1998 (10) TMI 123 - AT - Central Excise

Tribunal rules in favor of appellants, nullifies penalty, and sets aside duty demand pre-1990

The Tribunal upheld the classification of goods under sub-heading 70.07, set aside the duty demand predating 19-6-1990, and nullified the Rs. 5,000 ... Manufacture - Demand - Limitation Issues: Classification of goods under Tariff sub-heading, Duty liability, Time-barred demand, Imposition of penaltyClassification of Goods under Tariff Sub-heading:The appellants manufactured evacuated containers and filed a classification list under sub-heading 9617.00 for nil rate of duty. However, a show cause notice proposed modification, classifying the product under sub-heading 7012.90. The Assistant Collector confirmed the duty demand under Heading 70.12. The Collector (Appeals) classified the goods under sub-heading 7007.90, including bottles. The Tribunal analyzed the manufacturing process, concluding that a distinct product, 'evacuated sterile non-pyrogenic siliconized bottle,' emerged, different from plain glass bottles. The lower authority's classification under sub-heading 70.07 was upheld, rejecting the appellant's argument to remain under Heading 96.17.Duty Liability and Time-barred Demand:The appellants argued that no new duty liability arose as they only evacuated duty-paid glass bottles for blood plasma storage. The Tribunal disagreed, noting the distinct product created through various processes beyond mere evacuation. Regarding the time-barred demand, the Tribunal held that the demand under the new classification made by the Collector (Appeals) was not sustainable for the period preceding 19-6-1990 due to lack of prior notice, setting aside the duty demand against the appellants.Imposition of Penalty:The original authority imposed a penalty of Rs. 5,000, which the impugned order did not mention. The Tribunal found no justification for the penalty and set it aside, concluding that the penalty was unwarranted based on the circumstances of the case.Conclusion:The Tribunal upheld the classification under sub-heading 70.07, set aside the duty demand against the appellants for the period preceding 19-6-1990, and nullified the penalty of Rs. 5,000. The judgment emphasized the creation of a distinct product through manufacturing processes, the inapplicability of the duty liability argument, and the lack of notice for the revised classification's duty demand.