Classification dispute: Gypsum Plasters under Tariff Item 2520 or Tariff Heading 38.24?

The dispute involved the classification of Gypsum Plasters under Tariff Item 2520 versus Tariff Heading 38.24. The applicants claimed classification under Tariff Item 2520, while the Revenue proposed classification under Tariff Heading 38.24, leading to a demand for duty. The applicants argued that Gypsum Plasters fell under Tariff Entry 2520. The applicants contended that the demand was time-barred and sought a waiver of pre-deposit of duty, interest, and penalty. The Tribunal directed the applicants to deposit Rs. one crore within eight weeks, with the balance of duty, interest, and penalties waived for the appeal hearing.

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Issues involved: Classification of Gypsum Plasters under Tariff Item 2520 vs. Tariff Heading 38.24, time-barred demand, eligibility for waiver of pre-deposit of duty, interest, and penalty.

Classification Issue: The dispute centered around the classification of Gypsum Plasters, with the applicants claiming classification under Tariff Item 2520 of the Central Excise Tariff and clearing it at a nil rate of duty. The Revenue, however, proposed classification under Tariff Heading 38.24, leading to a demand for duty for a specified period. The applicants argued that Gypsum Plasters fall under Tariff Entry 2520 as it covers Gypsum, Anhydrite, and plasters consisting of calcined gypsum or calcium sulphate, thus asserting that the demand was not sustainable.

Time-barred Demand: The applicants contended that the demand was time-barred, emphasizing that they had consistently disclosed to the Revenue that Gypsum Plasters were manufactured from duty-paid Phosphogypsum. They argued that there was no intent to evade payment of duty, making the allegation of suppression unsustainable.

Waiver of Pre-deposit: The applicants sought a waiver of pre-deposit of duty, interest, and penalty, stating that they had already paid a significant amount. They claimed entitlement to credit of duty paid on the raw material, Phosphogypsum, and cum-duty benefit on input credit. After considering these factors and the amount already deposited, the remaining duty was calculated to be approximately Rs. 2.52 crores. The Tribunal found that the applicants had not established a case for total waiver of dues due to lack of disclosure regarding the manufacturing process of Phosphogypsum. However, they were directed to deposit Rs. one crore within eight weeks, following which pre-deposit of the balance of duty, interest, and penalties was waived, with recovery stayed for the appeal hearing.

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