2005 (9) TMI 473 - AT - Central Excise

Summary

Issues Involved:
1. Classification of imported goods.
2. Entitlement to the benefit of Notification No. 21/2002.
3. Justification for invoking the extended period for demanding differential duty.

Issue-wise Detailed Analysis:

1. Classification of Imported Goods:
The primary issue is whether the imported goods-Proximity Sensors, Float Switches, Digital Input Switches-are classifiable under Heading 85.36 as starting/stopping/operative devices, as contended by the appellants, or under Heading 90.31 as measuring or checking instruments, as argued by the Revenue. The adjudicating authority classified the items under Heading 90.31, leading to a demand for differential duty. The appellants argued that the proximity switches, which are non-contact switches, perform a switching function and should be classified under Heading 85.36. The Tribunal noted that the proximity switches incorporate sensors for switching action and are covered under Heading 85.36 according to the HSN Explanatory Note. The adjudicating authority failed to consider this note, which clearly indicates that proximity switches should be classified under Heading 85.36. The Tribunal concluded that the impugned goods perform a switching function and should be classified under Heading 85.36, not 90.31.

2. Entitlement to the Benefit of Notification No. 21/2002:
The second issue is whether the imported goods are entitled to the benefit of Notification No. 21/2002 or its predecessor notifications. The relevant entry in the notification lists switches with a contact rating of less than 5 amperes at a voltage not exceeding 250 Volts AC or DC. The Tribunal found that the impugned goods meet these criteria. Moreover, similar goods had been imported earlier and cleared under Heading 85.36 without objection from the Department. Therefore, the Tribunal held that the goods are entitled to the benefit of Notification No. 21/2002-Cus.

3. Justification for Invoking the Extended Period for Demanding Differential Duty:
The third issue is whether there was any justification for invoking the extended period for demanding differential duty on imports made from 1-4-99 onwards. The adjudicating authority demanded differential duty for imports made during this period, alleging wilful misstatement or suppression of facts by the appellants. The Tribunal found no evidence of wilful misdeclaration or suppression. The goods had been classified under Heading 85.36 after 1-3-94 without objection from the Department. The Tribunal noted that there was a genuine doubt regarding the correct classification, as evidenced by the issuance of a Tariff advice only after the show cause notice. Consequently, the Tribunal held that the extended period could not be invoked, and the demand for differential duty was unsustainable.

Conclusion:
The Tribunal found that the impugned goods are classifiable under Heading 85.36 and are entitled to the benefit of Notification No. 21/2002. The extended period for demanding differential duty could not be invoked due to the absence of wilful misdeclaration or suppression. The appeal was allowed with consequential relief, and the Order-in-Original was set aside.