TaxTMI 
TaxTMI 
2019 (12) TMI 936
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion No 7/2003 CE and 30/2004 CE during the relevant period 2003-04 to 2006-07 (up to 8.8.2006); they have evaded payment of Central Excise duty of Rs. 21,68,365. A Show Cause Notice, No. 89/06-07 dated 5.2.2007, was issued; the same was confirmed by Order-in-Original No. 7/2007 dated 30.8.2007. Goods seized at Bangalore and Madurai, totally valued at Rs. 4, 97,711, were confiscated while option to redeem the goods on payment of a fine of Rs. 30,000; Central Excise duty of Rs. 21, 68,365 was confirmed along with interest and equal penalty under Section 11 AC of CEA, 1944; penalty of Rs. 1,00,000 was imposed under Rule 25 of the CER, 2002. The Appellant Company has pre-deposited an amount of Rs. 6 Lakhs. On an appeal filed by the appellants, Commissioner (Appeals), vide 0-I-A No. 44/2008-CE dated 28.2.2008, rejected the said Appeal, for not depositing balance 4 Lakhs, under Section 35F of the CEA, 1944. On an appeal filed, by the Appellants, the Tribunal allowed the appeal by way of remand, vide Final Order No. 742/08 dated 1.7.2008/8.7.2008, granting waiver of pre-deposit of the balance amount. Commissioner (Appeals) passed the impugned 0-I-A No. 58/2009-CE 8.6.2009. 2. Shri B.V. K....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t of the yarn was not determined since the laboratory is not equipped for the same. Learned Counsel submits that it can be seen that except for carrying out superficial tests, the Custom House Laboratory is not equipped to test synthetic filament yarns like the Textile Committee of the Government of India or SASMIRA (Bombay) or ATIRA (Ahmedabad). The tests were not carried out by the Chemical Examiner, viz., V. Suresh but by the Chemical Assistant, J. Mohan Kumar. In the light of the evidence given during the course of the cross-examination, no weight or reliance can be given to the Test Report dtd 21.9.2006 of the Custom House Laboratory, on the basis of which the Department proposes to change the classification of the impugned goods. 2.2. Further, learned Counsel submits that the Appellants sent samples of the impugned goods for Test to M/s. Intertek Testing Services India Pvt. Ltd., Bangalore, on .09.10.2006; from the Test Report dated 24.10.06, it can be seen that the Denier Count in respect of one sample is 737.1 and 1752 in respect of another sample; the sample was of two sets of Black Polypropylene monofilament yarn in colour (A) (600 D) (B) (1200 D)". He submits that it is....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion only after the impugned goods were got tested by the Department; they also kept the Department informed about their intention to claim exemption from duty in terms of the said Notification vide their letters dated 12.11.2003 and 15.3.2005; on the basis of the directions given by the Investigating Agency, they applied and obtained Central Excise Registration on 16.10.2006 and from that date they have been paying duty on the impugned goods manufactured by them; no willful suppression of facts can be attributed to them in terms of the following decisions of the Hon'ble Supreme Court: * Pushpam Pharmaceuticals Co. v. Collector - 1995 (78) ELT 401 (SC) * Tamil Housing Board v. Collector - 1994 (74) ELT 9 (SC) * Padmini Products v. Collector - 1989 (43) ELT 195 (SC) * Collector v. Chemphar Drugs and Liniments - 1989 (40) ELT 276 (SC) 4.1. Learned Counsel also submits that extended period of limitation cannot be invoked in this case in terms of the proviso to Section 11A of the CEA, 1944 as there is no fraud, collusion or any willful misstatement or suppression of facts or contravention of any of the provisions of the CEA, 1944 or Rules made there under with an intention ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e factory came into existence in 2003; he admitted to pay the duty liability; Shri. Sameer Pasha of M/s. Horizon Trading Company, client of appellants, accepted that they are purchasing polypropylene multi filament yarn and that M/s. Deccan Trading Company, Bangalore (proprietress being his mother) were also buying polypropylene multi filament from the appellants since 2003. 