2019 (10) TMI 1214 - AT - Central Excise

Classification of goods - miscellaneous edible preparations such as ready to Eat Food Items - whether classified under sub heading 20049000 or under sub heading 21069099? - extended period of limitation - HELD THAT - The product manufactured by the appellant and its classification were informed to the Revenue vide their letter dt.18.5.2004 as well as their ER-2 returns. Therefore, the fact of manufacturing of goods in question and its classification thereof was in the knowledge of the department. In that circumstance, the extended period of limitation is not invokable. The whole of the demand raised against the appellant by invoking the extended period of limitation, therefore, the show cause notice is barred by limitation - no demand can be raised against appellant. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Classification of products under different subheadings, invocation of extended period of limitation for demanding differential duty, sustainability of penalties imposed on the appellant.

Classification of Products:
The appellants were manufacturing miscellaneous edible preparations like ready-to-eat food items. Initially, they classified their products under subheading 20049000 based on information provided by their Deputy Manager. However, the Revenue disagreed and contended that the correct classification was under subheading 21069099. A show cause notice was issued invoking the extended period of limitation, leading to the demand for duty and imposition of penalties. The Commissioner (Appeals) upheld the adjudication order, prompting the appeal.

Invocation of Extended Period of Limitation:
The appellant argued that the show cause notice was time-barred as they had been regularly filing ER-2 returns, disclosing details of their products and seeking classification. They contended that the entire demand was beyond the limitation period. The appellant's submission was that since the Revenue was aware of the product details and classification through their correspondence and returns, the extended period of limitation was not applicable.

Sustainability of Penalties:
The appellant's counsel emphasized the limitation aspect, asserting that the penalties were also unsustainable due to the time-barred nature of the demand. The Revenue, however, maintained that the extended period of limitation was rightly invoked based on intelligence gathered about misclassification. After hearing both parties, the Tribunal found that the Revenue was already aware of the product details and classification, rendering the extended limitation period inapplicable. Consequently, the Tribunal set aside the impugned order solely on the grounds of limitation.

Conclusion:
The Tribunal ruled in favor of the appellant, holding that the demand for duty and penalties were time-barred due to the Revenue's prior knowledge of the product details and classification. As a result, the appeal was allowed, and no duty could be demanded from the appellants, nor could penalties be imposed. The decision was based on the finding that the extended period of limitation was not valid in this case, leading to the setting aside of the impugned order.