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2023 (4) TMI 654 - CESTAT AHMEDABADClassification of goods - Compounds of PBT - classifiable under Chapter Sub Heading No. 39079190 of the schedule to Central Excise Tariff Act, 1985 or not - Compound of Polyamide - classifiable under Chapter Sub Heading No. 39081090 of the schedule to Central Excise Tariff Act, 1985 or not - recovery of differential Excise Duty with interest and penalty - denial of exemption notification no. 4/2006-CE - extended period of limitation - HELD THAT:- From the above exemption N/N. 4/2006-CE, it is found that the exemption is granted to polyester chips falling under chapter heading no. 3907 and nylon chips falling under heading no. 3908. It is to be noted that for the purpose of exemption eight digit subject heading has not been prescribed under the notification therefore, it is clear that all the polyester chips falling under 3907 is eligible for exemption similarly, all the nylon chips falling under 3908 is eligible for exemption. The adjudicating authority has denied the exemption relying on the clarification given by the Chemical examiner and chemical examination report - The adjudicating authority has put entire emphasis on the clarification issued by Chemical Examiner that against the question raised before the chemical examiner that whether the product compound of PBT can be reported as polyester chips or not. The chemical examiner has answered as above that the sample is other than pure PBT and other than pure nylon chips. From the above clarification, it is also clear that even though both the products are not pure PBT and pure nylon chips but both are pre-dominantly consists of more than 70% of polyester and nylon. It is settled law that any chemical compound is classifiable on the basis of its active ingredient only. In the present case, since both the products are admittedly pre-dominance of Polyester and Nylon, the same are classifiable under 3907 and 3908 respectively. Undisputedly, the form of the product is in chips so therefore, both the products are clearly qualified as polyester chips and nylon chips being constituent of pre-dominantly polyester and nylon respectively. The classification of the product decided by the commissioner will have no adverse effect on the eligibility of the notification so long the product falls under chapter heading 3907 and 3908 and the same is polyester chips and nylon chips irrespective of the same is not in the pure form therefore, the appellant are eligible for exemption notification in respect of their product namely polyester chips and nylon chips. Extended period of limitation - HELD THAT:- The appellant categorically informed the department vide letter dated 29.12.2006 that they are eligible for exemption. With these correspondence, the revenue was absolutely free and nothing prevented them to issue show cause notice well within the normal period of limitation. However, the show cause notice was issued on 02.11.2010 covering the period from August 2006 to June 2009 invoking proviso to Section 11A(1)of the Central Excise Act, 1944 - there is absolutely no suppression of fact on the part of the appellant therefore, the entire demand raised under the extended period will not sustain on limitation itself therefore, the demand is liable to be set aside on the ground of limitation also. Appeal allowed.
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