1998 (8) TMI 283 - AT - Central Excise

Appeal granted due to time bar on duty demands, no suppression of facts found

The Tribunal allowed the appeal, setting aside the demands and penalties imposed on the appellants. The decision was based on the finding that the demands ... Demand - Limitation Issues Involved:1. Classification of steel wool and steel wool powder under the Central Excise Tariff.2. Alleged non-payment of duty and non-compliance with Central Excise formalities.3. Validity of the demand for duty and imposition of penalty.4. Applicability of the time bar for issuing the show cause notice.Detailed Analysis:1. Classification of Steel Wool and Steel Wool Powder:The appeal arose from an order confirming a duty demand and penalty based on allegations of non-payment of duty, non-obtaining of a Central Excise license, non-maintenance of records, and removal of goods without proper gate passes. The appellants were manufacturers of steel wool and steel wool powder, initially classified under Tariff Item 68 and Tariff Item 25(5) respectively. From 28-2-1986, under the Central Excise Tariff Act, 1985, steel wool fell under Heading No. 7308.90 and steel wool powder under Heading No. 72.05, both attracting nil rate of duty. The appellants had filed declarations for exemption, which were accepted by the department.2. Alleged Non-Payment of Duty and Non-Compliance with Central Excise Formalities:The show cause notice alleged that the appellants had cleared steel wool valued at Rs. 21,81,548.40 during 1986-87, and the duty liability was calculated accordingly. It was further alleged that the appellants had suppressed the value of clearances and had not declared their sale depot at Bombay, aiming to avail the concession for small scale units. The department contended that the appellants had filed wrong declarations to enjoy exemptions and had removed excisable goods without paying duty, violating various Central Excise Rules.3. Validity of the Demand for Duty and Imposition of Penalty:In their defense, the appellants argued that the product was classified correctly under Tariff Item 25(5) and later under Heading 7205.00, both attracting nil rate of duty. They contended that there was no need to apply for exemption from licensing control as the product was totally exempt. They also argued that the demands were barred by time and there was no suppression of facts. The Additional Collector, however, confirmed the demand and imposed a penalty, leading to the appeal.4. Applicability of the Time Bar for Issuing the Show Cause Notice:The Tribunal considered the submissions and noted that the show cause notice relied on declarations filed by the appellants for the years 1982-83 and 1984-85, which had been accepted by the department. The Tribunal observed that the appellants had given a full description of the goods in their declarations, and the department had accepted the classification under Heading 7205.00 with nil rate of duty. Citing the case of C.C.E. v. Kinjal Electricals (P) Ltd., the Tribunal held that the duty of the assessee is to file a declaration with the correct description of goods, and classification is the function of the assessing officer. Since the appellants had filed declarations and there was no suppression of facts, the extended period for issuing the show cause notice was not applicable. The demands raised beyond six months were deemed barred by time.Conclusion:The Tribunal concluded that the demands were barred by time and allowed the appeal on this ground without delving into the classification issue. The appeal was allowed, and the demands and penalties were set aside.