TMI Blog2009 (5) TMI 105X X X X Extracts X X X X X X X X Extracts X X X X ..... clare the description or mfg. process etc., demand consequent to reclassification to be limited to the period available to department i.e. within one year only - E/3413-3414/2003 and E/580/2005 - A/952-954/2009-WZB/AHD - Dated:- 29-5-2009 - Ms. Archana Wadhwa, Member (J) and Shri B.S.V. Murthy, Member (T) REPRESENTED BY : Shri V. Sridharan, Advocate, for the Appellant. Ms. M.I.J. Micheal, Jt. CDR, for the Respondent. [Order per : B.S.V. Murthy, Member (T)]. - The appellants are inter alia engaged in the manufacture of Polyester covered yarn and Nylon covered yarn by applying the process of conventional covering on machine - MENEGATTO - Model 1500/2000 and also separately by applying the process of air covering (under dispute) on machine SSM - DP2-C. By applying both the processes what emerges from the machines is covered yarn. The manufacturing process of conventional covering and air covering are as under : Process of Convention Covering - M/C - MENEGATTO Model 1500/2000 The Lycra/Spandex Spools are loaded on the feeder shaft. Nylon/Polyester which is on flanged bobbin is placed on the spindle of the machine. The Lycra/Spandex is drafted as per the required qua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dification in classification of covered yarn manufactured by air covering method/demanding differential duty on covered yarn for the period March, 2001 to February, 2002/ demanding differential duty on DTA clearances based on 50% of the aggregate duties of customs for the period 16th Sept., 1999 to February, 2002/for imposition of penalty and recovery of interest etc. 6. After adjudication process, in the impugned order, the Commissioner has upheld that the polyester covered yarn and nylon covered yarn are clearly classifiable under Chapter Headings 5402.62 and 5402.61. Commissioner has confirmed differential duty demand of Rs. 44,89,471/- with interest as applicable. He has also imposed equal amount of penalty on appellant unit M/s. Sarla Polyester and penalty of Rs. 44,89,000/- on Shri Krishna Jhunjhunwala, Managing Director. Hence the appeals. 7. Shri V. Sridharan, ld. Advocate on behalf of the appellants submitted that covered yarn manufactured by them by using new technology of Gimped yarn only. Gimped yarn would cover covered yarn intermingled yarn and various types of yarns, Nylon yarn or polyester yarn covered drafted light spandex yarn. He also explained new manufactur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l in case of M/s. Futura Polymers Ltd. [2003 (152) E.L.T. 156 (Tribunal) = 2003 (54) RLT. 405 (CEGAT-Delhi)] whereunder it was held by Tribunal that the duty paid by the assessee on the basis of amount calculated at the rate of 50% of each duty of customs, based on C.B.E. C. Circular dated 18-5-1994 and duty demand made for the period prior to issue of revised circular dated 6-2-2001 was not permissible. It is submitted that in the above disputed case the dispute was covering for the period only upto 6-2-2001 i.e. the date when CBE C issued the revised circular and therefore there was no need to consider the issue regarding amendment effected in the Exemption Notfn. The appellants therefore relied upon the above decision also for the period upto 6-2-2001 and relied upon the judgment of Larger Bench for the entire disputed period. The appellants submit that the Commissioner deliberately ignored the correct legal position involved and passed the impugned order on his purported and baseless findings that the Hon'ble Tribunal in case of M/s. Futura Polymers Ltd. has given the thrust on the legality of duty calculation in view of proviso to Section 3 of the Act. The appellants submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mped Yarn that the core does not itself undergo twisting with the covered threads. Nowhere explanatory notes provide that there need not to be a core and other yarn need not be woven around the core which is the requirement for covered yarn. Therefore, we uphold the Commissioner's order as regards the classification of the product. 11. Coming to the point of limitation, ld. Advocate argued that extended period should not have been invoked at all since they have challenged the classification on the basis of classification of the similar yarn in the bills of entry seized by the Custom House, which is another unit of the same department. In this connection, to invoke extended period, relevant portion of the observation of Commissioner in Para 39 of Order-in-Original is reproduced below :- "39. As regards their contention for time-barred of demand of duty in this case, it is on record that the assessee were earlier classified their goods of polyester/Nylon covered yarn under Chapter Sub-heading 5402.61/5402.62 of Central Excise Tariff Act, 1985. However, from July 2001, they deliberately change the classification under Chapter sub-heading 56.06 of Central Excise Tariff Act, 1985. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Another legal point which was not put forth before Commissioner but argued before was regarding the proviso to Notification 2/95 providing that amount of duty payable in accordance with the Notification shall not be less than the duty of excise leviable. It is the submission of the ld. Advocate that proviso would mean for the purpose of additional excise duty could not be taken into account. For ready reference the proviso is reproduced below :- "Provided that the amount of duty payable in accordance with this Notification in respect of the said goods shall not be less than the duty of excise leviable on the like goods produced or manufactured outside the hundred percent export-oriented undertaking or free trade zone or Electronic Hardware Technology Park (EHTP) unit or Software Technology Parks (STP) unit which is specified in the said Schedule, read with any other relevant Notification issued under sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, or sub-section (1) of Section 5A of the said Central Excise Act :" 15. The proviso reads that the rate shall not be less than the duty of excise leviable on like goods produced or manufactured, read with any relevant Notifi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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