TMI Blog2003 (3) TMI 585X X X X Extracts X X X X X X X X Extracts X X X X ..... are manufacturers of industrial fabrics of nylon x nylon and nylon x cotton and were clearing the same without payment of duty. The company was registered as an SSI Unit in the year 1994 for manufacture of Grey Industrial Fabrics. The entire fabrics manufactured by the appellants were sold to M/s. Habasit Iakota Pvt. Ltd. The Officers of the Central Excise Department visited the unit on 27-2-2001 and studied the manufacturing process. It was learnt that for the buyers of the goods i.e. M/s. Habasit the said fabrics are the main raw materials for the manufacture of spindle tapes/transmission belts which are used as spares in the spindle drive system of the textile machinery. The scrutiny of the records revealed that they have filed two declarations the first one on 9-1-97 and the other one on 8-7-98 seeking exemption from Licence/Registration under Rule 174 declaring that they were manufacturing grey fabrics of nylon and cotton and nylon x nylon falling respectively under 5208.10 and 5406.10 and claimed full exemption under Notifications applicable for grey unprocessed fabrics falling under Chapters 52 and 54. It was observed by the officers that the goods manufactured by the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind P. Datar, learned Sr. Counsel for the appellants produced a communication dated 17-7-2002 from the appellants Company duly signed by the partner stating that the appellants are not contesting the classification of the goods as decided by the department and they would only contest the allegation of suppression of facts. Notes on submission was also submitted by the learned Counsel for the appellants in the court on 19-7-2002 wherein it is stated that Classification made by the department under Chapter 59 of the tariff is accepted to avoid further litigation with the department . 4. In view of the above submission, the issue to be decided is confined only to the sustainability or otherwise of the invocation of longer period of limitation for demand of duty and whether the combined penalty imposed under Section 11AC and Rule 173Q is sustainable in law and also whether interest is demandable under Section 11AB of the Act. 5. As regards invocation of Longer period for demand of duty in terms of proviso to Section 11A(1) of the Act, it is contended by the learned Sr. Counsel that longer period cannot be invoked in this case as there was no intention to evade payment of duty in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declaration and no suppression of fact involved for demand of duty and invocation of larger period. (3) Gufic Pharma Ltd. v. CCE, Vadodra reported in 1996 (85) E.L.T. 67 wherein it was held that extended period of five years not invocable by alleging suppression of a fact which was not required by law to be disclosed. 6. Shri C. Mani, learned DR appearing on behalf of the department defended the impugned order and submitted that the appellants have misdeclared the goods before the department. They have only submitted declaration under Rule 174 of the CE Rules, since as per the declaration, the value of the goods were expected to be not exceeding thirty lakhs. Therefore, no classification and price list was submitted and so also RT 12 return. It was only on investigation that it was found that their value of the goods far exceeded. Had they declared their product as Industrial Fabrics, which they should have and could have done initially, the department could have asked them to pay duty. But they intentionally withheld the information from the department and it was only on investigation it was found that the appellants had misdeclared the goods. He, therefore, sought for su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade payment of duty, longer period of limitation has been correctly invoked in this case, as held by the Five Member Larger Bench in the case of Nizam Sugar Factory reported in 1999 (114) E.L.T. 429. We observe that in the instant case, the product Industrial Fabrics manufactured by the appellants have been classified under sub-heading 5911.90 which classification has been accepted by the appellants. They are, therefore, not eligible for exemption. They have only filed declaration seeking exemption from taking licence/Registration under Rule 174 of the CE Rules, 1944. Such declaration by exempted assessee is filed once in a year with the Supdt. of Central Excise, incharge of the Range who has got jurisdiction over the Unit. Such declarant unit is not to be visited by the Supdt. or the Inspector of Central Excise to avoid harassment to them. The Central Board of Excise Customs, have also issued instructions to the Commissionerates that they will not allow any officers below the rank of Assistant Commissioners to visit such declarant unit. If those officers have to visit any such unit as a part of investigation, they have to obtain permission from the Assistant Commissioner and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period of limitation under the proviso to Section 11A(1) of the Act, is clearly applicable for demand of duty. In the circumstances the case laws relied upon by the appellants are not applicable to the facts of the present case inasmuch as the decision in the case of Pearls of Beauty v. CCE - 2001 (130) E.L.T. 495, it was held that it was required on the part of the department to make enquiry from the appellants before approving classification whereas in this case there was no classification list filed. The decision in the case of Tubex India Pvt. Ltd. v. CCE, Patna, -2001 (130) E.L.T. 382 also deals with a different situation from the present appeal as in that case, it was found by the Tribunal that the observation made by the Commissioner (Appeals) were based upon the fact that the appellant misinterpreted Chapter Note 1 of Chapter 83 and intentionally classified their product under Chapter 73 and there was also no finding by the Commissioner (Appeals) that there was any declaration as regards to the description of the products by the appellants. Further, in that case declarations filed by the appellants claiming the benefit of Notification was granted permission by the proper o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be an acceptable defence. (c) With particular reference to Modvat scheme (which has occasioned this reference), it has to be shown that the Revenue neutral situation comes about in relation to the credit available to the assessee himself and not by way of availability of credit to the buyer of the assessee s manufactured goods. 9. The appellants have also taken a plea that they are entitled to the benefit of Cenvat credit, if they are to pay duty now, and they have relied upon various case laws in support of their plea. The Revenue has opposed this plea on the ground that it is not related to the issue and the eligibility or otherwise is to considered by the proper officer only to the user and not to the appellants. 