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2002 (12) TMI 526 - AT - Central Excise
Issues: Classification of goods under Central Excise Rules, 1944; Invocation of proviso to Section 11A for duty recovery; Imposition of penalty under Rule 173Q and Rule 9(2) of the Central Excise Rules.
The judgment pertains to a case where the appellant, a PSU manufacturing bulbs, fluorescent lighting tubes, and parts thereof, had classified 'Lead Glass in Flare and Exhaust' under Heading 7015.00 since 1988, with approved Classification Lists and duty payments. A Show Cause Notice was issued, alleging misdeclaration and proposing reclassification under Heading 7001.90 with duty recovery invoking the proviso to Section 11A of the Central Excises and Salt Act, 1944. The Collector classified the goods under Heading 7001.90, confirmed a duty demand of Rs. 21,37,325 for the period 1-3-92 to 28-2-94, and imposed a penalty of Rs. 2 lakhs under Rule 173Q. Regarding the invocation of the proviso to Section 11A, it was argued that the demand beyond six months was barred by limitation, citing the Supreme Court precedent in CCE v. Giridhar Supplies Company. The Tribunal found that the notice issued on 23-1-95 for the period 1-3-92 to 28-2-94 exceeded the six-month limitation period, thus, the demand for duty beyond that timeframe was barred by limitation. On the issue of misdeclaration, it was noted that no new information on the manufacturing process was presented, and the appellant maintained that there was no change in the process since 1988. As misdeclaration was alleged but not proven, and no duty demands could be established, the longer period under the proviso to Section 11A(1) could not be invoked. Regarding the imposition of penalties under Rule 173Q and Rule 9(2), it was held that since no duty demands were substantiated, and no procedural violations were proven, the penalties could not be upheld. Rule 9(2) penalty applies only if goods are removed without following prescribed procedures, which was not the case here. Therefore, the Tribunal set aside the demand beyond the limitation period and the imposed penalties. The appeal was allowed with consequential relief, ruling in favor of the appellant.
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