By TIOL News Service

NEW DELHI, APR 25, 2015: THE respondent-Company is manufacturing floating pontoons which it describes as 'Pantoon with spuds'. According to the respondent these goods are covered by Chapter Heading 8905.00 which attracts nil duty. On the other hand, the Department took the position that the goods are classifiable under chapter Heading 8907.00 which attracts duty @ 20%. This resulted in issuance of show cause notice dated 4.1.1996. The respondent submitted that its product should not be classified under Chapter 8907.00.

The Commissioner passed the Order-in-Original dated 12.3.1996 affirming the contents of the show cause notice and holding that his product would fall under Chapter Heading 8907.00. Against this order, the respondent filed appeal before the Tribunal. The Tribunal vide impugned order has allowed the appeal. A perusal of the impugned order shows that primary reason given by the Tribunal while allowing the appeal is altogether different ground. The Tribunal has come to the conclusion that the product is not marketable and, therefore, would not attract any excise duty. After discussing this aspect in detail the Tribunal at the end has also returned the finding that the manufacture of ' Pantoon with Spuds' is classified under 8905.00.

However, the Supreme Court found that on this finding no reasons are assigned.

The Supreme Court went through the order of the Commissioner which deals with the issue of classification in detail and observed, "In case, the Tribunal was not agreeing with the order of the Commissioner, the order of the Tribunal should have been a speaking order dealing with the reasoning given by the Commissioner and stating as to why the said reasoning was faulty."

The counsel appearing for the Department, has argued, that the issue as to whether the product is marketable or not was not even raised by the respondent in reply to the show cause notice nor was it argued before the Commissioner and therefore on that ground the Tribunal could not have allowed the appeal.

In these circumstance , the Supreme Court set aside the order of the Tribunal and remitted the case back to the Tribunal to decide the issue of classification by passing a speaking order.

(See 2015-TIOL-85-SC-CX)