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TMI Blog2006 (11) TMI 486X X X X Extracts X X X X X X X X Extracts X X X X ..... r Heading 52.06/52.07 is not sustainable in law for want of show-cause notice for the purpose and consequently the penalties imposed on the appellants are also liable to be vacated. In the result, the impugned orders are set aside and these appeals are allowed. However, this order does not stand in the way of the department issuing proper show-cause notice to the party and proceeding further in accordance with law. - S/Shri P.G. Chacko, P. Karthikeyan, JJ. REPRESENTED BY : S/Shri N. Venkatraman, Sr. Advocate and M.N. Bharathi, Advocate, for the Appellant. Smt. R. Bhagya Devi, SDR, for the Respondent. [Order per : P.G. Chacko, Member (J)]. These appeals filed by the assessee are against an order passed by learned Commissioner of Central Excise in adjudication of seven show-cause notices issued by the department. The impugned order has demanded duty of over Rs. 8.6 crores on backing cloth consumed captively/cleared for home consumption from 15-12-1995 to 28-2-2002. It has also imposed penalties on the assessee. Backing cloth is a processed cotton fabric, an intermediate product arising during the course of manufacture of coated abrasives , the appellants fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2001 to 31-10-2001 6. 27-9-2002 O.C.No. 346/2002 1-11-2001 to 28-2-2002 7. 27-11-2000 SCN No. 12/2000 15-12-1995 to 30-3-2000 The notices mentioned at Sl. No. 1 to 6 classified the product under SH 5901.10 and demanded Additional Duty of Excise (ADE) [under Section 3 of the Additional Duty of Excise (Goods of Special Importance) Act] from the assesses for the respective periods. These notices held that the exemption under Notification No. 67/95-C.E. dated 16-3-95 was not available to ADE (GSI). The SCN mentioned at Sl. No. 7 invoked the extended period of limitation to demand both Basic Excise Duty (BED) Additional Duty of Excise (GSI) on the goods for the period 15-12-95 to 30-3-2000. This notice also classified the goods under SH 5901.10. The assessee, in their replies to all the SCNs, maintained that the processed cotton fabric (backing cloth) continued to remain classified under Heading 52.06/52.07. They contested the demand of duty on this and other grounds. In adjudication of the 7 SCNs, learned Commissioner classified the goods under Heading 52.06/52.07 (which carried higher rate of duty than Heading 59.01 propo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be set aside. It was also pointed out that, even classifying the goods under Heading 52.06/52.07, learned Commissioner denied the benefit of Notifications in respect of BED on clearances from the factory and ADE (GSI) on similar clearances as well as clearances for captive consumption for which also there was no SCN. The assessee was not put to notice of the rates/quanta of duties either. In relation to SCN dated 27-11-2000, it was submitted that the demand of duty was for the period (15-12-95 to 31-3-2000) for which earlier demands of duty on the same goods under Heading 59.01 had been vacated by the appellate Commissioner and the department s appeals (E/800 801/2005) against his orders were rejected by this Tribunal as time-barred. On these grounds, according to ld. counsel, the Commissioner s order impugned in the present appeals was liable to be set aside. In this connection, support was drawn from the following decisions :- (1) Warner Hindustan Ltd. v. CCE Hyderabad, 1999 (113) E.L.T. 24 (S.C.) (2) Hindustan Polymers v. CCE, 1999 (106) E.L.T. 12 (S.C.) (3) Metal Forgings v. UOI, 2002 (146) E.L.T. 241 (S.C.) (4) CCE v. Bright Brothers Ltd., 1991 (52 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Heading 52.06/52.07 was to be upheld. Reacting to the counsel s submission that the SCNs were issued for classifying the goods under Heading 59.01 and demanding duty accordingly after the Supreme Court s decision classifying it under Heading 52.06, ld. SDR submitted that a certified copy of the Supreme Court s order dated 3-9-2001 had been received by the department only on 11-7-2005. Referring to the Tribunal s orders in the cases of Nestle India (supra), Usha Industrial Corporation (supra), Bright Brothers (supra) etc. cited by ld. counsel, it was submitted that the entire case law was examined and distinguished in the case of Precision Rubber Industries (supra). Ld. SDR submitted that, in the light of the apex court s order giving finality to the classification of the product under Heading 52.06, the assessee was bound to pay duty in terms of such classification and it was not necessary for the department to issue any SCN proposing such classification and demanding duty. In this connection, reliance was placed on the High Court s decision in Madura Coats v. Govt. of India, 2000 (118) E.L.T. 332 (Mad.) and the Supreme Court s decision in Shree Ram Multi Tech. Ltd. v. CCE, Ahmed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dingly, quantified the demand of duty. The Commissioner s decision has come under severe attack on irresistible grounds supported by binding judicial authorities. 