Custom, Excise & Service Tax Tribunal
M/S. Industrial Filter & Fabrics Pvt. ... vs C.C.E. Indore on 2 February, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
PRINCIPAL BENCH, COURT NO. III
Excise Appeal No. E/1656/2007-Ex[DB]
[Arising out of Order-In-Appeal No. OIO No. 15/COMMR/CEX/IND/07 dated 09.05.2007 passed by CCE Indore]
For approval and signature:
Hon'ble Mr. S.K. Mohanty, Member (Judicial)
Honble Mr. B. Ravichandran, Member (Technical)
1
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3
Whether Their Lordships wish to see the fair copy of the Order?
4
Whether Order is to be circulated to the Departmental authorities?
M/s. Industrial Filter & Fabrics Pvt. Ltd. ...Appellant
Vs.
C.C.E. Indore Respondent
Appearance:
Mr. B. L. Narsimhan(Advocate) for the Appellant Mr. Govind Dixit, DR for the Respondent CORAM:
Hon'ble Mr. S.K. Mohanty, Member (Judicial) Honble Mr. B. Ravichandran, Member (Technical) Date of Hearing/ Decision.02.02.2016 Final Order No. 50134 /2016 Per B. Ravichandran:
The present appeal is against order dated 9.5.2007 passed by the Commissioner of Central Excise Indore. The appellant is engaged in the manufacture of dust collection bags and filter bags liable to Central Excise duty. These dust collection bags are manufactured using cotton and polyester fabrics and also woven glass fabrics. The dispute arose regarding classification of such bags made from woven glass fabrics. The Department contended that such item is classifiable under tariff heading 70199090 and not under tariff heading 59119090. Classification is relevant to decide the availability of exemption under notification 29/2004-CE. SCN cum Demand notice was issued to the appellant to re-classify the product under heading 7019 and to deny the exemption. The proceedings concluded with the issue of order in original dated 9.5.2007. The Original Authority held that the correct classification of dust collection bags manufactured out of woven glass fabrics will be tariff heading 70109090 and denied the exemption and confirmed demand for the period 9.7.2004 to 28.11.2006. He also imposed equal amount of penalty on the appellant. Aggrieved by this order, the appellant is before us.
2. The Ld. Counsel for the appellant submitted that though they have preferred this appeal on various factual and legal points, he will be restricting his plea only to the question of time bar. He submitted that SCN in this case was issued on 12.01.2007 covering the period of demand from 9.7.2004 to 28.11.2006. The appellants are engaged in the manufacture of these impugned goods for a long time. The dispute regarding classification arose for the first time in 2004 as certain concessions were given in terms of notification 29/2004-CE dated 9.7.2004 which is applicable to the goods heading 59.11 and not to the goods under chapter 70. They have been manufacturing dust collection bags since 1994 and from that time onwards they have been filling various declarations on the raw materials, manufacturing process and the final products. They have been importing woven glass fabrics and have been discharging appropriate customs duty classifying the same under chapter 70. They have filed declaration under Rule 57 G of the erstwhile Central Excise Rules. The Declarations clearly show that inputs are falling under chapter 59. The basic facts of the case relating to the nature of raw material, manufacturing process of the final products cleared on payment of duty are all along in the knowledge of department for more than a decade. Declarations under Rule 173B were also filed in fact there were certain disputes regarding credit taken on the glass woven fabrics on certain technical issues. There were regular audits on their records and the classification of goods as mentioned in their documents and invoices are always open for scrutiny. The ER-1 return filed prior and post 2004 contained the same type of material information and there is no deliberate suppression of any fact from the Department in any of the returns. There are many cases when the dust collection bags made out of glass fabrics were returned to the factory and D-3 intimations were filed by them for further reprocessing. All the details regarding challan, invoice and the nature of goods returned for reprocessing are available in the declaration. There was a case against the appellant for wrong availment of modvat credit on woven glass fiber. This proceeding ended in order in appeal dated 18.08.2004. In the said order, it was mentioned that the modvat credit was proposed to be disallowed on woven glass fiber of chapter heading 7019. He also relied on various case laws to submit that extended period of limitation is not invokable in cases of classification disputes; in cases where declarations claiming a particular classification have been filed; where regular audit were being conducted on the records of the appellant assessee.
