1986 (7) TMI 256 - AT - Income Tax

Classification of product under Tariff Item 27(f) confirmed, demand limited to 6 months prior. Appeal disposed.

The Tribunal confirmed the classification of the product under Tariff Item 27(f) as containers and restricted the demand to six months prior to the dates ... CLASSIFICATION Issues Involved:1. Classification of the product under Tariff Item 27(e) or 27(f).2. Applicability of the extended period of limitation for the demand of duty.Detailed Analysis:1. Classification of the Product under Tariff Item 27(e) or 27(f):The appellants are manufacturers of collapsible tubes falling under Item No. 27(e) of the First Schedule to the Central Excises and Salt Act, 1944. They clear plain tubes on payment of duty and then subject the goods to lacquering and/or printing. The appellants argue that printing and lacquering do not form part of the manufacturing process of collapsible tubes and that the tubes, even without these processes, are marketable commodities. They contend that their products should be classified under 27(e) as 'Extruded shapes and sections including extruded pipes and tubes.'The Assistant Collector, however, held that the appellants had cleared collapsible tubes after printing and lacquering without filing the price list for the same, thus evading duty by mis-declaring aluminium containers as mere extruded tubes. The lower authorities determined that the products, used for packaging toothpaste, medicines, cosmetics, shaving cream, etc., fall under sub-item 27(f) meant for containers made of aluminium ordinarily intended for packaging goods for sale. The authorities emphasized that the products undergo further processes such as trimming, threading, printing, and lacquering, which transform them from tubes to containers.The Tribunal upheld this view, stating that the products manufactured by the appellants are actually ready for packing goods for sale and thus cease to be tubes, becoming containers. The Tribunal noted that the further operations carried out by the appellants, including trimming and threading, indicate that the products are containers, not tubes. The Tribunal rejected the reliance on the Gujarat High Court decision, noting that the facts were different and the issue of whether the product is a container was not scrutinized in that case.2. Applicability of the Extended Period of Limitation for the Demand of Duty:The appellants received three show cause notices demanding duty for different periods, alleging mis-description of the products. The appellants argued that there was no suppression or wilful mis-statement as they had informed the Department of the nature of their activities, including printing and lacquering. They also argued that the demand was barred by time as per Rule 10 of the Central Excise Rules.The Tribunal noted that the appellants had indicated in their classification list effective from 28-3-1977 that printing and lacquering would be charged extra, although this was scored out as suggested by the Superintendent. The classification list dated 16-2-1979 also mentioned collapsible tubes. The Tribunal found that the Department was aware of the product and processes involved, and there was no suppression or wilful mis-statement by the appellants. Therefore, the Tribunal held that the demand should be restricted to a period of six months prior to the dates of the respective show cause notices, as the longer period of limitation could not be invoked.Conclusion:The Tribunal confirmed the classification of the product under T.I. 27(f) as containers and restricted the demand to six months prior to the dates of the respective show cause notices. The lower authorities were directed to re-work the demand on this basis. The appeal was disposed of accordingly.