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TMI Blog2006 (11) TMI 486X X X X Extracts X X X X X X X X Extracts X X X X ..... 'backing cloth' manufactured by the assessee had been classified under Heading 52.06 of the Schedule to the Central Excise Tariff Act by the Tribunal in Order No. 402/2001 dated 13-3-2001 [vide 2001 (133) E.L.T. 124] and that the civil appeal filed by the Revenue against the said order was dismissed by the Supreme Court on 3-9-2001 [vide 2002 (142) E.L.T. A181]. It further appears from the records that, for the period 15-12-95 to 31-3-2000, 12 show-cause notices were issued to the appellants by the department during July 1996-April 2000 classifying the same goods under Heading 59.01 and demanding differential duty on that basis. The dispute under 8 of these 12 SCNs eventually reached this Tribunal through the department's appeal No. E/800/2005. Similarly, the dispute under the remaining 4 out of the 12 SCNs eventually came up before the Tribunal through appeal No. E/801/2005 filed by the department. Both these appeals were dismissed as per Final Order dated 19-9-2006 of this Bench. Thus, for the period prior to March 1990, classification of 'backing cloth' manufactured by the appellants was settled under Heading 52.06 as per the Supreme Court's judgment dated 3-9-2001 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Central Excise Act, 1944. (b) Backing cloth are marketable goods and therefore chargeable to excise duty as excisable goods. (c) CUMI are not entitled to the exemption under Notification No. 8/96-C.E., dated 23-7-96 and successor notification as well as under Notification No. 9/96-C.E., dated 23-7-96 for the reasons stated in para 7.0 to 7.5 above. However they are eligible for exemption from payment of BED for captive consumption of backing cloth under Notification No. 67/95-C.E., dated 16-3-95. Therefore, CUMI are liable to pay (i) BED for removals outside and (ii) AED (GSI) for captive consumption as well as removals outside. (d) The demand of duly on backing cloth made under Heading No. 59.01 will survive for the demand of duty under Heading No. 52.07 for the reasons detailed in para 8.0 to 8.3. (e) The assessable value as proposed in the show cause notices have been taken into account for the purpose of demand of duty for the reasons as detailed in para 9.0 to 9.2 above. (f) CUMI had suppressed certain facts with an intention to evade payment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollector v. Bright Brothers Ltd., 2000 (116) E.L.T. A67 (S.C.) (5) Nestle India Ltd. v. CCE, 2001 (132) E.L.T. 134 (Tri.-Del.) (6) Usha Industrial Corporation v. CCE, 2001 (130) E.L.T. 785 (Tri. -Del.) (7) Raphael Pharmaceuticals Pvt. Ltd. v. Supdt. of Distilleries, 1988 (38) E.L.T. 11 (A.P.) Learned counsel also reiterated other grounds raised in the appeals. 6. Though, in the written submissions filed by her, learned SDR made submissions in justification of the adjudicating authority's findings with regard to manufacture and marketability of the goods and applicability of Exemption Notifications, she did not press these points at the bar. However, on the question whether the Commissioner's order demanding duty from the appellants under Heading 52.06/52.07 was tenable in law, she vehemently argued in favour of the impugned order. She claimed support from the Tribunal's decision in Precision Rubber Industries Pvt. Ltd. v. CCE, Mumbai IV, 2005 (183) E.L.T. 218 (Tri.-Mumbai) after pointing out that the facts of the two cases were similar. In the case of Precision Rubber Industries case, the party had cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edabad, 2006 (195) E.L.T. 138 (S.C.). 7. In his rejoinder, ld. counsel pointed out that the apex court granted stay to M/s. Precision Rubber Industries (P) Ltd. in Civil Appeal No. 1757/2005 filed against the Tribunal's decision cited by ld. SDR as reported in 2005 (186) E.L.T. A162 (S.C.) and, therefore, nothing contained in the Tribunal's order could be relied on in the present case. 8. We have already noted that the "backing cloth" was an intermediate product manufactured by the appellants and used captively in the manufacture of coated abrasives or cleared for home consumption during the period of dispute. This intermediate product was classified, for the period prior to March 1990, under Heading 52.06 by the Tribunal in Final Order No. 402/2001 dated 13-3-2001 reported in 2001 (133) E.L.T. 124 (Tri.