1998 (8) TMI 245 - AT - Central Excise

Tribunal upholds Collector's classification of product under Chapter 52.06, dismisses Revenue's appeal. Board's review order invalidated.

COLLECTOR OF C. EX., HYDERABAD Versus SWASTIK COATERS PVT. LTD.

The Tribunal dismissed the Revenue's appeal, upheld the Collector's order classifying the product under Chapter 52.06, and held the Board's review order ... Demand - Established practice - Revision/Review Issues Involved:1. Classification of book binding cloth.2. Validity of the Board's review order.3. Limitation period for the Board's review order.4. Grounds raised in the Board's review order.5. Long-standing classification practice.6. Applicability of previous judgments.Summary:1. Classification of Book Binding Cloth:The assessees, manufacturers of book binding cloth, filed a classification list under Chapter 52.06, claiming the product as processed cloth. The Revenue argued for reclassification under Chapter Heading 59.01, alleging the product was book binding cloth. The Collector, after detailed consideration, held that the item is classifiable under Chapter Heading 52.06 and not under Heading 59.01 or 59.03. The process of manufacture involved dyeing, starching, and coating with china clay, which did not meet the criteria for classification under Chapter 59.01 or 59.03.2. Validity of the Board's Review Order:The Central Board reviewed the Collector's order dated 22-12-1988. However, the review order dated 20-12-1989 was not signed by a Member of the Board but merely attested by a Senior Technical Officer. The Tribunal held that the unsigned order is not valid in the eye of law, relying on the judgment in CCE v. M.M. Rubber Co., which states that the limitation period starts from the date of signing the decision or order.3. Limitation Period for the Board's Review Order:The Tribunal noted that the Collector's order was dated 22-12-1988, and the Board's review order dated 20-12-1989 was within the one-year limitation period. However, since the Board's order was not signed, it was deemed invalid. The Tribunal emphasized that the limitation period starts from the date of signing the decision or order, not from the date of communication to the parties.4. Grounds Raised in the Board's Review Order:The Tribunal found that the grounds raised in the Board's review order were beyond those mentioned in the original show cause notice. The original notice only questioned the classification under Chapter 59.01, while the review order introduced new grounds related to Chapter 52.06. The Tribunal held that new grounds cannot be raised in the review order, citing the judgment in CCE v. Sunita Textiles.5. Long-standing Classification Practice:The Tribunal upheld the contention that the classification practice of about 10 years should not be disturbed. It relied on several judgments, including Steel Authority of India Ltd. v. CCE and Inarco Ltd. v. CCE, which support the view that long-standing classification practices should have prospective effect and not affect past clearances and assessments.6. Applicability of Previous Judgments:The Tribunal referred to previous judgments, including Sunita Textiles and Susma Textiles, which held that cotton fabrics heavily sized but not having permanent stiffness are classifiable under Chapter 52 and not under Chapter 59. The Tribunal distinguished the present case from the judgment in Bhor Industries, noting that the Collector had clearly stated that the item was not used as outer covers of books and was merely used for binding tapes.Conclusion:The Tribunal dismissed the Revenue's appeal, upheld the Collector's order classifying the product under Chapter 52.06, and held the Board's review order invalid due to lack of signature. The cross-objection was also disposed of accordingly.