TaxTMI 
TaxTMI 
2016 (1) TMI 386
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....additional machining work to be carried out on the forged materials and classified the same under Chapter Heading 73.26 of CETA and availed benefit of Notification under 16/2004 dated 28.02.2004 as amended. The department disputed the classification of goods under Chapter Heading 72.14 by appellant and issued a show-cause notice for change of the classification to Chapter Heading 73.26 and also demanded differential duty for the period 01.03.2004 to 31.10.2004. Appellant contested the matter on merits as well as on limitation. The adjudicating authority did not agree with the contentions and confirmed the demands along with interest and also imposed penalties. On an appeal field before the first appellate authority the views expressed by the adjudicating authority were upheld by the first appellate authority. 3. Learned Counsel appearing on behalf of the appellant would take us through the show-cause notice and also the impugned order and the adjudication order. He would submit that both the lower authorities have incorrectly considered the Tariff Heading descriptions and the classifications thereof. He would submit that their products were classified under Chapter Heading 72.14 a....
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....hapter No. 7214. He would submit that on limitation when the audit party has examined the records for the period in question, the classification dispute was not raised. The show-cause notice issued on 30.04.2009 by invoking extended period of limitation for demanding the differential duty for the clearances made during 01.03.2004 to 31.10.2004 is blatantly hit by limitation. He would rely upon the judgement in the case of Trans Engineers India Pvt. Ltd. - 2015 (40) STR 490 (Tri. Mum). He would submit that the penalty imposed on the Managing Director is also to be set aside as there was no suppression or mis-statement inasmuch as it is very same products were manufactured by them from 1994 onwards and classification lists were approved during the relevant period. 4. Learned D.R. on the other hand would submit that the issue is now squarely settled in favour of the Revenue as to the classification of forged articles by the Tribunal as well as the Apex Court. He would submit that the items manufactured by the appellant are nothing but articles which would merit classification under 7326 and not under 7214. He would submit that in order to get classified the items under Chapter ....
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....usion, it is necessary that we reproduce the relevant portions of the Chapter Heading 72.14 and 73.26 72.14 Other bars and rods of iron or non-alloy steel not further worked than forged, hot rolled, hot drawn or hot-extruded but including those twisted after rolling 7214.10 Forged 16% 7214.20 Of free-cutting steel 16% 7214.90 Other 16% 73.26 Other articles of iron or steel Forged or stamped, but not further worked: 7326.11 Grinding balls and similar articles for mills 16% 7326.19 Other, Articles of iron or steel wire: 16% 7326.21 Tyre bead wire rings intended For use in the manufacture of tyres for cycles and cycle-rickshaws 7326.29 Other 16% 7326.90 Other 16% It can be seen from the above reproduced Chapter Heading, to our mind, that in order to get classified under Heading 72.14, the product much be bars and rods of iron and non-Alloy steel. Appellant produced photographs of their final product and demonstrated before us, the items in the photograph is as under:- 6.2 The said products as has been demonstrated before us indicative that they are not bars and rods of iron and non-alloy steel but they are some articles having defin....
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....Court has held as under :- "In this appeal the only issue relates to the correct classification of the products in question which are described as forgings and forged articles of alloy steel by the assessee-respondent. Its claim is that the articles fall under Tariff item 73.26 of the Central Excise Tariff Act, 1985, whereas the claim of the Department is that it falls under Item No. 87.08 as parts of motor vehicles, viz. 'gears and pinions'. The learned members of the Tribunal constituting majority were of the view that the goods in question were unmachined forgings and several processes have to be gone through before the articles were brought to required specifications and dimensions. It was observed thus : In the present stage, they have just emerged from forging, without acquiring any essential characteristic of a part of a motor vehicle. The Revenue has not placed any evidence that the article has acquired such a shape and there has been further working of such a nature, that it is no longer an article of forging. The photographs of the product have been shown and the same are in the file. The impugned goods are straight from forging without any processes undertaken on....
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.... held that extra unwanted material is removed by trimming or gas cutting or skin cutting to achieve the shape and section nearest to the forged steel products required. The forging would not cease to be forging for the removal of superfluous extra skin cast iron. Similar view was taken by the Tribunal in the case of Shivaji Works Limited . After the decision of the Tribunal in the in the case of Shivaji Works Limited , the Central Board of Excise and Customs also issued the instructions to this effect. The contention of the appellants is that they are only removing extra unwanted material from the hul and disc spindle. Therefore, they are classifiable as forged articles of iron and steel. We find that the facts of the present case are not similar to the facts of the M/s. Metal Forgings (P) Limited and in the case of M/s. Shivaji Works Limited . In the present case, the customers of the appellants undertake the various processes such as grinding, heat treatment, hole making and short blasting and thereafter hul and disc are become capable of to be used as parts of agricultural implements. In the circumstances, we find no merit in the contention of the appellants that the forged arti....
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.... are being classified under Ch. Heading 72.14 and cleared by availing the benefit of Notification 16/04. It was the duty of the audit party to consider whether the classification was correct and the appellant had availed the benefit of Notification correctly or otherwise. The audit report which has been produced before us indicate that this issue was not raked by the audit team would mean that it was accepted by the audit team that the classification of products is under Notification 72.14. Now the department cannot say that EA 2000 audit was not for the classification of the product and was for other procedural aspects. We find strong force in the contentions raised by the learned Counsel that this Bench in the case of Trans Engineers India Pvt. Ltd. (supra) was considering the aspect of limitation when the audit had taken place. We reproduced the relevant paragraph:- "9. We find that the show cause notice has invoked the extended period for the demand of service tax liability. It is noticed by us that the records of appellants audited by the audit party of the Revenue in 2006 and vide audited report no 288/2006-07, for a period on 01/04/2003 to 31/12/2006, the authorities raise....