1984 (2) TMI 332 - AT - Central Excise

Summary

Issues Involved:
1. Eligibility of electric fan regulators for tax relief under Notification No. 198/76.
2. Classification of electric fan regulators under Tariff Item 33.
3. Interpretation of the term "Electric Fans, All Sorts" in the context of tax exemption.
4. Inclusion of regulator value in the assessable value of electric fans.

Issue-wise Detailed Analysis:

1. Eligibility of Electric Fan Regulators for Tax Relief under Notification No. 198/76:
The Respondent, a manufacturer of electric fans and regulators, cleared 3,701 pieces of electric fan regulators and claimed a 25% tax relief under Notification No. 198/76. The Assistant Collector ruled that the goods were not specified in the Notification's Table and thus were not eligible for the tax relief. The Collector (Appeals) overturned this decision, leading the Revenue to appeal.

2. Classification of Electric Fan Regulators under Tariff Item 33:
The Respondent argued that the regulators fall under Tariff Item 33, as amended in 1977, which includes "Electric Fans including regulators for electric fans, all sorts." The Revenue contended that prior to the 1977 amendment, regulators were assessed separately under Tariff Item 68 and were not covered by the Notification No. 198/76. The Respondent maintained that regulators were always cleared with fans and included in the price list, thus should be considered under Tariff Item 33.

3. Interpretation of the Term "Electric Fans, All Sorts" in the Context of Tax Exemption:
The Revenue argued that the term "Electric Fans, All Sorts" does not include regulators, citing judgments that regulators are not integral to fans. They referred to the Delhi High Court's decision in Jay Engineering Works Ltd. v. Union of India, which held that regulators are not indispensable parts of fans. Conversely, the Respondent cited the Andhra Pradesh High Court's judgment, which considered regulators as integral parts of fans in commercial and popular parlance.

4. Inclusion of Regulator Value in the Assessable Value of Electric Fans:
The Respondent referenced a Government of India decision and the Supreme Court judgment in Indo-China Steel Navigation Co. Ltd. v. Jasjit Singh, asserting that regulators should be included in the assessable value of fans. The Revenue's stance was inconsistent, as they argued regulators were indispensable parts when assessing value but not when considering tax relief eligibility.

Judgment:
After considering both sides, the Tribunal held that regulators are indispensable parts of fans and thus eligible for the tax relief under Notification No. 198/76. The Tribunal found the Delhi High Court's judgment unhelpful and aligned with the Andhra Pradesh High Court's view that regulators are integral to fans. The Tribunal dismissed the Revenue's appeal, affirming that the term "Electric Fans, All Sorts" should be construed liberally to include regulators. Consequently, the respondent's cross-objection was also dismissed as it merely supported the Collector (Appeals)'s order without raising new points.

Conclusion:
The appeal filed by the Revenue was dismissed, and the respondent was granted the benefit of Notification No. 198/76, recognizing regulators as integral parts of electric fans and eligible for the tax relief.