2015 (11) TMI 315 - AT - Central Excise

Classification of goods - Classification under Chapter Heading number 27.01 or under Chapter Heading number 34.03 - benefit of lower rate of duty - Bar of limitation - Held that - If the Department had any doubts as to the classification of the said products, they should have informed the appellant to produce further documents in order to correctly classify the products. There being no correspondence from the Department, before the approval of the classification list, it has to be inferred that the classification done by the appellant is acceptable to the Department. The appellant having got the classification list approved, clear the said products as per the approved classification list discharging the duty as per the classification list, cannot be charged with the allegation of mis- statement or suppression of facts to evade payment of duty. Further, it is noticed that the revenue authorities, on receipt of classification list, did not direct the appellant to go for the drawal of the samples and get the same tested in order to ascertain the correct classification of the product, during the relevant period. Having not done so, revenue authorities now cannot turnaround and allege that there was suppression, mis-statement on the part of appellant. There is nothing on record to show that during the relevant period, the job cards of the products in question were indicative of the classification under chapter 34. In any case, revenue having failed to indicate to the appellant assessee that the classification sought by them is unacceptable now cannot rely upon the job cards which were of latter period. It is settled law that the case of classification of a product, the revenue has to play a proactive role, which is absent in the case in hand. - Demand is otherwise barred by limitation - impugned order is unsustainable on the ground of limitation, and is liable to be set aside - decided in favour of assessee.

Summary

Issues:
Classification of products under different headings for duty purposes, Allegations of misclassification and duty evasion, Limitation aspect in the case.

Analysis:
1. Classification of Products: The appeal involved a dispute regarding the classification of products under Chapter Heading numbers 27.01 and 34.03 for duty purposes. The appellant claimed classification under 27.01, allowing for a lower rate of duty, while the revenue contended that the products should be classified under 34.03. The show cause notice alleged misclassification and duty evasion by the appellant.

2. Limitation Aspect: The appellant primarily argued on the limitation aspect, emphasizing that the demands were hit by limitation. The appellant had filed classification lists during the period in question, which were approved by the authorities as per the Central Excise Rules. The appellant's classification was based on their knowledge of the products, and there was no indication of doubt from the department regarding the classification. The Tribunal found that the demand was hit by limitation for multiple reasons.

3. Suppression Allegations: The revenue authorities claimed suppression on the part of the appellant for not informing the department about the product specifications. However, the Tribunal noted that the department did not raise any doubts or direct further classification during the relevant period. The Tribunal highlighted the importance of the revenue playing a proactive role in classification cases.

4. Judicial Precedent: The Tribunal referenced the Supreme Court judgment in the case of Densons Pultretaknik, stating that mere classification under different headings does not necessarily indicate willful misstatement or suppression. The Tribunal found that the case at hand was similar to the principles laid down in the judicial precedent.

5. Limitation Grounds for Appeal: The Tribunal concluded that the impugned order was unsustainable on the ground of limitation and set it aside. The appeal was allowed based on the limitation aspect, and no findings were recorded on other submissions due to the disposal of the appeal on this ground.

In summary, the judgment focused on the classification of products for duty purposes, allegations of misclassification and duty evasion, and the crucial limitation aspect, ultimately ruling in favor of the appellant based on the limitation grounds and setting aside the impugned order.