1. The appellants received polyester filament yarn on payment of duty as leviable on goods falling under Heading 3920 of the Central Excise Tariff. The process undertaken by them as was appended to the classification list filed on 12.10.94 was as follows:- "Duty paid Plain Polyester Film/Lacquered Polyester Film of different thicknesses will be used as inputs in Roll form. It will be cut into required sizes and equal numbers of pieces will be packed in a carton/box and sold in the market as article ready to use as transparency film mainly used in overhead projectors." 2. The classification claimed for such film in this classification list was under sub-heading 3926.90. This classification was claimed by them in the subsequent classification list/declaration filed by them time to time and was duly accepted by the jurisdictional officers.
3. Show cause notice dated 2.5.2000 issued by the Commissioner of Central Excise & Customs, Surat.II charged that the subject goods were more properly classifiable under sub-heading 3921.90. It was alleged that the assessees had mis-classified the product wilfully with malafide intention to take the benefit of the exemption notifications permitting clearance at Nil rate of duty. It was alleged that by this misclassification the duty short paid amounted to Rs. 3,79,53,125/-.
This duty was sought to be confirmed vide this show cause notice.
Interest was sought to be levied and penalty was sought to be imposed.
Before the Commissioner, the assessees cited similar articles which had merited their classification under sub-heading 3926.90. But he distinguished these on facts. The significant claim made before the Commissioner was that all the classification lists were duly approved on the assessees' making clear the process undertaken by them and therefore, it could not said that there was any suppression or any misdeclaration. The Commissioner disposed of this submission by citing the provisions of Sec.110 of the Finance Act 2000 and on validation of action taken under Sec.11A of the Central Excise Act, 1944. On his confirming this duty short levied, on his imposition of penalty of like amount and on his demanding interest on the duty short paid, the present appeal has been filed.
5. We find that in referring to any relying upon the provisions of Finance Act 2000, the ld.Commissioner has misdirected himself. The view held by the Tribunal prior to the enactment of the Finance Act was that in the fact of the earlier approval or acceptance of an assessment on examination of the relevant facts, the matter could not be agitated and the assessments could not be reopened. On perusal of the paragraph 3 of the impugned order we find that the ld.Commissioner has noted he history of the classification lists filed by the assessees and accepted by the department. The provision cited by the ld.Commissioner in his order seeks to do away with this impediment. Where the previous period of six months is concerned, the demand could be confirmed by resorting to Sec.11A. But where the demand is for the extended period, the prima-facie requirement is that the misdeclaration or fraud by the assessees has to be established with intent to evade payment of duty.
The facts of the case do not even remotely establish that any such attempt or intention was there on the part of the appellants. In the absence of any misrepresentation, suppression etc. with intent to evade the revenue, the extended period could not be invoked.
6. In view of our above findings, the demand as far as it relates to the extended period does not survive. Consequently, the imposition of penalty under Sec.11AC also does not survive and the orders in this regard are set aside. For the same reason, the orders for charging interest under Sec. AB also are set aside.
7. So far as the demand under normal period of six months is concerned, the ld.counsel does not wish to contest and requests for redetermination of the duty short levied for the said period. He further submits that in making the calculation, the ratio of the judgement of the Larger Bench of the Tribunal in the case of Srichakra Tyres Ltd vs. CCE, Madras [1999 (108) E.L.T.361(Tri)] should be taken into account. He also submits that the benefit of modvat credit where available should be extended. We find this request to be reasonable and acceptable.
8. We, therefore, allow this appeal and remit the proceedings back to the jurisdictional Commissioner for the limited purpose of redetermination of the duty short levied during the "normal period" keeping in mind the directions made by us above.