2005 (1) TMI 484 - AT - Central Excise

Summary

Issues: Classification of Signal Generator under Central Excise Tariff Act, extended period of limitation for demanding duty

Classification Issue Analysis:
The appeal concerns the classification of Signal Generator by M/s. Unitron Ltd. under Heading No. 90.30 or 85.43 of the Central Excise Tariff Act. The appellant initially classified the product under Heading 90.30 but later faced objections from the audit, leading to a series of show cause notices and reclassifications. The appellant argued that Signal Generator is electronic, not electrical, based on operating voltage, circuitry, and application, falling under electronic testing instruments (Heading 90.31) rather than electrical machines (Heading 85.43). The appellant disputed the department's reliance on HSN Explanatory Note, emphasizing differences in individual functions and the absence of sub-headings in the Central Excise Tariff. The appellant also challenged the time limit for demanding duty based on a corrigendum issued by the department.

Classification Issue Conclusion:
The Tribunal analyzed the distinctions between Heading 90.31 and 85.43, emphasizing that Heading 85.43 covers electrical machines with individual functions, aligning with HSN Explanatory Note mentioning Signal Generators. The Tribunal agreed with the department that the Signal Generator in question falls under Heading 85.43, as it electronically generates signals at specific frequencies, matching the HSN description. The Tribunal rejected the appellant's arguments, upholding the classification under Heading 85.43.

Extended Period of Limitation Issue Analysis:
Regarding the extended period of limitation for demanding duty, the Revenue issued a show cause notice in 1991, later modified in 1992 to propose a different classification and increased duty amount. The appellant contended that the modification constituted a new show cause notice, subject to the six-month limitation period preceding its issuance. The appellant argued that the modification exceeded the time limit specified in Section 11A of the Central Excise Act, challenging the validity of the increased duty demand.

Extended Period of Limitation Issue Conclusion:
The Tribunal agreed with the appellant that the modification in the show cause notice constituted a new notice, triggering the limitation period for demanding duty. As the modification proposed a different classification and increased duty amount, it was deemed a fresh notice subject to the six-month period preceding its issuance. Consequently, the Tribunal rejected the demand based on the modified notice, in favor of the appellant.

In summary, the judgment primarily addressed the classification of Signal Generator under the Central Excise Tariff Act, concluding that it falls under Heading 85.43. Additionally, the Tribunal ruled on the extended period of limitation issue, rejecting the increased duty demand based on a modified show cause notice.