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TMI Blog1995 (9) TMI 169X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the impugned order is violative of the principles of natural justice and is liable to be set aside. It was further urged that the petitioner is not guilty of suppression and therefore, longer period of limitation in terms of proviso to Section 11A of the Central Excises Salt Act, 1944 is not invokable prima facie and the impugned order is unsustainable on that score also. It was further urged that even on the question of classification, the view taken by the Department is erroneous as the goods which are parts of textile machineries are used exclusively only in textile machineries and the department has not stated or established that the goods are capable of general use. It was further urged that in any event the petitioner would be eligible to take Modvat credit if the goods are held dutiable and the ratio of the Special Bench ruling reported in 1994 (71) E.L.T. 1049 in the case of Sapphire Steels v. C.C.E., is squarely applicable to the facts of this case. On the above lines, the learned Counsel contended that the petitioner would be entitled to grant of pre-deposit of duty and penalty and further urged that if the plea that the impugned order is violative of the princ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to in the impugned order has not been considered and a finding given and the impugned order is not sustainable in law on this ground also. The learned Counsel contended that on the admitted evidence available on record, the petitioner/appellant cannot be said to be guilty of laches or suppression since notice itself states that the goods in question were exempted under Notification 132/86, dated 1-3-1986 as amended and subsequently by Notification 53/88, dated 1-3-1988 and Notification 14/92, dated 1-3-1992. The petitioner was therefore bona fide under the impression that the goods were not liable to excise duty and in the absence of any deliberate intention on the part of the petitioner to evade payment of duty, mere failure on the part of the petitioner in not paying the duty would not justify the Department to invoke the longer period of limitation in terms of proviso to Section 11A of the Act. The learned Counsel in this context placed reliance on the ruling of the the Supreme Court in the case of Tamil Nadu Housing Board v. Collector of Central Excise reported in 1994 (74) E.L.T. 9 (S.C.) = 1994 (55) ECR 7 (SC). The learned Counsel finally pleaded financial difficu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity gave only two days time to the petitioner to exercise an option in regard to the personal hearing which option the petitioner did exercise without loss of time and when before the predecessor adjudicating authority, the petitioner was represented by his consultant we are of the view that notice for personal hearing in the above facts and circumstances could have been sent to the consultant of the petitioner or to the petitioner s office address at Madras. We therefore, feel that since the order has been passed by the adjudicating authority without hearing the petitioner or the petitioner s consultant, in the interests of justice and fairplay one more chance could be given to the petitioner. In this view of the matter we grant waiver of pre-deposit of duty and penalty to the petitioner and take up the appeal itself since we are inclined to think that the impugned order is liable to be set aside and the matter should be remanded for reconsideration. 5. In the facts and circumstances of the case, without expressing any opinion on the merits of the issue and since the impugned order was passed ex parte as it were though on merits, we set aside the impugned order and remand the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o other communications have all been emanated from the factory address of the appellants and that the assessee before the authorities is the licensee i.e. the factory. 8. The learned DR for the department in this context pleaded that admittedly the notice had been sent to the appellants fixing the personal hearing and it was for the appellants to arrange for any representation if the appellants had desired so. He pleaded that in this background it cannot be said that there had been denial of principles of natural justice. He also pleaded that the learned predecessor adjudicating authority had already heard the appellants and the learned DR referred to the mention of personal hearing in the impugned order, by the predecessor adjudicating authority who had taken up the matter for adjudication but did not conclude the adjudication. 9. It is seen from the records that the grievance of the learned Counsel for the appellants is that the predecessor adjudicating authority who had earlier taken up the matter for adjudication gave personal hearing and the matter remained pending for over 1 years and the present adjudicating authority after he took up the matter for adjudication gave t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entioned above, the show cause notice, earlier communication of the personal hearing when the personal hearing was fixed by the predecessor adjudicating authority were also addressed to the appellants factory address and replies to all these have emanated from the appellants factory address. Further a clarification filed by the appellants from the South India Textile Research Association in respect of their machinery for the purpose of classification has also been addressed to the factory address by the association. In this background, therefore, the plea of the appellants that the