-Chennai) (Carborandum Universal Ltd. v. Commissioner) and this classification was upheld by the Supreme Court as per order dated 3-9-2001 reported in Commissioner v. Carborandum Universal Ltd., 2002 (142) E.L.T. A181 (S.C.). Before the apex court and the Tribunal, the department had claimed classification of the goods under Heading 59.01 but this claim was rejected. For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tle India Ltd. (supra), the SCN classified the goods under SH 2108.90 attracting Central Excise duty @ 20% ad valorem. The adjudicating authority upheld this classification and, accordingly, confirmed demand of duty against the assessee. The first appellate authority classified the goods under Heading 19.01 and directed the lower authority to re-quantify the duty accordingly. The Tribunal held that, without any SCN for classification of the goods under Heading 19.01 and demanding duty on that basis, the decision of the lower appellate authority was not sustainable. It appears, the Tribunal's decision in Nestle India case was accepted by the department. 11. In the case of Warner Hindustan Ltd. (supra), the assessee classified their products as "Ayurvedic Medicines" under SH 3003.30 of the CETA Schedule. The department issued a SCN proposing to classify the goods as "Patent or Proprietory Medicines" under SH 3003.19. The original authority upheld this proposal, but the first appellate authority rejected it and classified the goods under SH 3003.30 as claimed by the assessee. The department preferred appeal to the Tribunal, taking the stand for the first-time that the goods were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n by the department in the relevant SCNs. The order classified the product differently and demanded duty at higher rates. Such action is not permissible in law as held by the A.P. High Court in Raphael Pharmaceuticals case (supra). 15. In terms of the above case law, the demand of duty raised by the Commissioner on the appellants in respect of backing cloth classified under Heading 52.06/52.07 cannot be sustained. 16. Ld. SDR has claimed support from the High Court's order in Madura Coats case to her submission that as the classification of the goods under Heading 52.06 had attained finality with the Supreme Court's order dated 3-9-2001, it was not necessary for the department to issue SCN again for classifying the goods under the said heading. The High Court's decision does not support this contention. In the case considered by the High Court, the department had issued a SCN dated 17-2-1975 to the party to classify their product (twisted cotton/nylon yarn) under Central Excise Tariff Item No. 18E. The party challenged the SCN in W.P. No. 3737/75. On 8-8-77, the Govt. of India issued a Notification directing classification of the product under Tariff Item 18A(ii). The w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e writ petitioner in the instant case. It is not a new show cause notice that had been issued. If we look at the events leading to the issuing of impugned notice, it will be seen that the proceedings had been a continuous one and possibility at every stage there was disruption in the course of events before orders were passed by this Court in writ petitions and writ appeals. We do not find that the above view taken by the High Court in the peculiar facts and circumstances of the case of Madura Coats Ltd. is applicable to the present case. 17. Ld. SDR has also relied on the apex court's judgment in the case of Shree Ram Multi Tech Ltd. (supra). In this case, the department issued SCN dated 4-9-96 to the party proposing to reject their claim for classification of their product (tarpaulin) under SH 3926.90 and for exemption under Notification No. 36/94-C.E., dated 1-3-94, and to classify the goods under SH 6306.00. The notice also demanded duty on the goods under this Tariff heading. On receipt of the notice, the assessee filed a revised classification list classifying their product under SU 6306.00. Subsequently, the department issued another SCN dated 18-3-99 demanding duty as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ratio of the said decision is squarely applicable to the present case, the facts of the two cases being similar. But we are not in a position to accept this case of the Revenue inasmuch as the apex court's stay order vide 2005 (186) E.L.T. A162 (S.C.) has eclipsed finality of the Tribunal's decision. It is also pertinent to note that neither the decision of the Supreme Court in the case of Bright Brothers Ltd. vide 2000 (116) E.L.T. A67 (S.C.) nor its decision in the case of Warner Hindustan Ltd. vide 1999 (113) E.L.T. 24 (S.C.) had been cited before the Tribunal in the case of Precision Rubber Industries. 19. For the reasons already stated, we hold that the demand of ADE (GSI) or that of BED on the subject goods under Heading 52.06/52.07 is not sustainable in law for want of show-cause notice for the purpose and consequently the penalties imposed on the appellants are also liable to be vacated. In the result, the impugned orders are set aside and these appeals are allowed. However, this order does not stand in the way of the department issuing proper show-cause notice to the party and proceeding further in accordance with law. (Operative part of the order was pronounced in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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