2004 (5) TMI 378 - AT - Central Excise

Tribunal confirms duty demand for misclassified 'Plastic Satranj' product

The Tribunal upheld the classification of the 'Plastic Satranj' product under Chapter 46, confirming duty demand due to incorrect duty exemption claims by ... Classification - Board’s clarification - Demand - Cenvat/Modvat - Cum-duty price Issues: Classification of 'Plastic Satranj' product and confirmation of duty demand.Classification of 'Plastic Satranj' Product:The appellants manufactured 'Plastic Satranj' and initially classified it under Charter sub-heading 3922.90 of the CETA, claiming duty exemption under Notification No. 132/86-C.E. Later, they reclassified it under Chapter 39, but only provisionally approved under sub-heading 4601.00 of Chapter 46. The issue was whether the correct classification should be effective from the date of the Board's Circular on 16-6-1987 or earlier. The Tribunal held that the product was always classifiable under Chapter 46, and the Circular merely clarified the classification. The appellants wrongly claimed duty exemption, leading to a demand for duty payment, which was rightly confirmed.Duty Calculation and Modvat Credit:The appellants argued that duty calculation should consider the Modvat credit on inputs used in production and the cum-duty price principle. The Tribunal agreed that the duty amount calculation by the Department was incorrect. The appellants were entitled to claim Modvat credit and the cum-duty price principle, citing precedents like Bharat Wagon & Engg. case and C.C.E., Delhi v. Maruti Udyog Ltd. case. As these aspects were not considered, the matter was remanded to the adjudicating authority for a fresh decision, with instructions to consider the Modvat claim and cum-duty price, affording the appellants a hearing opportunity.Conclusion:The Tribunal upheld the classification of the 'Plastic Satranj' product under Chapter 46 but remanded the case for a reevaluation of the duty amount payable by the appellants. The decision emphasized the need to consider Modvat credit and the cum-duty price principle in the duty calculation process.