2016 (6) TMI 540 - AT - Central Excise

Classification - appellants were engaged in the manufacture of refrigerating appliances and air conditioner machinery and equipment - excise authorities treted the products as electric fans falling tariff item 33 - Held that - Order-in-Original as well Order-in-Appeal were passed on the presumption that the revisionary authority has finalised the assessment of the impugned goods as electric fan under Tariff Item 33(3). This observation in Order-in-Original as well Order-in-Appeal is incorrect as from the order of the Revisionary authority it is clear that the Revisionary authority had not classified the impugned goods under any heading but had left the issue regarding the classification open for adjudication. Even the Hon ble High Court in its order has observed as that the government had left the issue open and had in fact remanded the matter back to the lower authorities to hear the matter afresh after issuing show-cause notice. From the above it is apparent that both Order-in-Original as well as Order-in-Appeal are based on a wrong premise. They could not have proceeded with the confirmation of demand without first classifying of the product as the demand of classification was remanded by the Revisionary authority. In view of the above the impugned order is set aside and the matter is remanded for fresh adjudication after classifying the product following the due process of law.

Summary

Issues:
Classification of goods under Tariff Item 33(3) CET and exemption under notification 80/62-CE dated 24.04.1962.

Analysis:
The appellants, engaged in manufacturing refrigerating appliances and air conditioner machinery, assembled impeller and rotary blades as sub-assemblies for air conditioners. They believed the goods were non-excisable and exempt under Tariff item 29A, notification 80/62-CE. Previous demand classified the goods as electric fans under Tariff item 33. The revisionary authority set aside the order, remanding the matter for fresh adjudication by the Asst. Collector.

The High Court criticized the Assistant Collector's misdirection, noting the government had left the issue open for reevaluation with a show-cause notice. The Dy. Commissioner and Commissioner (Appeals) finalized the classification under Tariff item 33(3) for electric fans used in various appliances, contrary to the appellants' belief in exemption under Tariff item 29A.

The Order-in-Original and Order-in-Appeal incorrectly assumed the revisionary authority had classified the goods as electric fans under Tariff item 33(3), leading to confirmation of demand. However, the revisionary authority had not finalized the classification, leaving it open for adjudication. The High Court reiterated the need for a fresh assessment following due process of law, as the previous orders were based on a flawed premise.

Therefore, the impugned order was set aside, and the matter was remanded for proper classification following a lawful process, emphasizing the importance of accurate classification and due procedure in excise matters.