Order
Moheb Ali M., Member (T)
1. These two appeals, one by the Revenue and the other by M/s. Galaxy Plastics against the order of Commissioner of Central Excise’s order are taken up for disposal,
2. E/810/96
The Commissioner held that the respondents’ goods are classifiable under Chapter Heading 84.19 as against the Department’s claim for classification under Chapter Heading 3920.19. The goods involved are corrugated Rigid PVC sheets and plain sheets of the same material albeit of special characteristics such as size, strength and composition. M/s. Galaxy’s contention before the Commissioner was that the goods were not of a kind used as roofing material or as ordinary sheets of plastics. It was their contention that the goods manufactured by them were ‘Media Fills’ which were used in water purification plant/Bio gas plants; that the goods were exclusively sold to one M/s. Reva Enviro Systems Pvt. Ltd. who assembles the sheets into Media Fills for further use as part of purification plant and are therefore classifiable under Chapter Heading 8419 of CETA 1985.
3. The Revenue’s contentions are that the Commissioner ignored the Chapter Note and HSN Explanatory Note which say that plastic sheets of regular geomantic shape whether or not surface worked i.e. plain or corrugated fall under Chapter Heading 39.20; that the Commissioner ignored the decision of the Tribunal in M/s. Metrowood Engg. wherein the Tribunal held that heading which provides the most specific description shall be preferred to a heading providing a more general description; that he ignored the decision of the Tribunal in Sharpmax Engg. wherein the Tribunal held that statutory definition as per Section Note/Chapter Note etc. has to prevail over trade and Commercial understanding; that the respondents have misdeclared the goods as ‘Media Fills’ even when they were removing loose sheets packed in boxes which were neither parts of any machinery nor machinery itself and that extended period of limitation is invocable as the respondents have misdeclared the goods and evaded appropriate duty payable on the goods.
4. We have heard the rival contentions.
5. The Commissioner came to the conclusion that the corrugated PVC Sheets and plain sheets manufactured by the respondent are classifiable under 84.19 and extended period of limitation is not invocable on the following grounds.
Having regard to the aforesaid technical facts and the averments of various functionaries on reaches an in-escapable conclusion that the corru gated/plain sheets manufactured by the noticees are in fact Media Fills and the Media Module is not assembled at the noticee’s premises for obvious transport difficulties, particularly because between the two sheets, there has to be some void for filtration and in case they are assembled at the noticee’s factory. He said specific void required between the two sheets will obviously be disturbed and further more, even if one were to really transport them as against one truck-load of sheets the Module may require something like 25 to 30 trucks to carry the same number of sheets to the user’s site. The noticees have cited several case laws that for classification for levy of taxes, one has to go by the actual end use as also the nomenclature of the product known in the common trade parlance. Even the Chemical test results do not categorically support the issue one way or the other; it merely says that the end use of the product cannot be ascertained. Accordingly, I am inclined to hold that the Media Fills, in question, are more appropriately classifiable under Central Excise Tariff Heading under chapter 84 as claimed by the noticees.
As for invocation of Section 11-A for the extended period I find that the Deplt. had definite knowledge as the officers have visited the factory on 22-9-1993; the noticees have the classification list and even the RT 12 returns have been filed by thorn. The show cause notice is dated 3-3-1994 I also find that the issuance of the show cause notice by the Supdl. Central Excise would not survive in view of the aforesaid findings. In any case, since the charge of suppression or mis-representation etc. do not stand established, the demand could have been valid only for six months, even if I were to uphold the show cause notice.
6. The answer to the question whether the respondent’s goods are ‘Media Fills’ or not is provided in the Commissioners’ observations themselves. He finds that the corrugated sheets/plain sheets were first removed to M/s. Reva Enviro Pvt Ltd. where they are assembled into media fills. Thus what are removed from the respondents’ factory are only PVC corrugated sheets/plain sheets, classifiable under Chapter 39 of CETA. The implied suggestion that the sheets, have already attained the characteristics of media fills is devoid of any reason. Plain/corrugated sheets however specifically they were made can not become a part of a machine under Chapter 84 unless they are assembled into specific parts, ft is clear from the evidence that the respondent removed impugned goods as sheets and are therefore classifiable under the appropriate heading depending on the material with which they were made. In this case Chapter 39. We also observe that the decisions of the Tribunal in the matter of classification of goods were ignored by the Commissioner.
7. In view of this position we uphold the contention of the Revenue that the goods in question are classifiable under Chapter Heading 39 of CETA.
8. In regard to invocation of larger period of limitation, we observe that the respondents have been declaring their goods as ‘media fills’ in their classification list even when they were selling the goods as loose sheets. Their belief that what they were removing were media fills was based on a competitors classification of the same goods. This is not acceptable. Granting that the competitors was removing such goods made out of rigid PVC as Media Fills it is quite possible that he was doing so after fully assembling them into media fills. Blind belief cannot be termed as a bonafide belief. The respondents have suppressed the facts that they were clearing loose sheets of plastic packed in boxes. The only person who benefits from such misclassification is the respondent. Larger period of limitation is invocable.
9. We set aside the order of the Commissioner in regard to classification and allow the Department’s appeal.
10. E/CO-179-R/96.
The Commissioner confiscated the PVC Sheets (3519 kgs.) which were not accounted for in RG 1, appropriated the amount of Rs. 2.78 lakhs as the appellants failed to produce before him the goods provisionally released and imposed a fine of Rs. 75,000/- in lieu of confiscation of 2520 kgs. of plastic sheets which were seized. M/s. Galaxy can be aggrieved only against this part of the impugned order.
11. The Commissioner confiscated the goods for non-accountal under Rule 173Q. He specifically observed the fact that the assessee did not account for the goods in RG 1 either as ‘media fills’ or as loose plastic sheets. He further observed that had the respondents believed that what they were manufacturing were media fills it is incumbent on them to maintain proper statutory records of the goods manufactured by them one way or the other. They failed to do so with an intention to evade duty and the goods are therefore liable to confiscation.
12. We have perused the cross objections filed by M/s. Galaxy. The cross-objections filed by the appellants do not indicate why the goods are not liable to confiscation nor do they mention as to how the Commissioner was wrong in confiscating the goods. A cross objection can be filed by as-sessee/Department on that part of the order against which assessee/Department is aggrieved. If M/s. Galaxy is aggrieved against confiscation of goods which were not accounted for the RG 1, they are obliged to put across their case accordingly. The appellants failed to do. The cross objections are in the nature of written submissions in support of Commissioner’s decision that the goods in question are classifiable under 84.19 of the Schedule to CETA. We have observed that the goods are classifiable under Chapter Heading 3920.19.
13. Departments’ appeal is allowed. Cross objections by the respondent are rejected.
(Pronounced on 21-10-2005)