1999 (7) TMI 169 - AT - Central Excise

Summary

Issues:
1. Confirmation of duty demand and imposition of personal penalty.
2. Correct classification of the product under Chapter 3909.60 versus sub-heading 3506.00.
3. Invocation of the extended period of limitation.

Analysis:

1. Confirmation of Duty Demand and Imposition of Personal Penalty:
The Commissioner confirmed a duty demand of Rs. 14,31,602.00 and imposed a personal penalty of Rs. 14,32,000.00 on the appellant. The demand was confirmed for two periods, March 1992 to December 1992 and March 1994 to December 1995, despite the show cause notice being issued on 10-5-1996. The appellants challenged this order on grounds of limitation and merits. The Advocate for the appellants argued that all necessary information was disclosed in the Classification List, and the Department approved the classification after testing a sample. The Tribunal observed that the notice was issued after the normal six-month limitation period, and since the appellants had provided proper declaration and the Department had approved the classification based on testing, the demand was held to be time-barred.

2. Correct Classification of the Product:
The appellants had initially classified their product under sub-heading 3506.00 based on a Classification List effective from 24-8-1992. However, a show cause notice in 1996 contended that the correct classification was under Chapter 3909.60, not as prepared adhesives based on plastics. The notice alleged that the appellants did not disclose complete facts in their Classification List, leading to an incorrect approval. The Tribunal noted that the product had adhesive properties as per the Chemical Examiner's Report and consumer certificates. However, the Tribunal did not delve into the merits of the classification issue, as the appeal was disposed of on the point of limitation.

3. Invocation of the Extended Period of Limitation:
The issue of the extended period of limitation was central to the case. The Commissioner invoked the longer period due to an alleged suppression of facts regarding the manufacturing process in the Classification List. The appellants argued that they had disclosed all necessary information, and any doubts should have been clarified by the Department before approving the list. The Tribunal agreed with the appellants, stating that the detailed process of manufacture was not required to be disclosed in the Classification List. It held that the demand was time-barred as the appellants had not suppressed any information required by law, and the Department had the opportunity to seek further details if needed before approving the classification.

In conclusion, the Tribunal set aside the demand solely on the grounds of being time-barred, refraining from expressing an opinion on the correct classification of the product.