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TMI Blog1998 (4) TMI 497X X X X Extracts X X X X X X X X Extracts X X X X ..... s also price lists in respect of the same from time to time. The issues that arise for consideration relate to the classification of various items as set out in the order of the ld. lower authority as also whether the longer period of limitation was invocable in the facts and circumstances of the case and the appellants liable to penalty as levied. 3. The duty demand has been raised for misclassification of - (1) Processed and un-processed fabrics of cotton and made filament yarn and fibre, (2) Non-payment of duty in respect of one side coated fabrics, (3) Articles of Double Side Coated Fabrics, (4) Prefabricated Buildings, (5) Non payment of Auxiliary duty of Excise. The other issues that arise for consideration are the limitation period applicable in terms of Section 11A and the relevant date or provision for demand of duty i.e. whether provisions of Section 9A(5) will be applicable for demanding duty. Plea made is that the relevant date applicable would be the date on which duty was quantified. Each of the issues raised is taken for discussion separately. 1st issue : Correct classification of unprocessed fabrics of cotton and man-made fibre an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declared to the Department. When the Central Excise Tariff Act, 1985 was brought into force, the proposed classification was called for by the department. The appellants declared to the department, the proposed description, proposed classification and declared for each type of fabrics, the name of the fabric the types of purchase manufacturers, and the end uses of such products. A.19 The following pages of the paper book have also been placed before the Commissioner in his regard. A.20 In the classification list filed in January, 1984, the classification was claimed under Tariff Item 22 describing the nature of the fabric as chafer fabrics, filter fabrics, luggage fabrics, belting fabric, impression fabric, clading shelter and giving the code numbers and also the construction of the various fabrics. (Pages 5 to 47 of Paper Book 3 containing classification lists refers). On 18-2-1986 the Inspector directed SRF to file the revised classification list consequent to the introduction of new Central Excise Tariff Act, 1985. SRF informed the Superintendent by their letter dated 21-2-1986, giving the proposed classification, proposed nomenclature, manufacturing process, name of the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the day to allege that the Department did not know that SRF Limited, Industrial Fabric Division were manufacturing industrial fabrics. A.24 Further there was an adjudication order of the Additional Collector of Central Excise No. 24/89, dated 31-8-89 (Page Nos. 248 to 262 of Paper Book 2) wherein it has been very specifically noted that the appellants manufacture industrial fabrics in their unit at Varalimalai. The said show cause notice was issued after a detailed investigation by the Directorate of Anti-evasion, Madras. A.25 The Assistant Collector passed an adjudication order dated 7-11-89 (Pages 422 to 424) wherein among various industrial fabrics manufactured by the appellants only filter fabrics was taken up for consideration and decided that such filter fabrics would be classifiable under Heading 59.09. A.26 BONA FIDE BELIEF The Department approved the classification lists from time to time under Chapters 52, 54 and 55 fully aware of the description of the fabric, the nature of the fabric, the types and uses, and the industry in which it is used. Further, the Central Board of Excise and Customs issued instructions for classification of such fabrics under base fabri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on list filed earlier i.e. in 1986 to 1992, they had simply mentioned unprocessed/ processed fabrics of man-made filament yarn and unprocessed/processed fabrics of cotton and so on. 6. We have considered the plea made by both the sides on the aspect of limitation. We had during the hearing perused the classification lists filed from time to time and also the copies of the correspondence filed in regard to the classification of the goods during the relevant period. It is seen that the jurisdictional Inspector of Central Excise by his letter dated 18-2-86 (page 387 of Paper Book filed) informed the appellants about the coming into effect of the new tariff and asking them to file revised classification list. The appellants vide their letter dated 21-2-86 (page 388 of Paper Book 2) enclosed a detailed write up giving proposed classification and nomenclature of the fabrics manufactured by them. The write up etc. as enclosed with this letter figures at pages 389 to 393. To illustrate the manner in which the information was furnished one of the annexure for one set of fabrics is reproduced below : Proposed Tariff item No. : 5408 Nomenclature: Unprocessed fabrics of man-made filament ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TI. 