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2017 (9) TMI 222 - AT - Central ExciseClassification of goods - PP bags & rolls, LD/LLD bags & rolls and HM bags - extended period of limitation - Held that - It is correct that there was an increase in the duty of the products mentioned in CSH 39.17 and respondent had continued to pay the duty in the earlier rate. But undisputedly, they have paid the differential duty immediately on coming to know of the error. However, the department has chosen to issue a show cause notice invoking the extended period. Further, the issue of classification on the impugned products was under litigation before various forums and therefore being an interpretational issue, the respondents cannot be imputed with the intention to evade payment of duty - demand set aside on the ground of limitation - appeal dismissed - decided against Revenue.
Issues:
Classification of products under Chapter Sub Heading 39.17, time-barred demand, intention to evade payment of duty, liability of individual partners in the appeal. Classification Issue: The case involved a dispute regarding the correct classification of products under Chapter Sub Heading 39.17. The department alleged that the products should have been classified under 39.20 and 39.23 instead, attracting a higher rate of duty. The appellant argued that the goods manufactured by the respondent were not fit for the purposes mentioned in the Chapter Notes for 39.17, as they were polypropylene films primarily used for packaging, not for conveying liquids or gases. The respondent, however, contended that the goods fell under 39.17 based on previous Tribunal decisions and had rectified any inadvertent errors in duty payment promptly upon discovery. Time-Barred Demand Issue: The Commissioner (Appeals) had set aside the demand on the grounds of limitation, stating that there was no suppression of facts by the respondents. The appellant, however, argued that the respondents had changed the classification themselves to pay a lower duty rate, indicating an intention to evade payment. The department invoked the extended period for raising the demand, which the appellant claimed was justified due to the alleged intentional misclassification by the respondents. Liability of Individual Partners Issue: The appellant raised concerns about the liability of the individual partners of the respondent firm, alleging that they should also be held accountable for any evasion of duty. However, the respondent pointed out that no separate appeal had been filed against the individual partners, and they had rectified any duty discrepancies promptly upon identification. The Tribunal noted that since no appeal was filed against the partners, their liability could not be challenged in the current appeal, leading to the dismissal of the appeal by the Revenue. In conclusion, the Tribunal dismissed the appeal filed by the Revenue, emphasizing that the respondents had rectified any duty discrepancies promptly upon discovery. The issue of classification was deemed interpretational and under litigation in various forums, absolving the respondents of any intentional evasion of duty. The liability of the individual partners was not addressed in the appeal due to the absence of separate appeals against them.
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