Oswal Petrochemicals Ltd Vs Commissioner of Central Excise (Supreme Court of India)
Supreme Court held that re-classifying products based on the test report, which was leading to consequential differential duty demand, was not furnished to the appellant hence the same was in clear violation of principles of natural justice. Thus, order justifying re-classification cannot be sustained.
Facts- By the impugned order dated 21.05.2010, CESTAT dismissed the appeals filed by the appellant and partly allowed the appeal filed by the respondent. The differential duty demand in respect of the two products Benzene and Toluene for the period September, 1990 to December, 1992 amounting to Rs. 1,97,17,015.00 and for the period January and February, 1993 of Rs. 18,16,304.00 have been upheld. In respect of the aforesaid two products, CESTAT has also held that contents of the test reports on the basis of which tariff classification of the above two products were changed leading to higher duty and hence differential duty were duly communicated to the appellant. CESTAT has also held that the assessments covering the said period were not provisional except for the months of January and February, 1993.
Conclusion- Held that long after approval of the classification list, department had taken samples of the two products. If at all the department wanted to inquire into the correctness of the classification submitted by the appellant, it could have taken samples of the two products prior to the approval at the stage of Rule 173B itself. Approval of classification list under Rule 173B is not an empty formality. The proper officer has to apply his mind and if he considers it necessary, he may conduct further inquiry to ascertain the correctness of classification. Therefore, such belated sampling and still further belated test reports cast a shadow of doubt about the entire procedure adopted by the respondent. This is further compounded by non-furnishing of the test reports to the appellant. Therefore, we are of the considered opinion that orders re-classifying the products Benzene and Toluene under chapter sub-heading 2707.10 and 2707.20 respectively and levying consequential differential duty demand cannot be sustained in law. Impugned order of CESTAT justifying such re-classification cannot also be sustained.