22(1)b, these are to be treated as heat set fabrics and as much we have classified these as processed fabrics and have been paying AED as applicable while clearing these items. A list of all items which are heat set on the stenter by us, hence has been classified as PROCESSED FABRICS is given in the Annexure I. ANNEXURE I Items not dipped but only processed on stenter and hence classified as PROCESSED FABRICS under TI 22(1)b ITEM DESCRIPTION CL. NO: Sl. No. Filter Fabrics ISK - 105 10 30 ISK - 137 10 30 SF - 338/105 20 50 SF - 118/105 22 60 SF - 398/915 20 50 SF - 118/137 22 60 SF - 120 17 35 SF - 120/102 15 21 SF - 157/105 23 66 SF - 129/102 23 66 SF - 188/91 21 54 SF - 188/102 15 21 SF - 169/102 23 66 SF - 368/97 21 54 SF - 389/96.5 20 50 Cladding Shelter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge i.e. the residuary items covered are such as are specified thereunder. The said Chapter Note is reproduced below for convenience of reference : 7. Heading No. 59.09 applies to the following goods, which do not fall in any other heading of Section XI : (a) Textile products in the piece, cut to length or simply cut to rectangular (including square) shape (other than those having the character of the products of heading Nos. 59.07 and 59.08), the following only :- (i) Textile fabrics, felt and felt-lined woven fabrics, coated, covered or laminated with rubber, leather or other material, of a kind used for card clothing, and similar fabrics of a kind used for other technical purposes; (ii) Bolting cloth; (iii) Straining cloth of a kind used in oil presses or the like, of textile material or of human hair; (iv) Flat woven textile fabric with multiple warp or weft, whether or not felted, impregnated or coated, of a kind used in machinery or for other technical purposes; (v) Textile fabrics reinforced with metal, of a kind used for technical purposes; (vi) Cords, braids and the like, whether or not coated, impregnated or reinforced with meta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suitable for industrial use given are textile fabrics, combined with one or more layers of rubber, leather or other material and that there is bolting cloth, endless felts of textile fabrics, straining cloth . There is comma(,) after textile fabric and also after the words other material , and after each item bolting cloth and preceding straining cloth . Therefore, it cannot be presumed that these items textile fabric , bolting cloth straining cloth should be in cut piece and be in only coated . 9. We observe that the Tribunal in this order has in para 30 as above has clearly held that the fabrics as such are covered by the range of items as described in the Chapter Note to Heading 59.09. We observe that 59.09 is a residuary item and the scope of the heading as per the Chapter Note for this heading states Heading 59.09 applies to the following goods, which do not fall in any other heading of Section XI . It is seen from the scheme of the Chapters under Section XI that Chapter 59 covers impregnated, coated and laminated fabrics; Textiles Articles of a kind suitable for Industrial use. Under this Chapter Tariff Heading 59.02 covers Tyre cord fabrics of high tenacity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the above processes. His plea is that coated fabric as known in the market did not emerge. He pleaded during the relevant period an issue regarding classification of appellants goods did arise in the context of classification under heading 59.03 or 39.20 of the Tariff and Notification issued under Rule 57A under which basic Central Excise duty was exempt under Notification 217/86. Additional duty in question was however payable. He pleaded that the demand in question for the period from March, 1988 to October, 1992 raised was as it is barred by limitation as the appellant had not kept anything away from the purview of the department. By letter dated 14-9-89, appellants had finished the manufacturing process of coated fabrics which is filed at pages 332 to 334 of paper book 2. The manufacturing process as set out at page 334. COATING PROCESS OF NYLON FABRICS The coating line consists of a Let-off station, an entry accumulator, a coating head, a 3 none oven, another coating head, a 5 none oven, an embossing station, a set of cooling rollers, an exit accumulator and a wind up. The nylon fabric is fixed on the Let-off station and after passing through the entry accumulator roll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... side trimming is a simple process and covered under interpretative Rule 2 (a) any goods unfinished, semi-finished, incomplete, not complete, disassembled, unassembled will be classified under the heading appropriate on the goods when complete, finished or assembled. Hence, the single side coated fabrics are goods attracting excisability under Heading 5903 and Addl. Duty of Excise (GSI) is leviable. The question to be decided is whether the goods unfinished or semi-finished has the essential characteristics of the finished goods. This is decided by the