10. We have considered this plea and we are of the considered opinion that their plea for Cenvat Credit on inputs used by them for the manufacture of their final product has to be reconsidered by the lower authority in the facts and circumstances of this case. The appellants shall submit to the original authority all the duty paying documents in respect of the raw materials purchased by them and used in or in relation to the manufacture of their final pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emandable as held by the lower authority. (d) With regard to availability of the benefit of CENVAT credit on the input used by the appellants the matter is remanded to the lower authority for de novo consideration in the light of the judgments cited supra. (e) Since the price charged by the appellants is cum-duty price, they are entitled to abatement of duty under Section 4(4) (d) (ii) of the Act. (f) Duty shall be worked out after allowing Modvat/Cenvat Credit and after giving abatement of duty under Section 4(4)(d) (ii) of the Act. However, appellants shall be afforded opportunity of being heard before confirming the duty finally to be paid by them. (g) Aspect pertaining to imposition of penalty is remanded for de novo consideration. The original authority shall apportion the penalty under Section 11AC of the Act and Rule 173Q of the CE Rules, separately. Sd/- (Jeet Ram Kait) Member (T) 13. [Contra per : S.L. Peeran, Member (J)]. - I have carefully considered the order prepared by my learned brother. I could not persuade myself to agree to his finding with regard to extension of larger period in this case and for confirming duty on that count ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r for scoring and heating setting and the same had been filed by M/s. Habasit Iakota Pvt. Ltd. also. They had addressed a letter dated 14-11-96 to the ACCE, Coimbatore II Division wherein all the information from the time of receipt of yarn had been furnished by the buyer, M/s. Habasit Iakota Pvt. Ltd., including construction of the fabrics. Likewise, by intimation letter dated 25-12-96 under Rule 57F (3) to the ACCE, Coimbatore II Divn., about despatch of yarn to the job worker for manufacture of fabrics was filed by M/s. Habasit Iakota Pvt. Ltd. M/s. Habasit Iokata Pvt. Ltd. on receipt of fabrics from the appellants had sent to the processor under Rule 57F(3) procedure and the processor while despatching the goods paid duty and collected from them. These facts clearly show that the appellants and their buyer M/s. Habasit Iakota Pvt. Ltd. had informed the department about their manufacturing activity and each stage of transaction are known to the department. In a circumstance like this, it cannot be alleged that there was wilful suppression with an intent to evade duty. Appellants have pleaded that had they paid the duty, then the entire Modvat credit would have been available to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esented that there is no uniformity in the classification of circuit breakers above 1000 volts for the purpose of levy of Central Excise duty under Schedule to Tariff Act, 1985 (henceforth referred to as Tariff). The association had furnished a list of such HV and MV circuit breakers manufactured in India and it was pointed out by the Association that the Central Excise Officers in different Commissionerate have been classifying such circuit breakers under headings 8535 8537 of the Tariff. In order to ensure uniformity in classification of this product, the Board examined the classification of circuit breakers and issued an order in exercise of the power conferred under Section 37B of the C.E. Act, 1944 for the purpose of ensuring uniformity in classification of the product and levy of duty, vide Order No. 32/8/94-CX issued from file F. No. 151/6/94-CX. 4, dated 14-7-94. The list enclosed with the Board s order as noted above, covers circuit breakers manufactured by the appellants also. Since there was confusion in the minds of the trade as well as the Revenue whether the product in question viz. circuit breakers would fall under tariff heading 8535 or under 8537 of the Tariff an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oking the longer period of limitation in terms of Section 11A. 9. In view of the above discussion, I agree with the view taken by learned Member (T) Shri S.S. Sekhon that the appeal is required to be remanded for re-determination of the classification issue and the demand of duty has to be restricted to six months period only. 15. In view of the fact that in the present case also, the department had full knowledge about the manufacture and also about the appellants processors M/s. Habasit Iakota Pvt. Ltd. seeking permission under Rule 57F(3) and therefore it cannot be said in the said circumstances that larger period is invokable and demands are required to be confirmed in the matter. For this reason, I hold that entire demands are time barred and are not enforceable. However, the classification is confirmed under heading 5911.90 as the prayed for by the appellants. The impugned order is confirmed only to the extent of classifying the product under Chapter Heading 5911.90 while the demands are set aside as barred by time. Ordered accordingly. Sd/- (S.L. Peeran) Member (J) POINTS OF DIFFERENCE In view of difference of opinion arisen between the Members ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce in not taking licence or not paying duty not sufficient to invoke extended period. In this context, the department is on the view that since the appellant/assessee themselves declared before the State Government it is not justified to invoke the Larger Bench in terms of Section 11A. 18. I have carefully considered the matter. On going through the facts and circumstance and in view of the conflicting views in respect of classification of the product in question, I find that there was no justification to invoke the Larger period as it was rightly pointed out by the ld. Senior Counsel. Further, the decision rendered by the Hon ble Supreme Court in the case of Jaiprakash Industries Ltd. v. CCE, Chandigarh (supra) strengthened this view. Accordingly, I agree with the findings recorded by Member (J) and therefore the appeal deserves to be allowed accordingly. The Registry to place the matter before the Original Bench to pass the final order accordingly. Sd/- (G.A. Brahma Deva) Member (J) MAJORITY ORDER In terms of the Majority order the demands are required to be held as time-barred and the appeal is allowed. Sd/- (Jeet Ram Kait) Member (T) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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