ORDER
S.L. Peeran, Member (J)
1. In this appeal, the issue relates to the classification of the HDPE Tapes/strips under Chapter 39 or 54 of Central Excise Tariff Act, 1985 and regarding the confirmation of demand of Rs. 41,216.74 P. for the period 4-5-1986 to 16-8-1986. As the matter appeared to be covered by the ruling of the M.P. High Court in the case of Raj Packwell Ltd. v. Union of India [1990 (50) E.L.T. 201], both the stay and main appeal was directed to be listed for hearing as per law.
2. The appellants were issued with show cause notice dated 27-6-1990 in which it was alleged that on physical verification 32 bags of HDPE Granules weighing 800 kgs. were found lying in the factory premises. On further scrutiny of relevant records, it was noticed that there was a balance of 100 kgs. of HDPE tapes in their RG 1 register, while on scrutiny of records as well as private note-books lying in their factory, the officers noticed that they had manufactured and removed 10,182 kgs. of HDPE tapes from 4-5-1986 to 16-8-1986 without observing Central Excise procedures and without payment of duty. The statement of the partner of the firm was recorded on 25-8-1986. On the basis of these investigations, the department charged that the appellants had by recourse to wilful mis-statement and suppression of facts and with a deliberate and wilful intent to evade payment of duty, suppressed their production of 10,182 kgs. of HDPE tapes falling under sub-heading 5406.90 of GET 1985 during the period 4-5-1986 to 16-8-1986 and hence duty of Rs. 41, 216.74 P. was recoverable.
3. The Addl. Collector of Central Excise, after adjudication, confirmed the duty under Rule 9(2) of Central Excise Rules, 1944 read with proviso to Sub-section (1) of Section 11A of Central Excises and Salt Act, 1944 and imposed a penalty of Rs. 5,000/- under Sub-rule (1) of Rule 173 of Central Excise Rules, 1944.
4. We have heard Shri K.A. Sindhi, learned Consultant for the appellants and Smt. Sundaram, learned DR for the Revenue. Shri Sindhi contended that the item in question is classifiable under Tariff Heading 3920.32 of Central Excise Tariff Act, 1985 as per the ruling of the M.P. High Court and that the appellants are also entitled to the Modvat relief in terms of Rule 57A of the Central Excise Rules which has been denied to them. In this context, he has relied on the ruling of the Tribunal as rendered in the case of Kesoram Cement v. C.C.L. [1989 (40) E.L.T. 413] and also the Board’s Circular in letter F. No. 267/6/92-CX. 8 dated 30-1-1992.
5. Smt. Sundaram contended that the appellants had been granted L-6 licence and that their products had been classified under Chapter Heading 5406.90 of Central Excise Tariff, 1985.
5A. The case being of clandestine removal and non-accountal the benefit of the M.P. High Court ruling on the classification will not be available to the assessee, as the question of classification under classification list 54 had been approved and had not been disposed. Shri Sindhi, learned Consultant countered the arguments by stating that the burden of classification is also on the Revenue and classification can always be corrected by raising it at anytime and the correct classification has to be applied for confirming the duty. The lower authorities are bound by the classification fixed by the higher Courts. He relied on the ruling of the Supreme Court in the case of Shri “Rama Machinery Corporation Ltd. v. C.C.H. [1992 (57) E.L.T. 369] and that of Kerala High Court as rendered in the case of Hevca Crump Rubber P. Ltd. v. Supdt. of Centred Excise [1983 (14) E.L.T. 1685 (Ker.)]. He further contended that there has been no removal of the final product but only raw material had been removed in the present case.
6. We have carefully considered the submissions made by both the sides. The question of classification of the impugned product under Heading 3920.32 of CET Act has been upheld by the Hon’ble M.P. High Court in the case of Raj Packwell Ltd. v. Union of India. The said ruling has been accepted by this Tribunal and applied in several cases (Kanpur Plastipac and Ors. v. C.C.E. (Order No. 407-409/D, dated 21-9-1992). There is no reason to differ from the same and therefore, the classification of the impugned product under sub-heading 3920.32 of CET Act has to be confirmed. The appellants have rightly contended that they had raised the question of grant of Modvat benefit and the same has not been considered. The relevant citations support their claim for the Modvat benefit. They have also submitted that the final product had not been removed but only the raw materials had been removed. They contend that the original resin was duty paid and no duty was leviable on goods vide SI. No. 38 of the Table to the Notification No. 132/86 dated 1-3-1986. There is a further submission that on 2-4-1986, the Notification No. 221/86 was issued and according to this notification, strips of plastics as well as strips and the like of synthetic textile materials, both were exempt from duty if produced out of strips of plastics or out of film of plastics within the same factory and that duty was not leviable on such strips. This aspect of the matter is required to be examined by the lower authorities and therefore, we remand the matter to the original authority with a direction for considering this submission in the light of the classification determined by the M.P. High Court in Raj Packwell Ltd. case. The lower authorities shall also consider the grant of Modvat benefit as claimed by the appellants. The contention of the learned DR that the classification cannot be corrected is not a sound submission as duty has to be determined on the basis of the classification arrived at by the higher Courts as has been well settled by now. It is also seen that the show cause notice has been issued on 27-6-1990 raising demand for clandestine removal for the period 4-5-1986 to 16-8-19881 well after 6 months after the department has discovered the said clandestine removal which has come to be noticed by the department in their course of checks on 23-8-1986. The Original authorities may also examine the plea of time bar raised before us at the time of de novo proceedings, which shall be disposed of after hearing the appellants in the matter. The appeal is disposed of in the above terms.