2012 (7) TMI 536 - AT - Central Excise

CESTAT affirms product classification under Central Excise Act, penalties overturned

M/s VVF. Ltd. Versus CCE Daman

The Appellate Tribunal CESTAT, Ahmedabad upheld the classification of the product under Section 4A of the Central Excise Act and rejected the appeal. ... Classification of the product - product TETMOSOL Soap is assessable under Section 4A of the Central Excise Act, 1944 or not – Held that:- Product covered under the provisions of Section 4A of Central Excise Act, 1944 Penalty – Held that:- Demand for subsequent period and when the show cause notice was issued, the issue for the earlier period had not attained finality. The issue attains finality after the order was issued only. The Tribunal passed the order on 13.5.2005, whereas the show cause notice related to the year 2003. Therefore, it cannot be said that there was any suppression of facts or willful mis-declaration, fraud or collusion etc – Penalty set aside Issues: Classification of product under Section 4A of Central Excise Act, 1944; Imposition of penalties under Section 11AC of Central Excise Act.Classification Issue Analysis:The appeal before the Appellate Tribunal CESTAT, Ahmedabad revolved around the classification of the product TETMOSOL Soap under Section 4A of the Central Excise Act, 1944. The Tribunal had previously held against the assessee regarding the classification of the product, which directly fell under the provisions of Section 4A. Consequently, the appeal challenging the classification and non-coverage under Section 4A was rejected by the Tribunal. The issue was deemed to be narrow in scope, focusing solely on the classification of the product.Penalties Issue Analysis:In addition to the classification issue, the imposition of penalties under Section 11AC of the Central Excise Act was also a significant aspect of the case. The appellant contested the penalties imposed by the adjudicating authority, arguing that they were unwarranted as the classification dispute needed to be resolved by the Tribunal. The Tribunal, referring to a previous case involving the same appellant, set aside the penalties imposed under Section 11AC. The reasoning provided highlighted that penalties under Section 11AC are applicable only in cases of suppression of facts, mis-declaration, fraud, or collusion, none of which were proven in the present case. The Tribunal's decision to set aside the penalties was based on the lack of evidence supporting the allegations in the show cause notice and the timing of the issuance of the notice in relation to the final classification order.Conclusion:The Appellate Tribunal CESTAT, Ahmedabad, after thorough consideration of the arguments presented, upheld the classification of the product under Section 4A of the Central Excise Act and rejected the appeal. Furthermore, the Tribunal set aside the penalties imposed under Section 11AC, following the reasoning provided in a previous case involving the same appellant. The appeal was disposed of with the penalties being overturned based on the lack of evidence for the allegations made, ultimately providing relief to the appellant in this regard.