2002 (6) TMI 48 - HC - Central Excise

High Court Quashes Excise Duty Notices, Upholds Approved Classification List

SUPER STEELS CORPORATION Versus UNION OF INDIA

SUPER STEELS CORPORATION Versus UNION OF INDIA - 2002 (143) E.L.T. 504 (Bom.) Issues:Challenge to validity of show cause notices demanding excise duty under Section 11-A of the Central Excise Act, 1944 based on approved price list.Analysis:The petitioners, a partnership firm engaged in manufacturing LPG Tanks, challenged the validity of four show cause notices dated 2nd September 1986, 17th August 1987, 16th November 1987, and 23rd May 1988. These notices demanded excise duty under Section 11-A of the Central Excise Act, 1944 for short levy on goods cleared as per the approved price list. The petitioners filed Classification List Nos. 1 and 2 in March 1986, classifying LPG Tanks under Central Excise Tariff Heading 8707.00. However, the Central Excise Department directed them to classify the tanks under Heading 8704.00 and pay duty at 20% ad valorem. The petitioners complied and paid duty as per the revised classification list approved by the authorities.The show cause notices sought to recover excise duty on goods cleared by the petitioners, classified under Tariff Item 8707.00, despite being approved under Tariff Item 8704.00. The petitioners argued that demanding duty for past clearances made as per the approved classification list is without jurisdiction. They relied on a Supreme Court judgment stating that excise duty should be based on an approved classification list until its correctness is challenged. The High Court agreed, finding that the authorities cannot demand duty for periods when goods were cleared as per the approved list, as per the Apex Court's decision. The authorities' subsequent classification of goods under a different tariff item does not justify recovering differential duty.The respondents argued that the petition was premature as adjudication on show cause notices was pending. They contended that changes in manufacturing activities justified the reclassification of goods under Tariff Item 8707.00. However, the High Court held that the notices could not be sustained as they related to periods when goods were cleared as per the approved list. The original classification by the petitioners under Tariff Item 8707.00 was revised by the authorities to 8704.00, and duty was paid accordingly. The Court quashed the show cause notices, emphasizing that excise duty must align with the approved classification list, and there was no short levy in this case. The decision was limited to the specific notices seeking recovery based on goods cleared as per the approved list.In conclusion, the High Court quashed the four show cause notices demanding excise duty based on reclassification of goods already cleared as per the approved list. The decision aligns with the principle that excise duty should be levied according to the approved classification list until its validity is challenged. The Court's ruling was specific to the mentioned notices, and no costs were awarded in the matter.