2023 (8) TMI 656 - AT - Central Excise

Tribunal sets aside orders, no duty during specific period, penalties not imposed, appeals allowed.

Rippen Radiators & Heat Exchangers Pvt Ltd Versus Commissioner of Central Excise & ST, Ahmedabad-ii And Nirav Shah Director Versus Commissioner of Central Excise & ST, Ahmedabad-ii

The Tribunal set aside the impugned orders, ruling that no duty could be demanded during the period when Circular No. 924/14/2010-CX classified the goods ... Classification of goods - Scope of beneficial Circular over subsequent decision of Larger Bench of Tribunal - Parts of Drier/ parboiling parts namely Heat Exchanges, Drier Fan and Aluminium Fin Tubes cleared by the appellant for Rice Mill machinery - to be classified under Chapter Heading 8419 or under Chapter heading 8437? - suppression of facts or not - extended period of limitation - Board Circular No. 924/14/2010-CX dated 19.05.2010 - HELD THAT:- It is a settled legal position that the Board Circular issued by CBEC/CBIC is binding on the departmental officers. In view of this settled legal position, firstly, the show cause notice ought not to have been issued by following the binding Circular dated 19.05.2010. Therefore, the issuance of show cause notice itself is illegal and incorrect. Secondly, during the relevant period 2011-12 to 2013-14, Circular dated 19.05.2010 was in force according to which the goods were classifiable under heading 8437. It is settled position under various Hon’ble Supreme Court Judgments that any Circular which is beneficial to the assessee should be given effect irrespective to the different correct legal position of classification. Therefore, even though subsequently the Larger Bench has decided the classification under heading 8419 but by virtue of Circular dated 19.05.2010 during the currency of the said Circular the goods is classifiable under heading 8437 and consequently no duty could have been demanded on this very issue. This Tribunal, in the case of JYOTI SALES CORPORATION, HSF FOOD PROTECH PVT LTD, SHRI VINAYAKRICE TECHNO, SUNEEL GUPTA AND PUNJAB FABRICATORS VERSUS C.C.E. & S.T. -PANCHKULA AND C.C.E. & S.T. -ROHTAK [2019 (4) TMI 989 - CESTAT CHANDIGARH] held that For the period prior to 15.05.2014 if the appellants have classified their products in question under Chapter Heading No. 8437 of CETA, no demand is sustainable in terms of the Circular No. 924/14/2010-CX dated 19.05.2010. Therefore, the facts are not in dispute that for the period prior to 15-5-2014, the circular dated 19-5-2010 was in operation. In that circumstance, it is to be seen that whether the circular dated 19-5-2010 is binding on the revenue authorities during the period in question or not? Admittedly, the said issue has been examined by the Hon’ble Apex Court in the case of Paper Products Ltd. [1999 (8) TMI 70 - SUPREME COURT] wherein the Hon’ble Apex Court observed apart from the fact that the Circulars issued by the Board are binding on the Department, the Department is precluded from challenging the correctness of the said Circulars even on the ground of the same being inconsistent with the statutory provision - From the above decision it can be seen that even though the Larger Bench has decided the merits of classification under heading 8419 but despite that the issue that when the Board Circular was in force which classified the goods under heading 8437 shall prevail as per various Supreme Court decisions discussed by the Larger Bench in the aforesaid decision. Revenue’s contention is also that at the time of issuance of show cause notice, the Board Circular dated 19.05.2010 was rescinded - HELD THAT:- It is not the date of issuance of show cause notice which is relevant but the period during which the goods were cleared. In the present case, the period involved is 2011-12 to 2013-14 and during this period the circular dated 15.05.2014 was not in force but during the relevant period the Circular dated 19.05.2010 was prevailing and according to which the goods were classifiable under Chapter heading 8437. Therefore, in view of the said Circular dated 19.05.2010 the appellant was not liable to pay any duty for the clearances made prior to rescinding the Circular dated 19.05.2010. Therefore, the decision of this Tribunal in the case of Jyoti Sales Corporation is completely agreed upon. Appeal allowed. Issues Involved:1. Classification of goods (Parts of Drier/Parboiling parts)2. Applicability of Board Circulars3. Legality of demand for the extended period4. Entitlement to cum-duty price and Cenvat creditSummary:1. Classification of Goods:The primary issue was the classification of parts of Drier/Parboiling parts such as Heat Exchanges, Drier Fan, and Aluminium Fin Tubes used in Rice Mill machinery. The department classified these under Chapter Heading 8419, which attracted duty, whereas the appellant argued for classification under Chapter Heading 8437, which attracted Nil duty.2. Applicability of Board Circulars:The appellant cited the Larger Bench decision in M/s. Jyoti Sales Corporation vs. CCE, Panchkula, which classified similar goods under Chapter Heading 8419. However, a Division Bench later referenced Circular No. 924/14/2010-CX dated 19.05.2010, classifying the goods under Chapter Heading 8437, which was binding on the department until its rescindment on 15.05.2014 by Circular No. 982/06/2014-CX.3. Legality of Demand for the Extended Period:The appellant argued that the demand for the extended period (2011-12 to 2012-13) was unsustainable due to the absence of fraud, suppression, or willful misstatement. They cited the Supreme Court decision in Continental Foundation Jt. Venture vs. CCE, Chandigarh, asserting that the issue's referral to the Larger Bench indicated no such misconduct.4. Entitlement to Cum-Duty Price and Cenvat Credit:The appellant contended that the value realized should be treated as inclusive of excise duty, thus entitling them to cum-duty price benefits. They also argued for the allowance of Modvat/Cenvat credit if duty was demanded.Tribunal's Findings:- The Tribunal noted that during the relevant period (2011-12 to 2013-14), Circular No. 924/14/2010-CX, which classified the goods under Chapter Heading 8437, was in force.- It held that Board Circulars are binding on departmental officers and that the issuance of the show cause notice was incorrect as it contradicted the binding Circular dated 19.05.2010.- The Tribunal referenced multiple Supreme Court decisions affirming that beneficial Circulars should be applied retrospectively, while oppressive ones should apply prospectively.Conclusion:The Tribunal set aside the impugned orders, stating that no duty could be demanded for the period during which Circular No. 924/14/2010-CX was in force. Consequently, no penalties were imposed, and the appeals were allowed with consequential relief. The Tribunal did not address other issues such as time-bar, cum-duty price, and Cenvat credit, leaving them open for future consideration.