2003 (9) TMI 381 - AT - Central Excise

Television set with infra-red ray window consequential circuits inside - Demand - Limitation - Penalty

Summary

Issues Involved:
1. Classification of TV sets with or without remote control facility.
2. Liability for penalty under Rules 173Q and 209A of the Central Excise Rules, 1944.
3. Applicability of extended time limit for demand under the proviso to Sec. 11A of the Central Excise Act, 1944.

Detailed Analysis:

1. Classification of TV Sets with or without Remote Control Facility:
The primary issue was whether the four models of TV sets mentioned in the show cause notice are to be classified as TV sets "with remote control facility" or "without remote control facility." The appellants claimed the benefit of Notification No. 67/89-C.E., which provided a lower duty rate for TV sets without remote control facility.

The Commissioner held that the presence of an inbuilt receiver circuit for remote control in the TV sets, even if sold without the remote control hand unit, constituted a "remote control facility." The adjudicator relied on the dictionary definition of 'facility' and statements from dealers and customers, which indicated that the TV sets could be operated with a remote control unit purchased separately. The Commissioner concluded that the appellants' claim that the TV sets were without remote control facility was baseless and amounted to misrepresentation.

The appellants contested this, arguing that a TV set should only be considered to have a remote control facility if it is sold with the remote control hand unit. They cited a clarification from the Department of Electronics, Government of India, which stated that a TV with a built-in remote control signal receiving circuit does not imply it has a remote control facility if not supplied with a hand-held remote control unit.

The Tribunal found that the Commissioner had not given due weight to the technical opinion from the Department of Electronics and had a pre-set mind. The Tribunal concluded that the TV sets in question were without the remote control facility when cleared from the factory, as they were not supplied with the remote control hand units.

2. Liability for Penalty under Rules 173Q and 209A:
The show cause notice also proposed the imposition of penalties under Rule 173Q on the appellant-company and under Rule 209A on the Managing Director. The Commissioner imposed penalties of Rs. 20 lakhs each on both the appellant-company and its Managing Director, citing organized evasion of duty.

However, since the Tribunal found that the TV sets were correctly classified as without remote control facility and the demands were barred by limitation, there was no basis for imposing penalties. The Tribunal set aside the penalties imposed on both the appellant-company and the Managing Director.

3. Applicability of Extended Time Limit for Demand:
The Commissioner invoked the extended time limit under the proviso to Sec. 11A(1) of the Central Excise Act, 1944, alleging that the appellants had misrepresented the nature of the TV sets to evade duty. The appellants argued that the demand was time-barred and that the classification lists had been approved by the proper officers.

The Tribunal noted that the classification lists, which included the model numbers of the TV sets, had been approved under Rule 173B(2) of the Central Excise Rules. This approval process involved the proper officer conducting necessary inquiries before approval. The Tribunal found that the Department had not provided any evidence to show that the TV sets were removed without a declaration or that the classification lists were not approved as per law.

Citing decisions from the Supreme Court, the Tribunal held that the extended time limit could not be applied merely because the classification lists were approved. The Tribunal concluded that the demands were barred by limitation and the Commissioner's finding on this issue was not upheld.

Conclusion:
The Tribunal set aside the impugned order, allowing the appeals with consequential relief. The TV sets were classified as without remote control facility, the extended time limit for demand was not applicable, and the penalties imposed were annulled.