2009 (2) TMI 211 - AT - Central Excise

CESTAT rules in favor of assessee on product classification and duty demand dispute

The Appellate Tribunal CESTAT, New Delhi ruled in favor of the assessee in a case involving the classification of products under the Central Excise Tariff ... Self-Adhesive Hologram Sticker/Sheet and Holographic Film - Show Cause Notice dated 9-9-03 was issued proposing to classify the said products under sub-heading No. 3919.00 denying the claim of the assessee under sub-heading No. 4401.90 and demanded duty for the period 16-9-98 to 2-5-02 – held that - . As the product manufactured by the Appellants possesses the quality of self-adhesive, it cannot be classified in Heading 39.20 of the Tariff as the said heading applies to “other plates, sheets, film, foil and strip, of plastics, whether lacquered or metalised or laminated, supported or similarly combined with other materials or not.” As the product does not cease to be a self-adhesive product, it has to be classified under Heading 39.19 and cannot be classified under Heading 39.20 merely because one side of it has been laminated - demand of duty on classification and valuation is barred by limitation - We find that there is a dispute of the classification and valuation of the impugned products and demand of duty for extended period of limitation is not maintainable. Issues: Classification of products under Central Excise Tariff Act, imposition of duty, inclusion of shim development charges in assessable value, penalties, applicability of Board's Circular, suppression of manufacturing process, limitation period for demand of duty.The judgment by the Appellate Tribunal CESTAT, New Delhi involved multiple issues. The case revolved around the classification of products under the Central Excise Tariff Act, imposition of duty, inclusion of shim development charges in the assessable value, penalties imposed on the Managing Director and General Manager, applicability of Board's Circular, suppression of manufacturing process, and the limitation period for the demand of duty.Classification Issue:The Tribunal examined the essential character of the products in question, considering the process of manufacture involving embossing, coating with pressure-sensitive adhesive, and lamination with release paper to create a laminate roll. It was argued that the product possessed self-adhesive qualities, leading to its classification under Heading 39.19 of the Tariff rather than Heading 49.01. The Tribunal referred to relevant tariff headings and explanatory notes to support the classification decision. The Tribunal also distinguished previous cases and held that the classification under Heading 39.19 was appropriate.Limitation Issue:The Tribunal also addressed the issue of limitation for the demand of duty. It was noted that the assessee had informed the Department about the manufacturing process, obtained Central Excise registration, and recorded shim development charges in their ledgers. The Tribunal found that there was a dispute regarding the classification and valuation of the products, leading to the conclusion that the demand of duty for an extended period of limitation was not sustainable. Citing a previous case, the Tribunal held that the extended period of limitation should not be invoked, ultimately setting aside the impugned orders on limitation and allowing the appeals filed by the assessee while rejecting the appeals filed by the Revenue.In conclusion, the judgment provided a detailed analysis of the classification issue under the Central Excise Tariff Act and the limitation period for the demand of duty. The Tribunal's decision favored the assessee on the classification matter and highlighted the importance of timely disclosure and registration in determining the limitation period for the demand of duty.