Remand of matter - whether re-classification issue can be decided therein?

PJ/Case Laws/2011-12/1371

Case: PREMIER FOOTWARE PRODUCTS (P) LTD. Versus COMMR. OF C. EX., COIMBATORE

Citation: 2011 (271) E.L.T. 278 (Tri. - Chennai)

Issue:- Issue of Re-classification of goods – whether can be decided in proceedings initiated in remand of proceedings for limited purpose?

Brief Facts:- Appellant are manufacturers of "Micro-cellular Rubber Sole sheets" for Hawaii chappals and "Strap sheets (plap)" for straps of Hawaii chappals. They had not paid excise duty on the above products manufactured in their factory at Pollachi and removed to their customers during the period 15-12-1998 to 31-3-2003.

Hence a show-cause notice dt. 12-12-03 was issued invoking the extended period of limitation for recovery of duty on rubber sole sheets classifiable under CET sub-heading 4016.19 and on strap sheets classifiable under CET sub-heading 4008.29. Penal action was also proposed on the appellant as well as on M/s. Kerala Footwear Products (hereinafter referred to as KFP) who supplied rubber compound mix required for the manufacture of both sole sheets as well as the strap plaps, and on Shri Joy Verghese, Managing Director of M/s. PFP and Managing Partner of M/s. KFP. The Adjudicating Authority confirmed the duty demand of over Rs. 9 crores from M/s. PFP and imposed a penalty of equal amount on them under Section 11AC of the Central Excise Act, 1944 and penalties of Rs. 50 lakhs and Rs. 10 laths respectively on M/s. KFP and Shri Joy Verghese.

The impugned order was challenged by M/s. PFP and KFP and Shri Joy Verghese before the Tribunal. It was held by the Tribunal that rubber sole sheets manufactured by M/s. PFP fell for classification under CET sub-heading 4008.11 and that no duty of excise is leviable thereon as the goods falling under the above sub-heading were chargeable to 'Nil' rate of duty during the said period, and that strap plaps are classifiable under CET sub-heading 4008.49 as a sheet of vulcanized rubber (other than hard rubber) of non-cellular structure, from which structures for Hawaii chappals could be manufactured, and accordingly, excise duty is leviable thereon. The Tribunal upheld the applicability of the larger period of limitation and remanded the case to the Commissioner for re-quantification of duty payable by M/s. PFP on strap sheets for the period in dispute, as well as for re-determination of penalty, and set aside the penalties imposed M/s. KFP and Joy Verghese [2007 (207) E.L.T. 149 (Tri.-Chennai)].

Pursuant to the above order, the Commissioner took up the case for re-computation of duty liability and penalty. Appellant once again raised the issue of classification of "strap sheets" by contending that the strap sheets consist of a set of fully formed straps for Hawaii chappals loosely held together and would therefore fall for classification under CET sub-heading 6401.92 which covers "parts of Hawaii chappals of sub-heading 6401.13", relying upon the decision of the Apex Court in Phoenix International Ltd. v. Commissioner of Customs, Raigad [2001 (134) E.L.T. 593 (S.C.)]. They also contended that Section 11AC prescribed maximum penalty and that it was not mandatory for the Adjudicating Authority to impose highest penalty.

The Commissioner declined to consider the plea of the Appellant for reconsidering the classification of "strap sheets" for the reason that the Tribunal had already decided the issue of classification and only remanded the case for re-quantification of duty and penalty and accordingly, upheld the demand of Rs. 86,55,173/- on strap sheets and also demanded interest on duty liability and imposed penalty equal to duty amount.

Hence, this appeal is filed by Appellant before the Tribunal.

Reasoning of Judgment: - The Tribunal held that the issues of classification of strap sheets, valuation and time-bar stand already decided by Tribunal's Final Order No. 817- 819/06, dt. 31-8-06 reported at [2007 (207) E.L.T. 149 (Tri.-Chennai)] and the Commissioner was only required to re-quantify duty and penalty amounts. It was not legally permissible for him therefore to have viewed the classification issue afresh. It is also not open to the Tribunal to depart from the view already expressed on the classification of the goods in question as the final order has become final and to take a different view on classification would amount to review, which power is not vested in the Tribunal.

