2000 (12) TMI 133 - AT - Central Excise

Summary

Issues involved: Classification of goods under Central Excise Tariff, benefit of exemption Notification No. 275/88-C.E., extended period of limitation for raising demand

Classification of Goods under Central Excise Tariff:
The appeal involved a dispute regarding the classification of goods by M/s. Jagriti Industries, described as crude unmachined castings under Heading No. 73.25 of the Central Excise Tariff, which the Central Excise Authorities considered as machinery parts falling under Chapter 84 of the Tariff. The issue was whether the goods in question were unmachined castings eligible for exemption under Notification No. 275/88-C.E. or machinery parts classified under Chapter 84.

Benefit of Exemption Notification No. 275/88-C.E.:
The dispute centered around whether the goods, after being subjected to proof machining, could still be considered as unmachined castings eligible for the benefit of exemption under Notification No. 275/88-C.E. The appellants argued that proof machining did not change the essential character of the castings, while the Central Excise Authorities contended that proof machining rendered the castings ineligible for the exemption.

Extended Period of Limitation for Raising Demand:
The central issue regarding the extended period of limitation for raising the demand for central excise duty was raised based on the allegation of wilful suppression of facts by the appellants. The adjudicating authority invoked the extended period of limitation, alleging that the appellants had manufactured machinery parts covered under Chapter 84 but cleared them as unmachined castings to avail of the exemption. The appellants refuted the charge of suppression, stating that their classification lists had been approved and there was no mala fide intention to evade duty.

The judgment analyzed the contentions raised by both parties, focusing on the interpretation of Notification No. 275/88-C.E. and the processes involved in the production of the goods. It was noted that fettling and proof machining did not alter the classification of the goods as castings, as clarified by relevant circulars from the Board. The Tribunal agreed with the adjudicating authority's view that fettling did not amount to machining for the purpose of the exemption notification.

Regarding proof machining, the Tribunal acknowledged that while it did not change the essential character of the castings to classify them as machinery parts, the goods ceased to be unmachined castings after proof machining. The judgment emphasized that the goods remained castings but were considered machined castings after proof machining, making them ineligible for the exemption under Notification No. 275/88-C.E.

On the issue of limitation, the Tribunal found no justification for invoking the extended period of limitation based on the lack of suppression of facts by the appellants. The judgment highlighted that the classification lists had been approved by the authorities, and there was no evidence of mala fide intention. As a result, the impugned order was set aside on the ground of limitation, and the appeal was allowed in favor of the appellants.