1997 (9) TMI 324 - AT - Central Excise

CEGAT Tribunal Mumbai rules in favor of manufacturer in tariff classification case, emphasizing lack of fraudulent intent

The Appellate Tribunal CEGAT, Mumbai ruled in favor of the appellant, a manufacturer of rolls for rolling mills, in a case involving the classification of ... Demand - Limitation Issues:1. Classification of goods under Heading 84.55 of the tariff at 12% ad valorem.2. Duty payment discrepancy leading to penalty imposition.3. Appellant's claim of being misled by newspaper reports about tariff changes.4. Applicability of the extended period for duty recovery.5. Allegations of mis-stating facts by the appellant.6. Interpretation of classification list and gate pass endorsements.7. Justification for penalty imposition.Analysis:The judgment by the Appellate Tribunal CEGAT, Mumbai involved the classification of goods under Heading 84.55 of the tariff at 12% ad valorem. The appellant, a manufacturer of rolls for rolling mills, had filed a classification list in 1986 indicating a duty rate of 15%. However, ten consignments were cleared at 12% between March 25 to March 31, 1986, leading to a notice for duty recovery and penalty imposition. The appellant, represented by an advocate, argued that they were misled by newspaper reports on tariff changes, believing the duty rate had been reduced to 12%. The appeal focused on challenging the penalty rather than the duty liability.The Departmental Representative contended that the appellant had a history of mis-stating facts and attempting to mislead by endorsing gate passes. The Tribunal, after considering the facts, disagreed with the application of the extended period for duty recovery. They found the appellant's reliance on newspaper reports about a different notification irrelevant, as the classification list did not mention the applicable notification for duty reduction. The Tribunal clarified that the gate passes clearly indicated the duty paid at 12%, and the appellant had submitted these documents along with returns, which should have alerted the Department to the discrepancy.The Tribunal concluded that the appellant's actions did not amount to fraud, wilful misstatement, or suppression of information to justify penalty imposition. They highlighted that the appellant had not concealed the duty payment information and had brought it to the Department's attention. The judgment allowed the appeal on the question of limitation and set aside the penalty imposed on the appellant. The decision emphasized that the appellant's actions did not meet the criteria for penalty under Section 11A, as there was no intent to defraud or mislead the authorities.In summary, the judgment focused on the duty payment discrepancy, the appellant's claim of being misled, the interpretation of documents, and the justification for penalty imposition. The Tribunal ruled in favor of the appellant, setting aside the penalty based on the lack of evidence supporting fraudulent intent or deliberate misstatement.