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of <h1>Court allows appeal due to incorrect duty demands on Handloom cess, emphasizing adherence to Central Excise Rule 173B</h1> The appeal was allowed in favor of the appellants as the court found that the demands for duty on Handloom cess were incorrect due to the absence of ... Classification list Issues:- Demand for duty on Handloom cess- Approval of classification list- Liability to pay Handloom cess- Proper procedure for raising demandsAnalysis:The case involved a dispute regarding the levy of Handloom cess on fabrics manufactured by the appellants. The Superintendent of Central Excise raised demands for duty based on the monthly RT-12 returns submitted by the appellants. The appellants argued that since the department had not indicated in the approved classification list that Handloom cess was chargeable, they had not collected the cess from customers. The Assistant Collector upheld the demands, which was further confirmed by the Collector of Central Excise. The appellants appealed against this decision.The appellants did not appear during the hearing, but their grounds were reiterated in the appeal memorandum. The main contention was that the fabrics were liable for Handloom cess, but the classification list approval did not mention this, leading to confusion about the liability to pay the cess. The Central Excise Rule 173B requires the approval of the classification list by the proper officer to prevent erroneous assessments. Since the appellants and the approving officer were both unaware of the liability for Handloom cess, the demands raised based on the RT-12 returns were deemed incorrect.Rule 173B also outlines procedures for alterations in the approved list, which did not apply in this case. The Superintendent's action in raising demands without following the proper procedure of issuing a notice for recovery of the non-levied amount of Handloom cess was deemed incorrect. The correct course would have been to initiate adjudication proceedings as per Central Excise Rule 10. As a result, the orders of the lower authorities were set aside, and the appeal was allowed in favor of the appellants.
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