2017 (6) TMI 503 - AT - Central Excise

Tribunal rules for appellant in Central Excise Tariff Act case

The tribunal ruled in favor of the appellant in a case concerning the classification of goods under the Central Excise Tariff Act 1985. The appellant, a ... Validity of SCN - classification of goods - It appeared to Revenue that the goods were cleared under SKD condition by the appellant and they should have been classified as color television sets under said sub heading no.8528.00 - time limitation. Held that: - This SCN covered period from January 2002 to March 2003 whereas the same is issued on 29.01.2007 by invoking proviso to Sub Section (1) of Section 11 A of Central Excise Act 1944 and the entire evidence used for issue of SCN admittedly reflected in the ER-1 returns filed by the appellant. Therefore, there was no suppression and therefore extended period was not invokable. The SCN dated 29.01.2007 is not sustainable, as hit by time limitation - appeal allowed - decided in favor of appellant. Issues:Classification of goods under Central Excise Tariff Act 1985; Allegations of short payment of Central Excise Duty; Validity of show cause notice; Double taxation concern.Classification of Goods under Central Excise Tariff Act 1985:The case involved the classification of goods by the appellant, who was a manufacturer of black and white as well as color television sets falling under chapter sub-heading no.8528.00 of the schedule to Central Excise Tariff Act 1985. The issue arose when investigations revealed that the appellant was supplying color television sets in SKD condition but clearing them as parts of color television sets under a different chapter sub-heading. The show cause notice alleged short payment of Central Excise Duty amounting to Rs. 2,17,11,004.96 for the period from January 2002 to March 2003. The appellant contested the issue, arguing that the subsequent manufacturer had already paid duty on the goods as color television sets, thus questioning the justification of the demand.Allegations of Short Payment of Central Excise Duty:The Revenue contended that the goods cleared by the appellant under SKD condition should have been classified as color television sets under a specific sub-heading, leading to a short payment of Central Excise Duty. The show cause notice also proposed penalties for the alleged violation. The original authority upheld the demand and imposed penalties, prompting the appellant to appeal against the decision. The appellant argued that subjecting the goods to duty as color television sets would result in double taxation, as the subsequent manufacturer had already paid duty on the final product.Validity of Show Cause Notice:The appellant challenged the validity of the show cause notice on several grounds. Firstly, they argued that the notice covered a period from January 2002 to March 2003 but was issued in 2007, invoking a proviso to a specific section of the Central Excise Act. The appellant maintained that there was no suppression of facts as all relevant information was reflected in their filed returns, rendering the extended period inapplicable. Additionally, discrepancies were highlighted regarding the classification of goods and the lack of clarity in identifying which consignments satisfied the SKD condition requirement.Double Taxation Concern:A significant argument put forth by the appellant was the risk of double taxation if the demand raised in the show cause notice was confirmed. They emphasized that the job-workers had already paid duty when clearing the goods as complete television sets, thereby raising concerns about the potential imposition of Central Excise Duty on the same goods twice. The appellant's contention aimed to establish the lack of legal tenability in the show cause notice due to the risk of subjecting the goods to double taxation.In a detailed analysis, the tribunal found merit in the appellant's arguments and ruled in favor of the appellant, declaring the show cause notice dated 29.01.2007 as unsustainable due to limitations. The tribunal allowed the appeal, providing the appellant with eligibility for consequential relief in accordance with the law.