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of <h1>Tribunal overturns duty demand & penalties in tyre classification case, stresses importance of ISI specs.</h1> <h3>PODDAR TYRES (PVT.) LTD. Versus COMMISSIONER OF C. EX., CHANDIGARH</h3> PODDAR TYRES (PVT.) LTD. Versus COMMISSIONER OF C. EX., CHANDIGARH - 2000 (126) E.L.T. 737 (Tribunal) Issues Involved:1. Classification of tyres u/s 4011.30 or 4011.20 of the Central Excise Tariff Act, 1985.2. Demand of Central Excise duty and imposition of penalties.3. Admissibility of evidence and cross-examination of witnesses.4. Application of ISI specifications for determining tyre classification.Summary:1. Classification of Tyres:The central issue was whether the tyres manufactured by the appellants were classifiable u/s 4011.30 as 'tyres of a kind used on two-wheeled vehicles' attracting duty or u/s 4011.20 as 'cycle tyres' attracting nil duty. The department alleged that the tyres were for mopeds based on higher prices and statements from dealers, while the appellants claimed they were BMX cycle tyres. The adjudicating authority upheld the department's classification and confirmed the duty demand.2. Demand of Duty and Penalties:The Assistant Collector confirmed a demand of Central Excise duty of Rs. 4,70,400/- on 16,000 tyres and imposed penalties of Rs. 1,50,000/- on M/s Poddar Tyres Pvt Ltd. and Rs. 10,000/- on various branches of Poddar Sales Corporation. The Tribunal found that there was confusion in the trade regarding tyre sizes and set aside the penalties, noting no malafide intent by the appellants.3. Evidence and Cross-Examination:The Tribunal noted that the department relied mainly on statements from dealers, but cross-examination of these dealers was not permitted. Statements supporting the appellants' case were ignored. The Tribunal emphasized the need for considering all evidence, including statements favorable to the appellants, and remanded the matter for de-novo adjudication.4. ISI Specifications:The Tribunal highlighted the relevance of ISI specifications to determine whether the tyres conformed to cycle or moped standards. The department had not conducted necessary tests to ascertain this. The Tribunal directed the adjudicating authority to apply ISI specifications and carry out prescribed tests to conclusively determine the classification of the tyres.Conclusion:The Tribunal set aside the duty demand and penalties and remanded the matter to the adjudicating authority for fresh consideration, emphasizing the need for applying ISI specifications and conducting relevant tests. The appellants were to be given a reasonable opportunity to present evidence and be heard before fresh orders were passed. The majority opinion favored remand for a comprehensive re-evaluation of the classification issue.
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