9911796707
TMI Blog2003 (2) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... approved the classification of Fluorescent Paper and Paperboard under sub-heading No. 4810.10 (with effect from 20-3-90). Subsequently a show cause notice dated 4-5-92 seeking to classify the fluorescent paper and paperboard under sub-heading No 4811.90 and demand of differential duty of Rs. 22,93,820/- for the period from October, 1991 to March, 1992 was made. The Assistant Commissioner confirmed the demand vide order dated 17-1-94. Against the said reclassification and the consequent demand, the Commissioner (Appeals), Hyderabad, by his order dated 18-10-1994 upheld the Assistant Commissioner's order in the matter of classification under 4811.90 but set aside the demand for differential duty by holding that demand for the period prior to reclassification could not survive as the clearances were effected on the basis of approved classification list. Thus, the entire demand of differential duty for the period from October, 1991 to March, 1992 was set aside. Against the above order of the Commissioner (Appeals) the department had not filed any appeal. 4. The appellant filed an appeal before the Tribunal. The Tribunal vide Final Order 121/95-C, dated 25-4-1995 [1995 (78) E.L.T. 166 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agent. The purpose of using colouring agent (organic) is immaterial for the purpose of classification. The heading clearly uses the words "with no other coating" which are decisive. The heading does not stretch the words to "with no other coating material". Therefore, I do not find any ambiguity in the language used in the description of heading. What is precluded is other coating, which is Fluorescent coating in this case. Fluorescent pigments may be coating material or colouring material. I do not wish to go into that discussion, as that is not relevant for the purpose of classification under Chapter heading. What is relevant is whether Fluorescent substances which are organic substances are coated on the surface of paper or not. There is evidence by way of test reports. ITC Bhadrachalam have admitted the fact of coating of fluorescent colour on one surface of the paper. What is all the more important is that the coating solution itself is known as "Fluorescent Coating Solution". Therefore, classification of impugned goods under Chapter heading No. 48.10 is conclusively ruled out. The goods are rightly classifiable under Chapter sub-heading No. 4811.90.' The next issue consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed declaration for Sl. No. 3 products may be submitted after the approval of the classification list for the said final products. As per this, the assessee had filed another modvat declaration dated 23-8-89, only after the approval of the said classification list. Thus, Modvat declaration dated 10-5-89 had no relevance to the issue involved. In fact, Commissioner has failed to appreciate that for purposes of classification list for each product manufactured and there was clear misstatement in the said Classification list approved for the products in question. (b) The Commissioner also observed in the Order-in-Original that "the department had access to study manufacturing process and they were also at liberty to seek any clarification from ITC Bhadrachalam". This observation appears to be not relevant as party is not absolved of their responsibility of stating facts and giving true declarations. What is relevant is whether the assessee had misrepresented and/or suppressed the facts or not. It is very clear from the evidence brought on record, as discussed in the show cause notice that the assessee had suppressed the facts of usage of organic substance for coating and m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... show cause notice issued which clearly establish suppression of facts and misdeclaration on the part of the assessee with an intention to evade payment of duty and the proviso to the Section 11(A) of the Central Excise Act, 1944 was rightly invokable in this case. (f) In view of the foregoing, the Commissioner appears to have erred in not confirming the duty demand of Rs. 34,51,825/- under Rule 9(2) of the Central Excise Rules, 1944 read with the proviso to the sub-section (1) of the Section 11A of the Central Excise Act, 1944 and in not imposing the penalty under Rules 9(2) and 173Q ibid, and the order of the Commissioner appears to be not legal and proper. 10. After hearing both sides and considering the material on records including cross-objection filed by the Respondents, it is found - (a) There is no doubt that fluorescent paper is coated by an organic pigment which was declared in the Modvat declaration and the Assistant Commissioner had all the time and facilities and it was duty bound to approve the classification lists after due verification. Therefore, we find no merits in the grounds taken in the appeal before us filed by Revenue, as regards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... substance in surface colouring which was not prohibited. Therefore, classification should be under Chapter Heading 4810. (ii) The appellants submit that the learned Commissioner (Appeals) in taking out the entity from 4810 on the plea that china clay coat on surface were done simultaneously was not called for. It is a technical necessity in industry to mix fluorescent material in china clay and it was wrong to reject the contention of the assessee on the grounds that coating solution so prepared resulted being predominantly fluorescent pigment which would tender the coated paper not to be classifiable under Heading 4810; in as much as the test of predominant cannot be applied to coating solution when such solution were non-excisable. They relied on Board Circulars in this regard. (iii) They further submit that the notes under Heading 4811 of HSN described that paper was quite different for entity and classification and organic/inorganic chemical mentioned in Heading 4810 only related to coating material and not binder material which may be an organic. The use of fluorescent pigment classifiable under Heading 3204.30 was only for the purpose imparting surfacing colour and not for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so is activated, by most of the remaining absorbed light to re-emit it as colour of longer wavelength which results in reinforcement of the reflected colour, as pointed out by the JCDR. Therefore, the function of the material is not demonstrated by the assessee to be only to enhance surface characteristic but the function of fluorescent organic material is to impart characteristics as submitted by learned JCDR which are more than only surface characteristics. We, therefore, find that the notes under heading 4810 would exclude such coated paper which are having in the coating organic substance in substantial quality to enhance and supply special characteristic of fluorescence to the paper, from the purview of being classified under Chapter Heading 48.10 when HSN Notes are applied in this case. HSN notes are guiding factors to determine classification and that is well settled by the Apex Court. (d) Since Heading 4811 comes after Heading 4810 and applying the HSN notes and Rules of Interpretation especially Rule 3 (c), when we consider the classification under Headings 48.10 and 48.11 we have to approve 4811. We, therefore, find no merits in the grounds taken by the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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