Full Judgment
The show cause notice issued to the appellant in 1994 took the view that the goods were classifiable under Heading 85.43 and accordingly demanded duty on clearances made between 1988 and 1992. The extended period contained in the proviso under Sub-section (1) of Section HA was invoked on the ground of suppression of facts and misdeclaration. The Commissioner confirmed the demand and imposed penalty. Hence this appeal.
2. It is the contention of the counsel for the appellant that the department had been regularly approving the classification of the product under Heading 19.31 and subsequently under 90.30 for five years, and therefore would be expected to know what the goods were. He cited the decision of the Tribunal in CCI v. Muzzafarnagar Steels, 1989 (44) E.L.T. 552 to say an act of approval of classification list implies application of mind of the approving authority to the nature and function of the goods. Further the show cause notice does not allege any positive act of misdeclaration but only alleges misclassification. That by itself is not evidence. Every person files a classification list according to his understanding of the product and the scope of the tariff heading. Therefore, the extended period will not be available to the department.
3. The departmental representative emphasises what is found in the Commissioner's order, that the articles were misdeclared as checking or measuring instruments. They were in fact not such instruments.
4. The earlier classification list filed by the appellant correctly described the goods by their function as pattern and signal generator.
The appellant had at the top of its classification list reproduced the words of Heading 90.20 which includes instruments and apparatus for measuring or checking quantities. This is very different from saying that the appellant positively and wilfully stated that the goods were used as measuring or checking instruments. A mere reproduction of Tariff heading which was claimed for the goods in the classification list does not, in our view, amount to a positive act which the Supreme Court found to be required for invoking the extended period in its judgment in Padmini Products v. C.C.E. - 1989 (43) E.L.T. 195. We therefore do not find the existence of any factor that would justify the view that there was any deliberate intention on the part of the appellant. Accordingly, we hold that the extended period of limitation would not be available to the department.