communication of the personal hearing should have been sent to their Head office at Coimbatore is not understandable. The authorities had all along been dealing with the appellants at their known address at Pondicherry factory. Further, there is nothing in the correspondence to show that notice of hearing was at any time requested to be sent to the consultant. The appellants have acted upon the notice of hearing earlier sent to their factory address at Pondicherry by the predecessor adjudicating authority and made arrangement for the personal hearing before him. When the present adjudicating authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made out of plastics. However, that fact by itself is not the sole criterion to claim that they are classifiable under Chapter 39. The items under dispute are identifiable parts/components of goods falling under Chapter 84/85 which come under section XVI of the Central Excise Tariff. Chapter Note 2(n) of Chapter 39 specifically excludes articles of Section XVI from the purview of Chapter 39. The classification of the items under Chapter 39 will arise only if it can be proved that the disputed items are not covered by Section XVI. In this case a mere reading of the headings of Chapter 84 and 85 will clearly indicate that the disputed items are clearly covered by the headings of Chapter 84 and 85. Therefore classification of the items under dispute under Chapter 39 has to be ruled out. In regard to the two items classification which was specifically disputed before the lower authority, he has held as under : Regarding classification of products under Chapters 84 and 85 the assesee s defence lays particular emphasis only on pulleys and cups which according to them will fall under Heading No.84.48 and not under Heading No. 84.83. Heading Nos. 84.48. and 84.83.of the Central Excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and the specific entry in the tariff can it be said that the appellants were bona fide under the impression that there was no deliberate suppression in the matter of non-payment of duty. It is observed that the appellants themselves have stated that they were under the impression that the goods were falling under Chapter 39 and in any case two of the 5 items can be considered as textile machine parts exempted by Notification 53/88. In this context it has to be noted that the appellants would have gone through the scope of Chapter Note 2(n) under Chapter 39. Under this articles of Section XVI are specifically excluded from the purview of Chapter 39 and since the disputed goods are falling under Chapters 84 and 85 the question of classification of the goods under Chapter 39 prima facie not arise. There is no plea from the appellants that the goods were not intended for machineries falling under Chapters 84 and 85. In this background therefore, non-filing of the classification list is not understandable and prima facie the only conclusion that can be reached is that the appellants deliberately did not come on record as to the nature of the goods being manufactured by them with a vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be set aside for the reason of denial of principles of natural justice, pre-deposit of duty and penalty should be waived and the matter remanded for reconsideration of the lower authority for the reasons recorded by learned Vice President. or Whether in the facts and circumstances of the case, there is prima facie no infirmity in the order of the lower authority for reasons of denial of principles of natural justice and even on merits and the appellants should be directed to make pre deposit of Rs. 2.00 lakhs as held by Member (T), for the reasons recorded by him." 15. Sh. K. Narayanan, the learned Counsel, submits that though there is no dispute that there had all along been correspondence between the office of the adjudicating authority and the Pondicherry factory of the applicants, this was prior to the Consultant coming into the picture on behalf of the applicants. The applicants were always expressing their willingness to proceed in the matter and this is manifest from the fact that they replied within the very short period of two days given to them by the adjudicating authority to decide whether a personal hearing was required by them. The date of hearing was fixed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the view expressed by the learned Member (J) VP should be accepted at this stage. 16. Sh. Murugandi, the learned DR, states that it is not as if no notice was sent for personal hearing. In fact notice was sent to the Pondicherry factory and it was the responsibility of the Pondicherry factory to have taken up the matter with their Coimbatore office and their Consultant and failure to send notice of personal hearing to the Consultant has in no way resulted in the denial of principles of natural justice, as the applicants had reasonable opportunity in the form of notice issued to the Pondicherry factory. He supports the order recorded by the learned Member (T) on the merits of classification and in particular draws my attention to the findings of the learned Member (T) at page 15 of the original order that pulleys and cups will be covered by Note 2(a) of Sec. XVI and also paragraph 12 in which the learned Member (T) has opined that the longer period of limitation is available to the department as the applicants prima facie deliberately did not come on record as to the nature of the goods being manufactured by them, with a view to evade payment of duty. He hence urges acceptance ..... X X X X Extracts X X X X X X X X Extracts X X X X
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