- (1.) REVENUE has filed this appeal under Section 35-L of the Central Excise Act, 1944 (for short 'the Act') against the judgment and final order dated 9th April, 2002 passed by the Customs, excise and Gold (Control) Appellate Tribunal, New Delhi (for short 'the Tribunal') in Final order No. 140/2002-B in Appeal No. E/2199/2001/b wherein and whereby The Tribunal relying upon a judgment of the High Court of Karnataka in the case of Supreme Motors v. State of Karnataka has allowed the appeal filed by the assessee-respondent.
(2.) FACTS: assessee-RESPONDENT (hereinafter referred to as 'the assessee') was holding Central Excise registration No. 19 MOR-13 MOD-III 92 and engaged in the manufacture of Rail Assembly front Seat (Omni), Adjuster Assembly slider seat, YF-2, Rear Back Lock Assembly and 1000 cc Rear Back Lock Assembly. It submitted its classification list in the year 1986 under central Excise Tariff Act, 1985 (for short 'the tariff Act') classifying its products under chapter heading 8708. 00 as "parts and accessories of motor vehicles" which attracted the 15% rate of duty. The classification list filed by the assessee was approved. Acting on a specific information that the assessee was short paying the excise duty by classifying its products as motor vehicles parts and accessories, the factory premises of the assessee was visited by a team of officers of Central Excise MOD-III on 8. 12. 1998. They physically verified the items being manufactured by the assessee. Statement of Shri Ashwani kumar, authorised signatory of the assessee was recorded under Section 14 of the Act. In his statement, he admitted that they were supplying Rail Assembly Frost Seat Adjuster and assembly Slider Seat to M/s. Bharat Seats Ltd. and M/s. Krishna Maruti Ltd. which were manufacturing car seats falling under chapter heading 9401. 00 and were supplying to M/s. Maruit Udyog Limited. From the information gathered on the inspection of the factory premises of the assessee and the statement of Shri Ashwani Kumar, authorised signatory of the assessee, the department came to the conclusion that the items manufactured by the assessee were classifiable under chapter heading 9401. 00 attracting central excise duty at the rate of 18% ad valorem and not under chapter heading 8708. 00 paying less duty at the rate of 15%. Terming that the assessee had been mis-classifying its products, two show cause notices dated 4. 2. 1999 and 5. 7. 1999 were issued to it calling upon it to show cause as to why products manufactured by it as parts and accessories of motor vehicles and classified under chapter heading 8708. 00 be not treated as parts of the seats which are classifiable under chapter heading 9401. 00 attracting higher rate of duty at the rate of 18% and as to why the differential duty amounting to Rs. 9,50,995/- be not demanded and recovered under Rule 9 (2) of the Central Excise Rules, 1944 (for short 'the Rules') read with Section 11a of the Act.
(3.) THE adjudicating authority vide its order dated 24. 11. 1999 held that the goods manufactured by the assessee were integral parts of seats and available in the market as such and confirmed the duty demand of Rs. 9,50,995/- and imposed a penalty of rs. 2,00,000/- under Rule 173q of the Rules and also ordered to charge interest on the differential duty of Rs. 9,50,995/ -. Being aggrieved against the order of the adjudicating authority, assessee filed an appeal before the Commissioner of Central Excise (Appeals ). The Commissioner (Appeals) by his order dated 7th August, 2001 upheld the order of the adjudicating authority classifying the goods under chapter heading 9401. 00. He, however, waived the penalty of Rs. 2,00,000/-imposed on the assessee.;