5.1. Ld. AR submits that the appellants had taken Central Excise Registration during the year 2003; were filing returns declaring the item as PPMF yarn classifying under chapter 5404 and claiming exemption under notification 07/03; invoices issued also indicated PPMF yarn under chapter heading 5404 as monofilament yarn; benefit of notification was wrongly availed; registration was surrendered during Mar 2005; Shri Ebenezer, in charge of Madurai unit, stated that they are involved in the trade of PPMF yarn; they do not sell goods as mono filament yarn; they receive the goods as PPMF yarn and accordingly sell it as PPMF yarn only; they receive excess quantity than what is mentioned in the stock transfer bills; excess quantity received was sold to M/s. Usha traders without bills; subsequent to the investigation, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e submits that the fact of suppression by the appellant was proved beyond doubt during investigation; hence, the plea of limitation of demand does not sustain. 6. Heard both sides and perused the records of the case. Brief issues that requires to be considered in this case are as to whether the synthetic filament yarn manufactured by the appellant falls under 5402 of CETA as contended by the department or under 5404 as contended by the appellants and as to whether the test result would be applicable prospectively or retrospectively. The appellants are small scale unit and are engaged in the manufacture of synthetic filament yarn of 600 d and above and have classified the same under 5404 of CETA, 1985. The Superintendent in-charge of the appellant got the item tested by the Textile Committee who vide report dated 6.8.2004 concluded that the impugned goods were polypropylene monofilament yarn of 600 d or more and of which, no cross section dimension exceeds 1 mm. On the basis of this letter, the appellant surrendered their Central Excise registration and submitted a letter to the department on 15.3.2005 stating that no duty was payable on the impugned goods in terms of Notification ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ariff Item Description of goods Unit Rate of duty (1) (2) (3) (4) 5404 Synthetic monofilaments of 60 Deniers or more and of which no cross sectional dimension exceeds 1 mm; strip and the like (for example, Artificial Straw) of synthetic textile materials of an apparent width not exceeding 5 mm. 5404 10 00 Monofilament Kg. 16% 5404 90 Other: 5404 90 10 Catgut imitation of synthetic yarn, non-sterile Kg. 16% 5404 90 20 Strip and the like of synthetic fibre materials Kg. 16% 5404 90 90 Other Kg. 16% The appellants classified the impugned goods under 5404. The Heading 5404 refers to synthetic monofilament of 60 d or more and of which, no cross sectional dimensions exceeds 1 mm; strips and like (For Example, artificial straw) of synthetic textile material of an apparent width not exceeding 5 mm. This heading had two single '-'. One refers to monofilament yarn and the second 'others'. Chemical Examiner has given a report that it is a multifilament yarn. The moment the yarn is of multifilament nature, it goes out of Heading 5402. Therefore, as far as the tariff entries till 2004-05 are concerned, t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... polypropylene, therefore, the impugned goods merit classification under 5402 59 10 from 2005-06. However, as the DGCEI has visited the premises and got the test conducted on 29.9.2006, the classification can be taken from the new tariff for the reasons discussed hereunder. 6.2 The Learned counsel for the appellants submits that assuming but not accepting that the Chemical Examiner's report 29.9.2006, the same can be applied only prospectively but not retrospectively. The Learned counsel has relied upon catena of judgments. We find that the Tribunal in the case of Pattani Chemicals (supra) has held that test results could have only prospective application. We find that this contention is acceptable. The appellants have registered themselves with the department before 2003 itself and have surrendered the registration on the basis of the test report given by Textile Committee at the behest of the department itself. That being a case, we find that the results of the test reports are to be applied prospectively only. Further, we find that learned counsel for the appellants has submits that as the department is totally aware of the activities of the appellants. The appellants have kept....