2002 (5) TMI 799 - AT - Central Excise

Summary

Issues Involved:
1. Classification of Circuit Breakers and Control Panels.
2. Suppression of facts and invocation of extended period under Section 11A(1).
3. Applicability of Section 37B order and its retrospective effect.
4. Imposition of penalty under Rule 173Q of the Central Excise Rules.

Summary:

1. Classification of Circuit Breakers and Control Panels:
The appellants classified 'Indoor and Outdoor Circuit Breakers' and 'Circuit Breakers with Control Panels' under Heading 85.35. The dispute arose with a show cause notice dated 1-3-1994 proposing reclassification under Heading 85.37. The Commissioner concluded that the circuit breakers with control panels are assemblies falling under 85.37, as they consist of an assembly of apparatus like relays, voltmeters, and auxiliary switches, which are integral to the circuit breaker system. The Tribunal found that the control panels are accessories and not integral parts of the circuit breakers, thus not fitting the classification under Heading 85.37. The matter was remanded for re-determination of classification with expert opinion if necessary.

2. Suppression of Facts and Invocation of Extended Period under Section 11A(1):
The Commissioner alleged suppression of facts by the appellants, stating that the classification lists did not fully describe the goods, leading to a competitive advantage by paying lower duty. The Tribunal, however, found no evidence of non-feasance or malfeasance and concluded that the extended period under Section 11A(1) was not justified. The demand was restricted to six months.

3. Applicability of Section 37B Order and Its Retrospective Effect:
The Central Board of Excise & Customs issued an order under Section 37B on 14-7-1994 for uniform classification of circuit breakers. The Tribunal held that this order could not be applied retrospectively and would only be effective from its date of publication, following the precedent set by the Supreme Court in HM Bags Manufacturing Co., 1997 (94) E.L.T. 3 (S.C.).

4. Imposition of Penalty under Rule 173Q of the Central Excise Rules:
The Commissioner imposed a penalty of Rs. 75 Lacs under Rule 173Q. The Tribunal set aside the penalty, finding no suppression of facts or intent to evade duty, as the clearances were made following the approved classification lists.

Majority Order:
The appeal was allowed by remand for re-determination of the classification issue, and the demand of duty was restricted to six months. The penalty was set aside.