2017 (11) TMI 140 - AT - Central Excise

Benefit of N/N. 9/2003-CE dt. 1.3.2003 - suppression of facts - Whether otherwise the impugned product CERA Polycure was manufactured by the appellants or whether the same has been only traded by them? - Held that - In the absence of any clear cut evidence to incorporate the allegations of manufacture of Cera Polycure W, the demand of duty demanded in respect of that item will not sustain and will have to be set aside - demand set aside. Whether the appellant s products would be classifiable under Chapter 3214 as held by the lower authorities? - Held that - there has been no discussion or analysis on the reasons why the items would not be classifiable under 3824.90. In view of the contentions of the appellants, the matter should be considered afresh and conclusions arrived at concerning classification merited would only after proper analysis and reasoning - matter on remand. Whether duty liability can be foisted in respect of 18 products manufactured and originally cleared from the factory on payment of Central Excise duty, which was subsequently returned as sales returns for various reasons at their depot and sold to other purchasers on commercial invoice? - Held that - From the orders of the lower authorities, we find that there is insufficient discussion and analysis to arrive at the conclusions against which the appellant is in appeal. Ld. Advocate has stated that they are in a position to prove their bonafide in the matter. Accordingly, in the interest of justice, this issue too needs to be sent back for re-adjudication - matter on remand. Appeal allowed in part and part matter on remand.

Summary

Issues:
1. Alleged suppression of manufacture and clearance of excisable goods.
2. Classification of products under Chapter 3214.
3. Duty liability on products cleared from the factory.

Analysis:

Issue 1: Alleged Suppression of Manufacture and Clearance
The appellants were accused of removing excisable goods without paying Central Excise duty and misclassifying products to pay lesser duty. The department alleged suppression of manufacture to claim exemptions under Notification No.9/2003-CE. Show cause notices were issued demanding differential liability, penalty, and reclassification of products. The original authority confirmed most demands, but the Commissioner (Appeals) set aside the penalty under Section 11AC while upholding the rest. The core issue was whether the products were manufactured or traded.

Issue 2: Classification of Products
The lower authorities classified the products under Chapter 3214, requiring Section 4A assessment. The appellants argued for classification under CTH 3824.90 due to being construction chemicals. However, the reasoning for the classification was not adequately discussed. The tribunal ordered a fresh consideration based on proper analysis to determine the correct classification, which would impact the tax liability.

Issue 3: Duty Liability on Cleared Products
The dispute involved 18 products originally cleared from the factory and later returned as sales returns, allegedly removed clandestinely. The appellants claimed duty had been paid on these goods and they were sold on commercial invoices. Insufficient discussion and analysis led to the need for re-adjudication. The tribunal decided to remand the issue for a fresh assessment, allowing the appellants to present additional evidence.

In conclusion, the tribunal allowed the appeal regarding the alleged manufacture suppression, providing relief as per law. Issues related to product classification and duty liability were remanded for further adjudication, ensuring a fair opportunity for the appellants to present their case.