2017 (8) TMI 693 - AT - Central Excise

Classification of goods - HDPE stitching yarn - Held that - the issue is squarely covered by the decision of the Tribunal in the case of Commissioner of Central Excise, Ahmedabad Vs. Damodar Poly-Fab (P) Ltd. 1999 (11) TMI 732 - CEGAT, NEW DELHI - the classification of HDPE stitching yarn is not in consonance with Circular No.54/12/91-CX dated 24.9.1992 wherein the Board has categorically held that HDPE strips are rightly classifiable under Chapter 39 - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Classification of HDPE stitching yarn under Central Excise Tariff Act, 1985
- Inclusion of value of tags in assessable value
- Demand of Central Excise duty and Cess
- Imposition of penalty

Classification of HDPE stitching yarn under Central Excise Tariff Act, 1985:
The appeal revolved around the classification of HDPE stitching yarn under Chapter 39 of the Central Excise Tariff Act, 1985. The appellant argued that the stitching yarn is an article of plastic and should not be treated as a textile article. The appellant relied on Circular No. 54/12/91-CX dated 24.9.1992, which classified HDPE strips under Chapter 39. Additionally, the appellant cited the Tribunal's decision in the case of Commissioner of Central Excise, Ahmedabad Vs. Damodar Poly-Fab (P) Ltd.: 2002 (147) ELT 1144 (Tri.-Del.), where it was held that the goods were classifiable under Chapter Sub-heading 3920.32. The Tribunal, following the precedent, allowed the appeal and set aside the impugned order based on the classification issue.

Inclusion of value of tags in assessable value:
The Central Excise Officer contended that the value of labels/tags affixed to the sacks was not included in the assessable value, leading to a demand for inclusion of the same. The appellant argued that the purchase order issued by the customer already included the value of the tags supplied, and therefore, adding the value again was not necessary. The adjudicating authority dropped the demand on the issue of tags but demanded payment for other aspects. The Commissioner (A) upheld the Order-in-Original but dropped the penalty, prompting the appellant to file the present appeal.

Demand of Central Excise duty and Cess:
The appellant received a show-cause notice for short payment of Central Excise duty and AED amounting to ?53,737/-, along with a Cess of ?1,120/- on HDPE stitching yarn cleared during a specific period. The appellant contested the demand, citing the inclusive nature of the purchase order and other legal aspects. The Tribunal, after hearing both parties and considering the records, set aside the impugned order based on the classification issue, thereby addressing the demand for Central Excise duty and Cess.

Imposition of penalty:
The adjudicating authority had imposed a penalty of ?5,000/- on the appellant, which was later dropped by the Commissioner (A). The appellant, dissatisfied with certain aspects of the orders, approached the Tribunal, which ultimately allowed the appeal and set aside the impugned order. The Tribunal's decision focused on the classification issue and the legal precedents cited by the appellant, leading to the favorable outcome for the appellant in this case.