2019 (4) TMI 1411 - AT - Central Excise

Classification of goods - C.I. Castings - benefit of N/N. 208/83-C.E. dated 1.08.1983, No. 90/88-C.E. dated 1.3.1988, No. 202/88-C.E. dated 20.5.1988 and No. 275/88-C.E. dated 4.11.1988 - whether classifiable under Chapter heading No. 73.07 upto 28.2.1988 and heading No. 73.25 with effect from 1.03.1988 or otherwise? HELD THAT - It is trite law that, if the Department intends to classify the goods under a particular heading or sub-heading, the Department has to adduce proper evidence and discharge the burden of proof - In the present case, the Department has not produced any evidence that Castings manufactured by the Appellant have undergone any process beyond proof-machining. There seems to have been no misdeclaration or suppression of facts or contravention of any of the provisions of law with intent to evade payment of duty on the part of the appellant. Validity of subsequent SCNs - HELD THAT - The Excise Department considered the issue relating to the chargeability of the duty on the products manufactured by the Appellant on various occasions in the past i.e. when the Appellant surrendered the L-4 license on 26.12.1986 and also when the Appellant filed declarations on 16.4.1990. The issue of chargeability of the duty on the products manufactured by the Appellant was also examined by the Assistant Director, DGAE, Patna. The department also issued letters/Show Cause Notices (s) on the same subject matter - It is well settled by various decisions of the Hon ble Supreme Court that when the department has earlier considered the issue, or has issued show cause notice on the same matter earlier, it cannot issue a subsequent show cause notice alleging suppression of facts. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Classification of manufactured goods under Central Excise Tariff Act, 1985; Claim of exemption under various Notifications; Demand of duty, interest, and penalty; Proper evidence for classification by the Department; Surrender of L-4 License and bonafide belief; Previous consideration of the issue by Excise Department.

Classification of Manufactured Goods:
The case involved the classification of goods manufactured by the appellant under the Central Excise Tariff Act, 1985. The Tribunal clarified that the castings manufactured by the appellant, which underwent operations only up to the proof-machining stage, were classified under specific headings. Circulars issued by the Board further supported this classification, emphasizing that the castings did not merit classification as parts of machinery under different chapters.

Claim of Exemption under Notifications:
The appellant claimed exemption under various Notifications, including No. 208/83-C.E., No. 90/88-C.E., No. 202/88-C.E., and No. 275/88-C.E. for different periods. The Tribunal analyzed the applicability of these Notifications to the goods manufactured by the appellant, considering the changes in tariff headings and relevant Circulars issued by the Board.

Demand of Duty, Interest, and Penalty:
The Adjudicating Authority had passed an order demanding duty, interest, and penalty from the appellant. The Tribunal reviewed the impugned order and found discrepancies in the consideration of the appellant's claim regarding the classification of goods and the applicability of exemption Notifications. Consequently, the impugned order was set aside, and the appeal by the appellant was allowed.

Proper Evidence for Classification by the Department:
The Tribunal emphasized that the Department must provide proper evidence to classify goods under a particular heading or sub-heading. In this case, the Department failed to produce evidence that the castings manufactured by the appellant underwent processes beyond proof-machining. The absence of misdeclaration or suppression of facts was noted by the Tribunal.

Surrender of L-4 License and Bonafide Belief:
The appellant had surrendered the L-4 License and made a bonafide claim for exemption under specific Notifications. The Tribunal highlighted that when duty is not paid or exemption is claimed under a bonafide belief, the proviso to Section 11A(1) cannot be invoked. The surrender of the license and correspondence with the Excise authorities were considered in the context of bonafide belief.

Previous Consideration of the Issue by Excise Department:
The Tribunal observed that the Excise Department had previously examined the issue of chargeability of duty on the products manufactured by the appellant on multiple occasions. Show Cause Notices were issued, and the issue was considered earlier by the Department. The Tribunal referred to established legal principles that prevent the Department from issuing subsequent show cause notices alleging suppression of facts when the issue has been previously considered.

In conclusion, the Tribunal set aside the impugned order, allowing the appeal filed by the appellant based on the detailed analysis of the classification, exemption claims, demand of duty, proper evidence, surrender of license, bonafide belief, and previous consideration by the Excise Department.