Larger Bench of the Tribunal in the case of BHEL v. CC, 1987 (28) E.L.T. 545. The Hon ble Tribunal has observed thus : It is to be determined whether the article in question has the essential character of the complete article, has attained the approximate shape or outline of the finished article and could be used only for the completion into the finished article especially with reference to the nature of material, bulk, quantity, weight or value . In this case, the only process required to bring the goods to fully finished and complete article is trimming the sides. In this connection, the judgment of the Hon ble Supreme C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aused. The evidence filed is not conclusive. It is settled position in law as held by the Hon ble Supreme Court in a number of judgment and the judgments cited by the appellants that burden is on the department to establish marketability for levy of excise duty purposes. The appellants plea on limitation will also have to be viewed in the background of this plea apart from other circumstances. So far as the demand for the period after the receipt of the letter dated 14-9-89 is concerned the same in our view is barred by limitation inasmuch as the appellants had come on record about the manufacturing process and all stages of manufacture are mentioned therein. No mala fides or suppression of fact with intent to evade payment of duty can be attributed to them for period after that. We while holding that demand for the period after the receipt of the letter of 14-9-89 by the authorities is barred by limitation, remand the matter for de novo consideration in the respect of the period prior to that in the light of our observations above including the ques tion and after affording the appellants opportunity of hearing. 14. The third issue relates to the demand in respect of materials ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been held to be falling under Chapter 39. He pleaded starting material in the case of HDPE bags was plastic and tapes etc. formed out of the same were woven into a fabric and which was stitched out into bags. In the present case also he pleaded the position was similar as the instead of Polyethylene the starting material was another type of plastic. He pleaded that benefit of exemption Notification 217/86 has not been allowed as the Chapter Heading 63.01 is not covered under this notification. 18. Even if the duty is held to be payable he pleaded that since the goods were consumed captively and the question of removal of goods from the factory the relevant rules for demanding duty would be 9A(5) i.e. the date on which duty is demanded. On that date he pleaded there was no levy on the goods and therefore the demand fails. He cited the following judgments in support of his this plea. 1987 (32) E.L.T. 234 (S.C.) - J.K. Cotton Weaving Mills Ltd. v. U.O.I., 1986 (26) E.L.T. 701 (All.) - Swadeshi Polytex Ltd. v. ACCE, 1992 (61) E.L.T 375 (Kar.) - Durga Works v. ACCE. 19. He has pleaded that during the relevant period the appellants had paid duty through the PLA under Tariff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... customer. Straps are also fixed if required by the Customers. In all their private correspondence inter office memo and other documents, these articles were described as Tarpaulins. Besides in the tenders floated by various Public Sector units and other customers, and participated by the appellants, the description furnished was Tarpaulin. But in all Central Excise docu ments, they have been described as Nylon covers. ARGUMENT OF THE APPELLANT : (i) When the raw material is falling under Heading 39.20 is finished article cannot falling under 6301 but only fall under 3920. (ii) Note (h) of Section XI of C. Ex. Tariff cleanly manipulates that woven, knitted, crocheted fabrics, felt or non-wovens, impregnated, coated, covered or laminated with plastics and articles thereof of Chapter 39 are not covered by Section XI, i.e. textiles and textile articles. (iii) Pre-impregnated cotton conveyor belting and PVC impregnated flame resistant colliery conveyor belting classifiable under sub-heading 3922.90/3926.90 of C. Ex. Tariff and not as strips under sub-heading 3920. 1995 (77) E.L.T. 3 S.C. Fenner India v. C.C.E. (iv) Composit articles made out of co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lastic material and hence anything made out of these are article of plastic. The basic and essential material being a fabric and to increase the use and effective coating is done, it is the fabric that has the essential characteristic. Hence the article made out of such fabrics are made up textile article. Admittingly, there is no dispute about the applicability of definition for made up. In this context, the description section in HSN Explanatory Notes may be seen. The extract is reproduced for ready reference :- Section VII TI. 39.26 page 622. 3926 other articles of plastics and articles of other materials of Heading 3901 to 3914. The heading covers articles, not elsewhere specified or included, of plastics as defined in Note 1 to the Chapter or of other materials of heading 3901 to 3914. They includes : 1. 