2005 (5) TMI 356 - AT - Central Excise

Tribunal upholds Revenue's Tariff classification, denies exemption, applies extended limitation, rejects appeal.

The Tribunal upheld the Revenue's classification of Thinner under the Central Excise Tariff, denied the exemption under Notification No. 71/78 due to the ... Demand - Limitation - Suppression Issues: Classification of goods under Central Excise Tariff, Exemption under Notification No. 71/78, Time limit for demanding duty, Suppression of material facts.Classification of goods under Central Excise Tariff:The case involved the classification of Thinner manufactured by M/s. Bhagsons Paint Industries (India) under the Central Excise Tariff. The appellants classified Thinner under Tariff Item 14, seeking exemption under Notification No. 71/78-CE. However, the Revenue classified Thinner under Tariff Item 68 and denied the exemption due to the aggregate value of clearance exceeding Rs. 20 lakhs. The Tribunal upheld the Revenue's classification, stating that the value of clearances of Thinner needed to be considered as it was not specified under the relevant notification.Exemption under Notification No. 71/78:The appellant contended that they were contesting the duty demand based on the time limit, as the show cause notice was issued for the period 1979 to June 1980. They argued that they believed the value of clearances of Thinner was not to be included as they manufactured it without the aid of power, citing an earlier explanation to the notification. However, the Tribunal found that the subsequent amendment to the explanation clarified that only specified goods were exempted, and as Thinner was not specified, its value had to be considered for the exemption limit.Time limit for demanding duty:The appellant claimed that they had not suppressed any facts, as the goods were manufactured in the presence of an inspector. However, the Revenue argued that the value of Thinner clearances was not included in the returns filed, suggesting suppression of material facts to keep clearances below Rs. 20 lakhs. The Tribunal held that the extended period of limitation applied for demanding duty due to the failure to disclose the value of Thinner clearances, rejecting the appellant's argument.Suppression of material facts:The Tribunal noted that the appellants did not provide any material to show that the fact of manufacturing Thinner without the aid of power had been disclosed to the department. They also failed to rebut the finding that Thinner clearances were not mentioned in the returns filed with the department. The Tribunal concluded that the appellants' belief regarding the exemption was unfounded, as the relevant notification excluded only specified goods, and since Thinner was not specified, its clearances had to be considered. Consequently, the Tribunal upheld the demand of duty, rejecting the appeal.In conclusion, the Tribunal upheld the Revenue's classification of Thinner under the Central Excise Tariff, denied the exemption under Notification No. 71/78 due to the value of clearances exceeding the limit, applied the extended period of limitation for demanding duty based on the suppression of material facts, and rejected the appellant's appeal.