2015 (9) TMI 1210 - AT - Central Excise

Supreme Court remands case, Tribunal favors assessee in excise duty classification, penalties waived.

VST Industries Ltd. and others Versus Commissioner of Central Excise, Customs And Service Tax Hyderabad-III

VST Industries Ltd. and others Versus Commissioner of Central Excise, Customs And Service Tax Hyderabad-III - 2015 (325) E.L.T. 772 (Tri. - Bang.) Issues:Classification of printed gray wrappers under Central Excise Tariff Act.Analysis:The case involved a dispute regarding the classification of printed gray wrappers used in packaging cigarette packs under the Central Excise Tariff Act. The Revenue alleged that the appellants, engaged in cigarette manufacturing, were also manufacturing these wrappers, classifying them under heading 4823.90. The appellants contended that they were not the actual manufacturers of the wrappers, and even if they were, the wrappers should be classified under heading 4901.90 with a NIL rate of duty. The original adjudicating authority rejected the appellant's plea, confirming the demand under heading 4823.90.The Tribunal referred to similar disputes in other cases, notably the case of Sri Kumar Agencies, where the product was classified under heading 4901.90 with NIL duty. Another case, Web Impressions (India) Pvt. Ltd. Vs. CCE, Calcutta, was also challenged before the Supreme Court, leading to a remand order. The Tribunal, in the case of VST Industries Ltd., following previous decisions, held in favor of the assessee, classifying the wrappers under heading 4901.90 with NIL duty, setting aside the demands against the appellant.The Revenue appealed the Tribunal's decision before the Supreme Court, which observed that since the earlier decision in the case of Web Impressions (India) Pvt. Ltd. was set aside and remanded, the present appeals were also allowed by remand. The advocate for the appellants argued that the remand order left all issues open for fresh decision, emphasizing that the goods were manufactured by job workers, and demands could not be directed towards them. She highlighted the Tribunal's decision in the case of Sri Kumar Agencies, where the goods were classified under heading 4901.90, supporting the appellants' stance.The Tribunal, without delving into the manufacturing aspect, focused on the issue of classification. Considering the precedents and finality of decisions in similar cases, it held that the goods were properly classified under heading 4901.90, attracting NIL duty. The Tribunal noted that subsequent orders favored the assessee, and penalties could not be imposed. Consequently, the impugned order was set aside, and all appeals were allowed in favor of the appellants, providing consequential relief.In conclusion, the Tribunal's decision in the case of VST Industries Ltd. highlighted the importance of correct classification under the Central Excise Tariff Act, emphasizing the significance of precedents and final decisions in resolving disputes related to duty rates and penalties.