2. 3. 4. 5. 6. 7. Transmission, conveyor or elevator belts endless or cut to length and joined end to end or coated with fasteners Transmission conveyor belts or belts of any kind presented with the machine or apparatus for which they are designed, whether or not actually mounted, are classifiable w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... covered, laminated or of canvas. They usually have a single or double roof and sides or walls (single or double), which permit the formation of an enclosure. The heading covers tents of various sizes and shapes, e.g. marquees and tents for military camping (including backpack tents), circus, beach use. They are classified in this heading, whether or not they are presented complete with their tent poles, tent pegs, guy ropes or other accessories. Caravan awnings (sometimes known as Caravan assnevel) which are tent like structures are also regarded as tent. They are generally made of man-made fibre fabrics or fairly thick canvas. They consist of three walls and a roof and are designed to augment the heavy space provided by the caravan. From the above, it is clear that the fabrics made out of man-made filament yarn whether coated, covered or laminated with other materials, chemicals and the tarpaulins made out of such goods are rightly classifiable under heading 6301 of Central Excise Tariff. It is also submitted that there are certain sheets exclusively made out of plastic material and they are used as protective covers and they may be classified under Heading 3926 as articles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rly. The copies of same of the price lists have been filed before us for the period 1987 onwards as referred to in the pleadings of the ld. Advocate. The price lists carry the description of the goods by name, code number of their product, the classification and the reference of the classification list, the purchase order number of the customer. All these have been approved by the Assistant Collector from time to time. 24. We observe that the RT 12 returns in respect of goods cleared showing the duty paid would also have been approved from month to month. There is nothing to show that any objection was taken either at the time of approval of classification under TI 39.26 or at the time of approval of price lists which carried this classification or at the time of assessment of RT 12 returns. The gate passes and invoices would have been also seen by the authorities at the time of scrutiny of RT 12 returns. There is no attribution that the appellants had not described the goods in the invoices as per the customers orders. The authorities can be taken to have been satisfied about the classification of the goods under TI 39.26. 25. In the above view of the matter it cannot be held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f entry 63.01 specifically includes this item under that heading. No doubt under Section note 1(d) of Section XI under which tariff entry 63.01 figures the articles of coated fabrics which fall under Chapter 39 are not to be classified under this Section but since the item in question as we have held above is not covered under this heading, this Section Note does not come in the way of the item being classified under this heading. The description under Tariff Heading 63.01 is as under : Made up Textiles articles not elsewhere specified including balnkets (other than of wool), tarpaulins, tents, sails for boats. Tarpaulins are specifically covered under this heading. In terms of Rule 3(a) of Rules of Interpretative of the Schedule the heading that provides the most specific description is to be preferred to the heading which provides factual description. Going by this rule the classification under Tariff Heading 63.01 is sustainable. Even otherwise under Rule 4 where the other Rules do not apply the classification has to be done under the heading appropriate to the goods to which these are most akin. Even based on this rule classification under 63.01 would be more appropriate as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vt. Ltd. case of the Tribunal cannot be held to be a good law in view of the decision reported in 1994 (72) E.L.T. 513. This aspect of the case was not taken into consideration while Simplex Mills case was decided as the decision in the case of Fenoplast was not available at that time. 35. It is further seen that the learned Advocate Shri Lakshmikumaran appearing for the appellants has contended before us that the CBEC had issued a Circular under Section 37B after referring to the decision of the CEGAT in Simplex Mills case to maintain uniformity within India as also to fall in line with classification of similar products all over the world. It was submitted by him that the departmental circulars are binding on the authorities. Therefore there cannot be any deviation from the circulars issued by the Department and in this connection he has relied on the following decisions : (i) 1996 (87) E.L.T. 19 (S.C.) in the case of Ranadey Micronutrients v. Collector of Central Excise; (ii) 1992 (57) E.L.T. 674 (Cal.) in the case of Birla Jute Industries Ltd. v. ACCE; (iii) 1981 (127) ITR 1 (Guj.) in the case of Rajan Ramakrishna v. Commissioner, Wealth tax. In the decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the classification of Grey Cotton Canvas, Cotton Ducks, Cotton Tyre Cord Fabrics and Cotton Belting Fabrics. Such products have been classified either under Chapter Heading No. 52.05 or under Heading No. 59.09 of the Central Excise Tariff Act, 1985 (henceforth referred to as Tariff). 