9. In the case of Bright Brothers Ltd. (supra), a SCN was issued by the department demanding Special Excise Duty (SED) from the assessee in terms of Central Excise Tariff Item No. 15A(2), but Basic Excise Duty (BED) leviable under that tariff item was not demanded from them. The assessee had already paid BED on the goods wrongly classified under Tariff Item 68. The Tribunal did not permit appropriation of this amount towards BED on the goods under Tariff Item 15A (2) as the department had not issued SCN for classifying the goods under this Tariff entry and demanding duty appropriately. The view taken by the Tribunal was upheld by the Supreme Court vide 2000 (116) E.L.T. A67 (S.C.) by holding thus - upon the facts of the case, no interference is called for since as is clear from the order of the Collector of Central Excise (Appeals) that no demand for recovery of basic excise duty under Tariff 15(A)(2) had ever been made upon the Respondent. The civil appeals are dismissed. 10. In the case of Nestle India Ltd. (supra), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... make a demand on the assessee even if it be assumed that the Revenue s contention as to classification of the goods as held by the Tribunal was correct. Even a corrigendum to show-cause notice, changing the very complexion of the department s case, has been held to be impermissible vide S.T.L. Exports Ltd. v. Commissioner - 2004 (168) E.L.T. 272 (Tri.-Del.). Thus the paramount importance of a show-cause notice under Section 11A(1) of the Central Excise Act for demanding duty from an assessee on a chosen basis is something oft-repeated by judicial authorities. 14. In the present case, the proposal in the SCNs was to classify backing cloth under Heading 59.01. The adjudicating authority, however, classified the goods under Heading 52.06/52.07 and, accordingly, modified the demand of duty. Admittedly, no SCN had been issued for classifying the product under Heading 52.06/52.07 and demanding duty on that basis for any part of the period of dispute (15-12-95 to 28-2-2002). Ld. Commissioner s order is a determination of duty under sub-section (2) of Section 11A of the Central Excise Act and the same is on a basis different from the one laid down by the department in the relevant SCN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /79 was allowed by the High Court which quashed the Asst. Collector s order dated 25-11-78. Subsequently, the Asst. Collector again took up SCN dated 30-8-78 for adjudication and called for the assessee s remarks, whereupon the latter took the stand that the former could not direct them to present any case without issuing fresh SCN. This was during the period 1986-89. Ultimately, on 23-1-90, the AC issued a SCN to the party proposing classification of their goods under Tariff Item 18E(ii). In reply, the noticee submitted that such classification had already been set aside by the High Court. The adjudicating authority passed order dated 28-5-90 upholding the classification proposed in the said notice. It was against this order of the Asst. Collector that W.P. No. 15469/90 was filed in the High Court by M/s. Madura Coats Ltd. The Hon ble High Court, in the order cited by ld. SDR vide 2000 (118) E.L.T. 332 (Mad.), rejected the plea raised by the assessee that the SCN issued in 1990 in respect of liability which arose in the 70s was heavily barred by limitation. The court observed thus - In my view, such a contention is not available to the writ petitioner in the instant case. It is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordships held that there was no provision under the Act for waiver of payment of duty and that duty could be waived only by Exemption Notification. It was, further, held that, once tarpaulin was held to be classifiable under SH 3926.90, the appellant was liable to pay differential duty. Ld. SDR has heavily relied on this conclusion recorded by the Supreme Court in the case of Shree Ram Multi Tech Ltd. (supra). Again, we do not find any merit in this argument inasmuch as, before the Tribunal and the Supreme Court, there was only one SCN and the same was the notice issued on 18-3-99 proposing to classify tarpaulin under SH 3926.90 and demanding differential duty on that basis. The earlier SCN dated 4-9-96 had been withdrawn. The classification proposed in the surviving SCN was confirmed by the Commissioner, affirmed by the Tribunal and reaffirmed by the apex court. On these facts, no assistance could be claimed by the Revenue from the above judgment of the apex court. 18. In the impugned order, learned Commissioner relied on the Tribunal s decision in Precision Rubber Industries (supra). Ld. SDR also has submitted that the ratio of the said decision is squarely applicable to th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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