2016 (9) TMI 1230 - AT - Central Excise

Invokation of extended period of limitation - Classification - Gloves manufactured and used for sports - whether to be classified under Chapter heading No.9506 of Schedule to CETA 1985 or under Tariff Item No.4203 2110 of said schedule - notification issued by Government of India for All Industries Rate of Drawback through which the goods manufactured by appellant were shown to have been classifiable under Tariff Item No.950621 - Held that - the show cause notice was issued by invoking proviso to Sub-Section 1 of Section 11A to Central Excise Act 1944. The show cause notice was issued on 25.06.2013 and the period covered by the show cause notice is from June 2008 to February 2012. For issue of show cause notice under extended period separately it is to be established that the noticee has either suppressed information or miss-declared the information or contravened the provisions of Central Excise Law or Rules made thereunder and separately they had intention to evade duty. In the present case we find that Government of India through their notification for All Industry Rate of Drawback classified the goods manufactured by noticee under Tariff Item No.9506 21 and admittedly the noticee have paid the Central Excise duty liable to be paid for the goods classifiable under Tariff Item No.9506 21. Therefore Revenue could not establish that the appellants had intention to evade duty. We therefore hold that the show cause notice is hit by limitation. - Decided in favour of appellant

Summary

Issues: Classification of goods for Central Excise duty under Tariff Item No.4203 2110, applicability of extended period for show cause notice, intention to evade duty.

In this case, the appellants, engaged in manufacturing goods for sports purposes, specifically Gloves, were issued a show cause notice proposing to classify the goods under Tariff Item No.4203 2110 instead of Chapter heading No.9506. The Revenue argued that Gloves used for sports are not covered under Chapter 95, leading to the demand of Central Excise duty amounting to a significant sum. The appellants contested the notice, citing Rule 3(b) of the Rules of Interpretation of Central Excise Tariff, stating that goods need to be classified under different tariff items based on the component providing the essential character. They also referred to the All Industry Rate Schedule of Drawback, believing their goods fell under Chapter Heading 9506. The Original Authority upheld the classification under Tariff Item No.4203 2110, imposing penalties and interest. The appellants appealed, arguing that the decision was not based on tariff interpretation rules and that the goods were shown under Tariff Item No.950621 in the Drawback rate notification.

The Tribunal analyzed the issue of limitation regarding the show cause notice issued under the extended period. It was noted that the notice was based on the proviso to Sub-Section 1 of Section 11A of the Central Excise Act, covering the period from June 2008 to February 2012. To invoke the extended period, it must be established that there was suppression of information, misdeclaration, contravention of laws, and an intention to evade duty. However, the Government's notification classified the goods under Tariff Item No.9506 21, and the appellants had paid the duty accordingly. As a result, the Tribunal found that the Revenue failed to prove an intention to evade duty, rendering the show cause notice invalid due to limitation. Consequently, the appeals were allowed, and the appellants were deemed entitled to any consequential relief.