2. Lack of uniform classification of goods has brought in disparity in the pricing of the commodity by the manufacturers of such goods with consequent impact on sales and the market economy. Keeping in view the settled principle of law and pending final decision by Hon ble High Court against the decision of CEGAT in the case of M/s. Simplex Mills Co. Ltd. v. Collector (Order Nos. E/150 to 161/92-D, dated 28-2-1992) and the fact that there is no uniformity in the classification of these goods, it would be expedient in the interest of administration of taxing statute to bring out uniformity in the assessment practice. 3. Now, therefore, in exercise of the powers conferred under section 37B of the Central Excises and Salt Act, 1944 (1 of 1944) (henceforth referred to as the Act) and for the purpose of ensuring uniformity in the classification of the said goods, the Central Board of Excise and Custom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in 1981 (127) ITR 1 (Guj.), the Hon ble Gujarat High Court at pages 5, 6 and 7 held as follows : As to what is the effect of the circular issued by the Board of Direct Taxes under the provisions similar to Section 13(1) of the W.T. Act, we have a series of cases. The first of those cases was that of the Supreme Court in R.C. Mitter Sons v. CIT (1959) 36 ITR 194. In that case, Hidayatullah J., as he then was, observed in the last paragraph of the judgment at page 205 of the report : I entertain, however, some doubt as to whether the instrument sought to be registered should be in existence in the accounting year, before registration can be claimed. There is nothing in the Act which says this specifically. My brother has reasoned from the contents of the Act and the Rules that such a condition is implied. While I entertain some doubts, I am not prepared to record a dissent, more so as the Board of Revenue has issued instructions that all firms should be registered, whether the documents under which they were constituted existed in the accounting year or not provided the Income-tax Officer was satisfied about the genuineness of the firms . Thus, though Hidayatullah J. doubt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enevolent circulars, even though they may be deviating from the provisions of the Act, would be binding on the Income-tax Officers. This position is well accepted and there are several decisions of the different High Courts in India, namely, the decisions of the Bombay High Court in Tata Iron Steel Co. Ltd. v. N.C. Upadhyaya (1974) 96 ITR 1 and in Navnitlal Ambalal v. CIT (1976) 105 ITR 735, the decision of a Full Bench of the Kerala High Court in CIT v. B.M. Edward (1979) 119 ITR 334 and of the Karnataka High Court in M.M. Annaiah v. CIT (1970) 76 ITR 582 (Mys), and in Dr. T.P. Kapadia v. CIT [1973] 87 ITR 511 (Mys.). Thus, the legal position is that benevolent circulars are binding on all ITO s and WTOs, as the case may be, and on all the persons employed in the execution of the W.T. Act. 38. It is thus seen that the instructions issued by the Central Board of Excise Customs are bound on the authorities. These instructions are issued in order to have uniform practice all over India. This aspect was not at all discussed in the impugned order. The learned Vice President has not discussed this aspect of the matter in his order. It is further seen that the learned Advocate h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned Vice-President for the following reasons. 40. It is now seen that the case of the appellants is that the single side coated fabrics coming at the intermediate stage of manufacture of double side coated fabrics is not goods. In the absence of marketability there is no duty liability. The Commissioner in the impugned order agreed with the submissions made by the appellants that certain processes and operations are not carried out on the single side coated fabrics which are used in the manufacture of double side coated fabrics within the factory. However, he held that the market ability has to be determined with respect to the capability of being marketed instead of actual marketing. In my view, this approach of the Commissioner is not in accordance with law. The test of marketability has been laid down by the Hon ble Supreme Court in the case of Union Carbide of India v. UOI reported in 1986 (24) E.L.T. 169. In the said case, the aluminium canes and charged batteries are produced by extrusion processes and the same was neither sold nor marketable because the canes have uneven edges and only after certain processes are carried out it can be become distinguished and a complet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Excise reported in 1997 (89) E.L.T. 16 (S.C.) = 1996 (17) RLT 807 (S.C.) at paras 3 to 7 held as follows : 3. It is not dispute before us, as it cannot be, that the onus of establishing that the said rings fell within Item 22-F lay upon the Revenue. The Revenue led no evidence. The onus was not discharged. Assuming therefore, that the Tribunal was right in rejecting the evidence that was produced on behalf of the appellants, the appeal should, nonetheless, have been allowed. 