25.06.1986 is in conformity with the opinion of the Coir Board. In the wake of this, reliance by the Commissioner on some dictionary meaning for the purpose of deciding whether the impugned goods are coir product does not sustain. We find that the exemption Notification No.6/2006 dated 21.06.2006 was applicable to coir products. This exemption was available till 28.02.2011 when it was withdrawn and duty @ 1% was imposed vide Notification No.01/2011 dated 01.03.2011 which was hiked to 2% vide amending Notification No.16/2012 dated 17.03.2012 - Impugned demand for the period up to February 2011 does not survive. For the subsequent period, it is seen that for the period 01.03.2011 to 16.03.2012 the effective rate for coir products was 1% and from 17.03.2012 it was 2% ad val subject to the condition that there was no Cenvat Credit taken on the inputs or input services. The appellants have stated that they have already paid the duty. - there is no justification for imposition of any penalty - Decided in favour of assessee.
Issues involved:
1. Classification of R.C. Mattresses as coir products for excise duty exemption. 2. Interpretation of relevant notifications and circulars. 3. Application of excise duty rates for the period in question. 4. Imposition of penalty. Issue 1: Classification of R.C. Mattresses as coir products The judgment revolved around whether R.C. Mattresses could be considered coir products for excise duty exemption. The adjudicating authority initially denied the exemption, stating that R.C. Mattresses did not qualify as coir products under specific notifications. However, the appellants argued that various official communications, including a CBEC circular and a Coir Board clarification, supported the classification of R.C. Mattresses as coir products due to their coir content exceeding 70%. The tribunal agreed with the appellants, emphasizing that the Coir Board's opinion was crucial in determining the classification, and previous judicial decisions supported the coir industry status of R.C. Mattresses. Issue 2: Interpretation of relevant notifications and circulars The tribunal analyzed the applicability of excise duty exemption notifications, specifically Notification No.6/2006, which was in force until 28.02.2011 before being replaced by Notification No.1/2011 imposing a 1% duty rate. Subsequent amendments increased the rate to 2%. The tribunal highlighted that the exemption under these notifications was intended for coir products, and the classification of R.C. Mattresses as such warranted the benefit of these notifications. The judgment underscored the importance of official opinions and circulars over dictionary definitions in determining the scope of exemptions. Issue 3: Application of excise duty rates For the period from 01.03.2011 to 16.03.2012, the tribunal upheld the 1% duty rate for coir products, subsequently raised to 2% from 17.03.2012 onwards. The appellants had already paid the duty for these periods, and the tribunal found no grounds for imposing any penalty due to the justified nature of the duty payments. The judgment clarified the duty rates applicable to coir products during the relevant periods based on the notifications in force. Issue 4: Imposition of penalty Considering the findings on the classification of R.C. Mattresses as coir products and the correct application of duty rates, the tribunal concluded that there was no justification for imposing any penalty. As a result, the penalty was set aside, and the appellants' appeals were allowed, with the impugned demands being adjusted based on the classification and duty rates discussed in the judgment. This detailed analysis of the judgment provides a comprehensive overview of the issues involved and the tribunal's reasoning in resolving each matter related to excise duty exemption for R.C. Mattresses.
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