3. The Ld. AR contested the submissions made by the counsel for the appellant. He reiterated the findings of the original authority and submitted that the appellant deliberately availed the ineligible concessions under notification 29/2004-CE with the full knowledge that they are not eligible for the same. The imported goods, namely, glass fabric were classified under chapter 70 for paying CVD. He further submitted that when the exemption notification is not available for the goods under chapter 70, the appellant continued to avail the same even after 2004 disregarding their obligation under self assessment procedure. The Ld. AR drew our attention to the various case laws relied upon by the Original Authorities.
4. We have heard both the sides and examined the records.
5. The only point for decision in this appeal is the sustainability to demand for extended period. The Original Authority discussed at length the question of application of limitation for the present demand. Regarding declarations filed under Rule 173B and Rule 57G and Rule 173H of the erstwhile Central Excise Rules, 1944, the Original Authority held that these declarations were in compliance of the conditions/ requirements of the respective Rules and cannot be taken as information provided in respect of other set of Rules. For this, he relied on Apex Court decision in the case of [Grauer & weil (India) Ltd. 1994 (74) ELT 481 SC]. We find in the said decision the Honble Supreme Court was dealing with declarations by the appellant which were incorrect and misleading. The appellant in that case had made various declarations which are factually found to be wrong and misleading. In the present case, there is no such allegation of misleading or wrong declaration. The issue is the correct classification of one type of dust bags manufactured by the appellant. The said dust bags made out of woven glass fabric has been in existence for many years. The dispute came with the allegations of fraud, suppression and willful misstatement only after the issue of notification 29/2005-CE which would not be available if the bags were classified under chapter 70. It is an admitted fact that the appellant have not changed any factual details in any of their records or intimations to the Department prior to or after the said notification.
6. The Original Authorities reliance on the Tribunal order in the case of Maharaja Agarsen Iron Foundry vs. CCE 2004 (169) ELT 232 is again found not applicable to the facts of the present case. The Tribunal was dealing with the declaration under Rule 173B and RT-12 returns filed by the appellant. It was noted that the appellants in that case misdeclared the product under Rule 173B with the intention to claim benefit of exemption. It may be noted here that in the present case that there is no requirement for a declaration under Rule 173B during the impugned period which is post 2004. Infact, during the impugned period there is no allegation or evidence to the effect that the appellant has filed any intimation or declaration to the Department giving wrong or misleading information to claim an ineligible exemption. The facts of the case as evidenced from (a) assessment of imported glass fabric (b) certain audit objections regarding cenvat eligibility and these glass fabrics (c) duty paid invoices and other documents maintained by the appellant (d) the continued classification of the impugned product for many years under Chapter 59 will all go to show that alleging fraudulent intend against the appellant for evading Central Excise duty by availing ineligible exemption notification is not sustainable. We find that the Original Authority also emphasized that in self assessment system, the assesse should have intimated the Department about the correct classification or eligibility of exemption under the said notification. By claiming an unavailable exemption the appellant was held to be indulging in suppression. We find such allegation will not stand legal scrutiny. The original authority clearly indicated in the order that the appellant has declared in their ER-1 returns that they are engaged in the manufacture of clearance of dust collection bags manufactured out of cotton fabric, poly fabric and woven glass fabrics. However, the Original Authority proceeds further to state that the Chapter heading was not mentioned in respect of woven glass fabrics and this will amount to deliberate suppression of facts. We are not able to agree with such conclusion. It is an admitted fact that the appellant has declared the nature of raw material and the nature of final product. They had in their assessment and clearance documents mentioned the classification as was done for many years. In the matter of classifying the product, the assessee followed their understanding. When the material facts are disclosed, a particular classification followed by the appellant will not make a case for suppression. The Honble Supreme Court in the case of [Desons Pultretaknik 2003 (155) ELT 211 (SC)] held that merely claiming a classification under a particular heading cannot be a willful misstatement or a suppression of facts. The Tribunal in the case of [AB Mauri India Pvt. Ltd. 2010 (260) ELT 424] held that in the case of bonafide belief of a particular classification, it cannot be said that the appellant suppressed any material fact before the Department with intend to evade payment of duty.
7. After careful consideration of the facts of the case, we find the demand for extended period is not sustainable, and accordingly, the appeal in so far as it relates to extended period is allowed. The penalty imposed on the appellant is also set aside. The demand due to reclassification as confirmed by the Original Authority with applicable interest will be restricted to the normal period of limitation. The appeal is disposed of in these terms.
(Operative portion of the order pronounced in the open court)
(B. Ravichandran) (S. K. Mohanty)
Member(Technical) Member (Judicial)
Neha
3 | Page
E/1656/2007-Ex-[DB]