4. It is not the function of the Tribunal to enter into the arena and make suppositions that are tantamount to the evidence that a party before it has failed to lead other than supposition, there is no material no record that suggests that a small scale or medium scale manufacturer of brake linings and clutch facings would be interested in buying the said rings or that they are marketable at all. As to the brittleness of the said rings, it was for the Revenue to demonstrate that the appellants averment in this behalf was incorrect and not for the Tribunal to assess their brittleness for itself. Articles in question in an appeal are shown to the Tribunal to enable the Tribunal to comprehend what it is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the duty as required is to be paid. Since this issue was not contested before us during the course of the arguments. I also concur with the views of the learned Vice-President that the duty on this account is to be confirmed. Accordingly I confirm the duty of Rs. 3,29,289/- for the period from May, 1992 to October, 1992 in this regard. As admitted by the appellants themselves this demand is not hit by limitation. Therefore this demand is confirmed. 44. As far as the fourth and fifth issues are concerned, the same relate to the production of Tarpaulins and other articles manufactured out of double side coated fabrics. The demand on this account is Rs. 3,83,08,728/-. The learned Vice-President has already held that this demand is barred by limitation. The reasonings are mentioned in paras 24 and 25. I agree with this findings that this demand is barred by limitation. 45. As far as the classification is concerned, the learned Vice-President held that the goods are rightly classified under Heading 63.01. I respectfully do not agree with the above findings of the learned Vice-President for the following reasons. 46. In the impugned order, it has been ordered by the Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le materials, the same should come under Chapter 39.20 only. 49. In this connection it is necessary to look into Note 1(d) of Section 11 which reads as under : Woven, knitted or crocheted fabrics, felt or non-wovens, impregnated, coated, covered, or laminated with plastics, and articles thereof, of Chapter 39. . It is thus seen that this Section Note states not only the woven fabrics, coated, covered or laminated with plastics, under Chapter 39, but also the articles thereof. Heading 63.01 in so far as it mentions Tarpaulins therefore can cover only those Tarpaulins which are made out of fabrics which are not covered, coated or laminated with plastics. But the reasonings of the Commissioner which is reiterated by the learned SDR is that Chapter 63 would cover articles made of other items also, cannot be accepted as correct because there is a specific Heading 63.09 in HSN to cover worn out articles. These were original made out of leather, straw, plastics, rubber etc. These worn out articles were classified under the same heading because for customs purposes they have to be classified and Heading 63.09 was chosen. But that cannot be a reason to say that fresh or new fabricate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Heading 63.01. In that particular case the Revenue has contended that the stripes of fabrics themselves would come under Chapter 54 and the articles should come under Chapter 63.01. But this argument was not accepted by the Hon ble High Court. Therefore the principles enunciated in that case also supports the arguments advanced on behalf of the appellants. In the premises, I hold that the same is classifiable under Heading 39.26 as claimed by the appel lants. 