1987 (1) TMI 360 - AT - Central Excise

Summary

Issues:
1. Proper classification of goods under Central Excise Tariff.
2. Disclosure of grounds for changing classification.
3. Imposition of penalty without reference in show cause notices.
4. Denial of personal hearing despite request.

Detailed Analysis:

Issue 1: The main contention in both appeals revolved around the proper classification of goods under the Central Excise Tariff. The appellants, who were processors receiving fabrics for processing, received show cause notices demanding payment of differential duty due to a change in classification from T.I. 19(1)(ii) to T.I. 19(1)(i) CET. The Assistant Collector and the Appellate Collector upheld the demand based on the mis-declaration of goods by the appellants. However, the appellants argued that they were not informed of the grounds for the change in classification, rendering the proceedings invalid.

Issue 2: The appellants contended that despite specific requests for disclosure of the materials leading to the alteration in approved classification, the Department failed to provide any reasons for the change. The Assistant Collector's reasoning for the change was based on the classification by the customer under T.I. 19(1)(i), which the appellants disputed by producing evidence of the customer's classification list showing T.I. 19(1)(ii). The Tribunal found that the Department did not disclose the basis for altering the approved classification, justifying the appellants' argument that the orders were invalid.

Issue 3: The appellants also raised concerns regarding the imposition of penalties without any reference to them in the show cause notices. Additionally, in one appeal, the appellants requested a personal hearing, which was not granted despite their plea. The Assistant Collector claimed that the appellants did not ask for a personal hearing, contrary to their request, leading to further grounds for setting aside the orders.

Conclusion: The Tribunal concluded that the orders of the lower authorities were to be set aside due to the failure to disclose the basis for changing the classification, rendering the demands for differential duty invalid. The lack of disclosure and the imposition of penalties without proper reference in the show cause notices further supported the decision to allow both appeals. Consequently, the orders of the lower authorities in both matters were set aside, ruling in favor of the appellants.