Judgment

Tarun Chatterjee, J.—Appellant M/s. Anand Nishikawa Co. Ltd. is a manufacturer of rubber profiles which product after extrusion is subject to notching or drilling of a few holes or slitting. The appellant had classified such extruded rubber profiles under sub-heading 4008.29 of the Central Excise Tariff which attracted Nil rate of the duty. The Revenue, however, classified such rubber under heading 4016.19.

2. According to Revenue, the operations like notching, drilling and slitting are “further working” and in view of Note 9 to Chapter 40, these goods fall outside Heading 40.08. Accordingly, a show cause notice was issued in October, 1995 demanding duty of over Rs. 2.18 crores for the period from September 1990 to February, 1994 under the proviso to Section 11A of the Central Excise Act, 1944 (hereinafter referred to as `the Act’). The Commissioner by his order dated 2nd August 1996 discharged the show cause notice, inter-alia, on the ground that proviso to Section 11A of the Act was inapplicable in the facts of the case. In his order, the Commissioner observed that the authority had knowledge of the manufacturing process of the appellant and was seized of the matter from t