It was further held that the judgment of the Bombay High Court in Ratanlal Kisandas v. Bajirao Gallpat Mahalasne and 2 Others [(1975) Maharashtra Law Journal 65] relied upon by the appellant in support of their contention that remand order will not operate as res judicata so as to preclude the remanding court from reopening it at the subsequent stage of the same continuing proceedings even when the law underlying remand order is differently interpreted by the Larger Bench or by the Supreme Court, is distinguishable for the reason that, in that case, the issue as to whether the word "partition" in Section 38(7) of the Bombay Tenancy and Agricultural Lands (Vidarbha Region) Act, 1958 did not cover partition of the joint family property, as such member cannot be said to have acquired title to the property for the first time under such partition, was remanded to the Tahsildar for enquiry, holding on the authority of Salubai's decision in Smt. Salubai v. Chandu [1966 Mah.L.J. 2891] that claims for possession of such tenure holders were not barred under Section 38(7); by the time the litigation reached the Revenue Tribunal, thereafter in revision, after orders passed in compliance with the remand orders, Salubai's case was overruled by the Full Bench of the Bombay High Court in Smt. Radhabai v. State of Maharashtra [1969 Mah.L.J. 933]; following the judgment in Radhabai case, the Tribunal, inter alia, held that claims in those applications were barred under Section 38(7) of the Tenancy Act and were liable to be rejected and the validity of such order was challenged in Special Civil Application before the High Court in Ratanlal case.

The Tribunal held that in other words, the issue on merits was not determined initially and hence the Bombay High Court held that the remand order was interlocutory and cannot determine the case and the litigation finally, and the possibility of the litigation coming up before the remanding court at another stage cannot be ruled out. In the present case, however, the issue on merits has been finally decided by the Tribunal's earlier order of 2006 and the case was remanded to the Commissioner only for arithmetical calculation, namely, for working out the amount of duty to be paid by the assessees on the strap sheets for the relevant period and for re-determining the penalty amount.

The judgment of the Apex Court in Palace Administration Board v. Rama Varma Bharathan Thampuran and others [1980 Supp. SCC 2341] relied upon by the Appellant to support their plea for reconsideration of the classification is permissible in law is also distinguishable as the Supreme Court was hearing a review petition while the Tribunal has no power of review.

The decision of the Apex Court in Flex Industries Ltd. v. CCE, Meerut [2006 (199) E.L.T. 193 (S.C.)] cited by appellant is also not applicable to the facts of the present case for the reason that the Apex Court itself, in earlier proceedings, had directed the assessees to raise the issue not involved by way of a rectification application, and the Tribunal rejected the application and it is in this context that the apex court held that the appellants should have an opportunity of agitating the issue after the remand from the Supreme Court.

It was further held that appellant’s submission that the earlier decision dt. 31-8-06 is per incuriam and not a binding precedent as it did not take into account the Apex Court's decision in Phoenix International [2001 (134) E.L.T. 593 (S.C.)] wherein it was held that printed PVC leather cloth as imported has distinct and clear features of shoe uppers and are classifiable under CET sub-heading 6406.10 is also not tenable for the reason that the earlier order of the Tribunal (against which no ROM application was filed) in the appellant 's own case determining the issue of classification of strap sheets on the basis of the Apex Court's decision in Speedway Rubber Co. v. CCE, Chandigarh [2002 (143) E.L.T. 8 (S.C.)] cannot be considered as per incuriarn as it is only a judgment or order in another case can be considered as per incuriam and therefore not required to be followed in another assessee's case. Further, the issue in Phoenix International was regarding classification of different goods and not goods identical to strap sheets which is the subject matter of dispute in the present case. Prayer for re-classification of strap sheets rejected.

Decision:- Appeal rejected.

Comment:- This decision clearly bring about that the matter cannot be reopened in remand proceedings. It has to be decided in light of remand directions.

Comments

PJ/Case Laws/2011-12/1371

Post a Comment

Query