52. I also agree with the views of the learned Vice-President that the penalty imposed on the individuals are not called for and I set aside the same. But as far as the penalty on the company is concerned, I am of the view that the same is required to be considered by the adjudicating authority after the de novo adjudication proceedings in the light of the above observations and in view of the fact that I have ordered that the case should be remanded to the adjudicating authority with respect to determination of the issue No. 1 In that view of the matter the penalty imposed on the company is set aside and the question of imposing penalty is required to be reconsidered by the adjudicating authority in the light of his decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adings 52, 54 and 55 after filing the classification list and after following all the necessary formalities under the relevant rules. The Tribunal determined classification of cotton fabrics used as an industrial fabric as in the case of Simplex Mills v. CCE reported in 1993 (49) ECR (147) and held that the goods which came up for determination before the Bench were classifiable under Tariff Heading 59.09 of the Central Excise Tariff. After this judgment was delivered, proceedings were initiated against the appellants by reopening classification and it was urged in the show cause notice that in terms of the judgment of the Tribunal, the goods are re-classifiable under Chapter Heading 5909 and not under the respective Chapter 52, 54 or 55 of the Central Excise Tariff. Demands were also raised by invoking larger period. There is no point of difference as regards the demands being time barred, both by the Hon ble Vice-President and Hon ble Member (J). The ld. Vice-President has held that the items in question were rightly classifiable under Heading 59.09 in terms of the judgment rendered by the Tribunal in the case of Simplex Mills. While proceedings were still pending before the Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is for the Commissioner consider all the points pertaining to the circular, which was in force as well as to the applicability of Simplex Mills case, in view of several factors, the judgments having been held as not good law in the case of CCE v. Fenoplast supra. 60. The Ld. CDR pointed out that the circular in question does not refer to the goods in question but it refers only to cotton fabrics, while the appellant s products are not so. 61. This point is required to be looked into by the Commissioner as the Third Member at this point cannot determine the applicability or non-applicability of the circular and it is for the authority before whom the circular was, to have considered this point. As the Commissioner has not looked into this aspect, in my opinion, the opinion expressed by the ld. Member (J) for remand is proper and also for the reason that the ld. Vice-President has not expressed any opinion on the circular. 62. It is also interesting to note that the Board has again revised its stand in earlier circular, which was adopted in Trade Notice 62/93. The Board under Section 35B Order No. 48/27/97-CX, dated 17-4-97 has expressed a different opinion and has held that co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I am agreeable with the ld. Member (J) that a lacuna which was there on the show cause notice cannot be availed by the department to carry out an investigation and then commence fresh proceedings. This has been the well settled position as has been held by the Supreme Court in the case of State of U.P. v. Manbodhan Lal Srivastava as reported in AIR 1957 SC 922. The Tribunal in similar circumstances relied on several Supreme Court judgments to hold that the department cannot produce documents not confined to charges in the show cause notice as that would amount to making out a fresh case as held in the case of CCE v. Bhupendra Steels Pvt. Ltd. reported in 1989 (44) E.L.T. 760. As the revenue has not discharged the burden the point has to be answered in favour of assessee, as the Supreme Court time and again has been discharging such cases, and giving the benefit to the assessee. 68. As noted by ld. Member (J), I am agreeable with the findings, that the department has not proved their case. This finding has also been given by the ld. Vice President and as noted above, the Vice-President has also held that an opportunity has been given to the department to produce evidence and they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of plastics and articles of other materials. Even the Explanatory Notes on HSN also does not support the plea raised by the ld. Advocate. 75. In that view of the matter, I agree for classification of these items under Heading 63.01. 76. The appeal shall be placed for final orders. Pronounced and Dictated in Open Court on 17-4-1998. Sd/- (S.L. Peeran) Member (J) MAJORITY DECISION Final Order Nos. 782 to 784/98 : 77. In terms of the final order - (a) the classification of un-processed fabrics of cotton, MM filament yarn and fibre is remanded to the original authority. (b) the item one side coated fabrics is held to be not marketable and not dutiable. (c) the articles of one side coated is classifiable under Heading 63.01 of the Central Excise Tariff. (d) articles of double side coated fabrics falls under Chapter Heading 63.01 of Central Excise Tariff. (e) the demands at issue Nos. 1, 2, 4 and 5 are held to be barred by time. 78. These appeals are disposed of in the above terms. Sd/- (V.K. Ashtana) Member (T) Sd/- (S.L. Peeran) Member (J) - - TaxTMI - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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