Customs, Excise and Gold Tribunal - Bangalore
Chimique Industries Ltd. And Anr. vs Commissioner Of Central Excise on 19 January, 2005
Equivalent citations: 2005(100)ECC373
ORDER T.K. Jayaraman, Member (T)
1. Revenue proceeded against the appellant on the ground that they had cleared twisted/doubled multi-folded yarn (classification CH 5402.61) under the guise of Twine of synthetic fibres (CH 5607.50) without payment of duly by wilfully suppressing and mis-representing the facts with intent to evade payment of duty. The original authority confirmed the above position in his order dated 17.11.2000. The appellant approached this Tribunal, which remanded the case to the original authority for re-consideration by observing the principles of natural justice, in the de novo order, which is impugned in the present appeal, the adjudicating authority held that the goods are classifiable as Sewing Thread (CSH 5401) and demanded duty of 73,03,216 under proviso to Section 11A of the Central Excise Act, 1944. Equal penalty under Section 11AC has been imposed. Interest under Section 11AB has been demanded. A penalty of Rs. 10,00,000 has been imposed on Shri Deepak Ganeriwala, Director of the appellant unit under Rule 25 of the Central Excise Rules, 2002.
2. Shri G. Shiva Dass, learned Advocate appeared for the appellant and Shri L. Narasimha Murthy, learned SDR appeared for the department.
3. The learned Advocate urged the following points:
(a) The impugned order is beyond the proposals in the Show Cause Notice. The Show Cause Notice proposed to classify the goods as 'Multiple (folded) Yarn' under CH 54.02 as against 'Twine' falling under Chapter Sub-heading 5607.50 as claimed by the appellants. But the Commissioner, in the impugned order, has classified the goods as 'Sewing Thread' falling under CH 54.01. The Department cannot set up a new case by going beyond the Show Cause Notice.
(b) The adjudicating authority, in her order, appears to have relied on the Chief Chemist's Report dated 11th December, 1998. The Show Cause Notice was issued on 22nd July, 1999. When the Show Cause Notice was issued, the Department was in possession of the Chief Chemist's Report. However, the same was not taken into account by the Revenue. Only during de novo proceedings, the Chief Chemist's opinion was relied on to make a new case. This is illegal.
(c) The appellant adopted the classification of the impugned goods on the basis of trade understanding. The documents issued by the purchaser as well as by the appellants indicate that the impugned product is considered by both the parties as Twine only.
(d) The proceedings are barred by the principles of Constructive Res Judicata. The Department initiated proceedings for the period from March 1995 to February 1997 in respect of Nylon Fishnet Twine falling under Chapter Sub-heading 5607.90, even after 16.3.1995, when Note 12(A) to Section XI of the Central Excise Tariff Act prescribed a condition of more than 9000 deniers and sought to deny only the benefit of the Notification on the ground that the raw material had suffered the duty at 'Nil' rate. The proceedings were dropped. The present proceedings initiated initiated vide Show Cause Notice dated 22.7.1999, which seeks to demand duty for the period from March 1995 to March 1999, cannot seek to reopen the classification of the product since the principle of Constructive Res Judicata would apply. In a situation, where the authorities had all the materials before them to come to a conclusion but take a different stand based on the said materials, then the authorities are estopped from taking a different stand based on the same materials as held in the case of Hind Lamps Ltd. v. CCE, 1987 (28) ELT 429 [Affirmed by the Supreme Court in 1997 (91) ELT A 231 (SC).
(e) In any case, the goods in question are exempted under Notification 8/96-CE dated 23.7.1996 as amended.
(f) Assuming without admitting that the goods are to be considered as multiple (folded) cabled yarn, the product is exempt from duty vide Notification 5/98-CE dated 2.6.1998.
(g) In the present case, there is absolutely no justification for invoking the longer period as the appellants have not suppressed any material and all the facts were before the Department.
(h) In view of the above submissions, penalty and interest are not imposable.
4. The learned SDR reiterated the points in the adjudication order.
5. We have gone through the rival submissions. It is a fact that the Show Cause Notices proposed the classification of the goods as 'Multiple (folded) Yarn' falling under CH 54.02 as against the claim of the appellant as 'Twine' falling under CH 5607.50. However, the Commissioner, relying on the Chief Chemist's opinion classified the goods as Sewing Thread falling under CH 54.01. It is very clear that the adjudicating authority has made out a new case beyond the proposals in the Show Cause Notices. As contended by the learned Advocate, the Adjudication Order is contrary to the settled law on the subject as decided in the following cases.
(a) Hindustan Polymers Co. Ltd. v. CCE, 1999 (106) ELT 12 (SC)
(b) Warner Hindustan v. CCE, 1999 (66) ECC 592 (SC) : 1999 (113) ELT 24 (SC)
(c) Sharp Batteries & Allied Inds. P. Ltd. v. CCE, 2002 (145) ELT 611
(d) CCE, Meerut-II v. Beltek Canadian Water Ltd., 2001 (130) ELT 657
(e) Comteck Laboratories v. CCE, Mumbai, 2003 (156) ELT 966 We also find that in all the documents, the appellant has indicated that the impugned goods are Twine. In view of this, it is very difficult to sustain the charge of suppression of facts. In the light of the above observations, invocation of longer period under proviso to Section 11 A(1) is not correct. Further it is seen that for the period from March 1995 to February 1997, the department initiated proceedings by issue of 4 Show Cause Notices wherein the Department did not question the classification of the product. Even if the goods are classified as Multiple (folded) Yarn', as contended by the party, they would be exempted under Notifications 8/96 and 5/98. Hence, the Order-in-Original deserves to be set aside. We allow the appeals with consequential relief.