1991 (11) TMI 140 - AT - Central Excise

Tribunal ruling: Duty demand time-barred for certain period, payable for later period. Importance of Department approval highlighted.

RAINBOW INK AND VARNISH MFG. CO. LTD. Versus COLLECTOR OF C. EX.

The Tribunal held that the demand for duty on printing ink media cleared between 1-7-1984 to 14-4-1986 was time-barred up to 1-3-1986 but duty was payable ... Demand - Classification of goods Issues:Classification of printing ink media under Tariff Item 68 and Heading 3215.00, Demand of duty on printing ink media cleared between 1-7-1984 to 14-4-1986, Bar of limitation for demand, Misdeclaration and suppression of information, Department's approval of classification lists, Applicability of extended period of limitation, Tribunal's precedent on demands for revised classification, Duty payable for the period from 1-3-1986 to 14-4-1986.Detailed Analysis:1. Classification of Printing Ink Media:The appellants manufactured 'printing ink media' and filed classification lists during the relevant period, initially under Tariff Item 68 and later under Heading 3215.00. However, test reports revealed that the products were varnishes, phenolic resins, and bituminous mixers falling under different Tariff Items than claimed by the assessee.2. Demand of Duty and Bar of Limitation:The Department issued a show cause notice for duty demand on the printing ink media cleared between 1-7-1984 to 14-4-1986, invoking the extended period of limitation. The appellants contended that there was no suppression or misdeclaration justifying the extended period of limitation, citing the Department's knowledge and approval of classification lists since 1972.3. Misdeclaration and Suppression of Information:The appellants argued that they had consistently informed the Department about the nature of their products, and the Department had approved classification lists over the years. The Department's approval of these lists did not absolve the appellants from misdeclaration charges, as per the Adjudicating authority's view.4. Department's Approval of Classification Lists:The Tribunal emphasized that the Department's approval of classification lists is crucial for assessment. The Assistant Collector is expected to apply due diligence and make informed decisions before approving classifications. Once approved, the Department must bear the consequences, and the assessee cannot be charged with misdeclaration if the Department had approved the lists.5. Applicability of Extended Period of Limitation:Referring to previous Tribunal decisions, the judgment held that demands for revised classifications could only be enforced from the date of the show cause notice if a long-standing practice had been allowed by the Department. The demand up to 1-3-1986 was deemed time-barred, but duty was held payable for the period from 1-3-1986 to 14-4-1986.6. Conclusion and Clarification:The Tribunal clarified that it was not expressing an opinion on the classification of the product and disposed of the appeal based on the limitation period and duty payable for the specified periods.This judgment addressed the classification of printing ink media, the demand of duty, the bar of limitation, misdeclaration allegations, the significance of Departmental approvals, and the applicability of the extended period of limitation based on previous precedents.