2015 (1) TMI 627 - HC - Central Excise

Court affirms Tribunal's decision on goods classification under Central Excise Rule

COMMISSIONER Versus JAYESH C. MISTRY

The appellate court upheld the Customs Excise & Service Tax Appellate Tribunal's decision regarding the correct classification of goods under Central ... Imposition of personal penalty - Wrong classification of goods - Held that:- Tribunal accepted the stand of the manufacturer that it had bona fidely believed that hulk cleared by the manufacturer would be classified under the Chapter Heading 89.06 and not 89.03. It was not a case of deliberate misdeclaration - Tribunal committed no error. The issues involved interpretation of the entries. The Tribunal when therefore, ordered deletion of personal penalty in our opinion, no question of law can be stated to have been arisen. - Decided against Revenue. Issues:Challenge to judgment of the Customs Excise & Service Tax Appellate Tribunal regarding personal penalties imposed and correct classification of goods under Central Excise Rule, 2002.Analysis:The primary issue in this case revolves around the correct classification of a structure constructed by the assessee, with the department contending it qualifies as a yacht, while the manufacturer argues otherwise due to lacking essential requirements. The Tribunal upheld the department's classification but ruled out imposing personal penalties. The Tribunal extensively discussed the taxability of the goods, emphasizing the construction of a hull with superstructure by the manufacturer, concluding it had the essential character of a yacht despite lacking certain navigational equipment.Regarding the penalty issue, the Tribunal accepted the manufacturer's belief that the structure would be classified differently and not as contended by the department. The Tribunal reasoned that since the matter primarily involved an interpretation of entries in Chapter 89, there was no basis for imposing penalties on individuals involved in the appeals. Consequently, the personal penalties were set aside, and the appeals of the individuals were allowed.The appellate court found no error in the Tribunal's decision, emphasizing that the issues at hand required interpretation of the entries in question. Therefore, the deletion of personal penalties by the Tribunal was deemed appropriate, with no legal question arising from the decision. Ultimately, the Tax Appeals were dismissed based on the above analysis of the issues involved in the case.