ORDER
S.S. Kang, Member (J)
1. The appellants filed these appeals against the adjudication order passed by the Commissioner of Central Excise whereby the demand of Rs. 58,127,548/- was confirmed and a penalty of equal amount was imposed under Section 11AC of the Act. A penalty of Rs. 1 lac was also imposed on Shri Approva Sharda, Director of the appellants’ firm under Rule 209A of the Rules.
2. The brief facts of the case are that the appellants are engaged in the manufacture of articles of iron and steel, dies for stampings and parts of agricultural implements, etc. On 6-9-2002, the officers of Revenue Department visited the premises of the appellants firm and they found the appellants were clearing the forged articles of iron and steel falling under Heading 73.26 of the Central Excise Tariff while misdeclaring as parts of agricultural implements falling under sub-heading 8432.00 of the Tariff. A show cause notice was issued to the appellants for reclassifying the goods in question under Heading 73.26 of the Tariff and the duty was also demanded for the period from October, 1997 to July, 2002 by invoking the proviso to Section 11A on the ground that the appellants had suppressed the facts and wilfully misdeclared the goods in question under wrong heading with an intention to evade payment of duty. The adjudicating authority confirmed the demand of duty and imposed the penalties.
3. The contention of the appellants is that the goods in question are not forged articles of iron and steel. These are identifiable parts of agricultural implements. The appellants are manufacturing articles of iron and steel which are known in the market as Tines (Hul) and Disc Spindle which are used as such as parts of cultivator. Hence, these are classifiable as parts of agricultural implements. The appellants relied upon the decision of the Tribunal in the case of Shivaji Works Ltd. v. CCE, 1994 (69) E.L.T. 674 to submit that castings remain castings up to the stage of proof machining. The contention of the appellants is that the Revenue filed the appeal against the decision of the Shivaji Works Limited which was dismissed by the Hon’ble Supreme Court reported in 1996 (87) E.L.T. A131. The appellants also relied upon the decision of the Delhi High Court in the case of Metal Forgings (P) Limited v. Union of India reported in 1985 (20) E.L.T. 280 (Delhi) to submit that forging would not cease to be forging by processes like removal of superfluous extra skin of cast iron.
4. The appellants also submitted that the demand is time-barred. A show cause notice was issued to the appellants on 7-10-2002 for the period from October, 1997 to July, 2002. The contention of the appellants is that in the year 1999, the appellants filed a classification list claiming classification of goods in question under sub-heading 73.26 of the Central Excise Tariff. The Revenue had not accepted this declaration and the adjudicating authority vide Order-in-Original No. 40/90, dated 15-6-1990 approved the classification under Chapters 84 to 87 of the Central Excise Tariff. The appellants filed the appeal and the Commissioner (Appeals) remanded the matter to the adjudicating authority for deciding afresh. In the circumstances, the allegations of suppression or mis-declaration to evade payment of duty is not sustainable.
5. The contention of the Revenue is that the appellants are clearing the forged articles which are not used as such as parts of agricultural implements. Enquiries were made by the Revenue from their customers shows that they had received those Tines (Hul) and Disc Spindle in forged condition on which they are undertaking the processes of grinding, hole making (four holes), heat treatment and short blasting and thereafter they are used as parts of cultivators. The contention of the Revenue is that in these circumstances, it cannot be said that the appellants are clearing identifiable parts of agricultural implements which are classifiable under Heading 8432.00 of the Central Excise Tariff.
6. In respect of limitation, the Revenue reiterated the findings of the lower authorities.
7. Heard both the sides. In this case, the appellants are claiming the classification of Tine (Hul) and Disc Spindle under Heading 73.26 of the Central Excise Tariff as forged articles of iron and steel. The appellants relied upon the decision of the Hon’ble Delhi High Court in the case of Metal Forgings (P) Limited (supra) and in the case of Shivaji Works Ltd. v. CCE. The Hon’ble Dehli High Court in the case of Metal Forgings (P) Limited held that extra unwanted material is removed by trimming or gas cutting or skin cutting to achieve the shape and section nearest to the forged steel products required. The forging would not cease to be forging for the removal of superfluous extra skin cast iron. Similar view was taken by the Tribunal in the case of Shivaji Works Limited. After the decision of the Tribunal in the in the case of Shivaji Works Limited, the Central Board of Excise and Customs also issued the instructions to this effect. The contention of the appellants is that they are only removing extra unwanted material from the hul and disc spindle. Therefore, they are classifiable as forged articles of iron and steel. We find that the facts of the present case are not similar to the facts of the M/s. Metal Forgings (P) Limited and in the case of M/s. Shivaji Works Limited. In the present case, the customers of the appellants undertake the various processes such as grinding, heat treatment, hole making and short blasting and thereafter hul and disc are become capable of to be used as parts of agricultural implements. In the circumstances, we find no merit in the contention of the appellants that the forged articles of iron and steel cleared from their factory were used as such as parts of agricultural implements, hence, we find no infirmity in the impugned order where the Commissioner of Central Excise held that the goods are classifiable under Heading 73.26 of the Central Excise Tariff as forged articles of iron and steel.
8. On limitation, we find that the present demand is for the period October, 1997 to July, 2002 and the show cause notice issued on 7-10-2002. The appellants filed a classification list in the year 1999 claiming the classification under heading as unmachined forged articles of iron and steel classifiable under Heading 7214.10 of the Tariff. A show cause notice was issued to the appellants for reclassifying the goods under Chapter 84 or 86 of the Central Excise Tariff and the adjudicating authority vide Order-in-Appeal No. 40/90, dated 15-6-1990 approved the classification list after classifying the goods under Chapters 84 to 87 of the Central Excise Tariff. The appellants filed the appeal and the Commissioner (Appeals) vide Order-in-Appeal No. 708/C.E./MRT/2003, dated 20-3-2003 remanded the matter to the adjudicating authority for deciding afresh with the direction to specifically classify the goods under specific heading. In the circumstances when the appellants in the year 1999 claimed the classification as unmachined forged items of iron and steel which was not accepted by the Revenue and the matter travelled up to the Commissioner (Appeals), the allegation of suppression or misdeclaration with intent to evade duty, is not sustainable. Therefore, the demand beyond the normal period of limitation is not sustainable and set aside. We find that Section 11A of the Central Excise Act was amended with effect from 12-5-2000 and the time-limit for issuing show cause notice was extended from six months to one year. Therefore, the demand prior to 7-10-2001 is set aside as time-barred.
9. As the allegations of suppression and misdeclaration with intent to evade duty are not sustainable, therefore, the penalties imposed on the appellant are also set aside. The adjudicating authority will compute the demand as indicated above. The appeals are disposed of in the above terms.