1997 (8) TMI 381 - AT - Central Excise

Issues Involved:
1. Classification of the goods (High Voltage test transformers, Current transformers, capacitor voltage transformers, and balancing transformers).
2. Applicability of Tariff Heading 85.04 vs. Tariff Heading 85.43.
3. Retrospective application of the revised classification and limitation period for demand.

Detailed Analysis:

1. Classification of the Goods:
The primary issue in the appeal is the classification of specific electrical goods, namely "High Voltage test transformers, Current transformers, capacitor voltage transformers, and balancing transformers."

2. Applicability of Tariff Heading 85.04 vs. Tariff Heading 85.43:
The lower authority classified the goods under Tariff Heading 85.04, which covers "Electrical Transformers, Static Converters (for example, rectifiers) and inductors." The appellant argued for classification under Tariff Heading 85.43, which pertains to "Electrical Machines and Apparatus, having individual functions not specified or included elsewhere in this chapter."

The appellant's advocate contended that the goods should not fall under Tariff Heading 85.04 because they are used for specific purposes and do not meet the trade parlance test for transformers, which generally involve stepping-up or stepping-down voltage. Instead, these goods ensure a steady voltage for measurement or testing purposes and are used between normal transformers and machinery.

The department's representative argued that the goods perform the function of transformers and should be classified under Tariff Heading 85.04. He referenced explanatory notes under the Harmonized System of Nomenclature (HSN), which cover all kinds of transformers under this heading.

The tribunal observed that the goods function on the principle of transformers, involving primary and secondary coils housed in one shell. The tribunal referred to definitions and descriptions from authoritative sources like the "Standard Handbook for Electrical Engineers" and "McGraw Hill Dictionary of Scientific and Technical Terms," which describe transformers based on their function and construction.

The tribunal noted that the appellant did not provide any technical distinction between their products and the commonly understood transformers. The tribunal also highlighted that the goods are rated in kVA, similar to other transformers, and the HSN notes indicate that all types of transformers are covered under Tariff Heading 85.04.

3. Retrospective Application of the Revised Classification and Limitation Period for Demand:
The appellant argued that the demand should not be made retrospectively and should be limited to a period of six months. The tribunal observed that the Supreme Court has held that a longer period of limitation can only be invoked in cases of suppression of facts with the intention to evade duty. In this case, the appellant had been filing classification lists regularly, which were approved, and there was no evidence of suppression of facts.

The tribunal referred to a Supreme Court decision that allows for demand for a past period of six months in the event of a change in classification.

Conclusion:
The tribunal concluded that the goods are correctly classifiable under Tariff Heading 85.04 based on their function, construction, and usage. The appellant's plea regarding the limitation period was addressed by referencing Supreme Court rulings, which permit demand for a past period of six months without evidence of suppression of facts. Consequently, the appeal of the assessee and the department were dismissed.

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