Tariff classification of flat bed printing screens governed exemption and barred a demand based on a new heading.
Flat bed printing screens used in printing fabrics were treated as classifiable under Chapter Heading 84.42, not Chapter Heading 59.09, and the exemption under Notification No. 39/90-C.E. (N.T.), issued under Section 11C, applied to clearances for captive consumption during the disputed period. The Revenue also could not sustain the demand on an alternate tariff heading when the show cause notice itself had proceeded on Chapter Heading 84.42. The demand therefore could not be supported by changing the classification basis.
Issues: (i) Whether flat bed printing screens were classifiable under Chapter Heading 84.42 of the Central Excise Tariff and entitled to the benefit of Notification No. 39/90-C.E. (N.T.) dated 10-10-1990 issued under Section 11C of the Central Excise Act; (ii) whether the Revenue could sustain a demand on a different classification when the show cause notice itself proceeded on Chapter Heading 84.42 of the Central Excise Tariff.
Issue (i): Whether flat bed printing screens were classifiable under Chapter Heading 84.42 of the Central Excise Tariff and entitled to the benefit of Notification No. 39/90-C.E. (N.T.) dated 10-10-1990 issued under Section 11C of the Central Excise Act.
Analysis: The Tribunal followed its earlier view that flat bed printing screens used in printing fabrics fall under Chapter Heading 84.42 and not under Chapter Heading 59.09. Once the goods were treated as falling under Chapter Heading 84.42, the notification issued under Section 11C exempting recovery of duty on such printing frames cleared for captive consumption covered the disputed period.
Conclusion: The classification under Chapter Heading 84.42 was upheld and the benefit of Notification No. 39/90-C.E. (N.T.) was applicable, against the Revenue.
Issue (ii): Whether the Revenue could sustain a demand on a different classification when the show cause notice itself proceeded on Chapter Heading 84.42 of the Central Excise Tariff.
Analysis: The demand in the notice was founded on the very classification later accepted by the Department for invoking the notification. The Revenue could not shift to an alternate heading to sustain the demand when that was not the basis of the notice.
Conclusion: The Revenue was not permitted to support the demand on a different classification, against the Revenue.
Final Conclusion: The appeal failed as the goods were covered by the exempting notification and the Revenue could not alter the classification basis of the notice.
Ratio Decidendi: Where goods are held classifiable under the heading covered by a valid exemption notification, and the demand notice itself is founded on that classification, the Revenue cannot later sustain the demand on a different tariff heading.
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