2008 (8) TMI 320 - AT - Central Excise

Classification Demand of duty contradictory stand by department for the same goods but for the different period when goods are being manufactured using duty paid Infra-red Lamps falling under the very same Heading 8539.90 and when the resultant apparatus is nothing but Infra-red Lamps and there is no change in the nature and character of the goods, how can the Department charge duty on the resultant goods again Held that demand is not sustainable

Summary

Issues: Classification of goods under different headings - Heading 90.18 vs. sub-heading 8539.90

In this case, the Appellate Tribunal CESTAT, KOLKATA heard appeals from both the Appellant assessee and the Department regarding the classification of goods under different headings. The lower appellate Authority had classified the impugned goods, Infraphil - HL 4307 apparatus, under heading 90.18 in one case and under sub-heading 8539.90 in another case. The Appellant claimed the goods to be classifiable under Heading 90.18 for medical purposes, while the Department argued they should be classified as Infra-red Lamps under sub-heading 8539.90.

The Appellant's advocate argued that the impugned goods had been consistently classified under Heading 90.18 for over a decade until a dispute arose. He explained that the apparatus included various components, including Infra-red Lamps, which were first classified under sub-heading 8539.90 before being used in manufacturing the Infraphil - HL 4307. The advocate emphasized that the goods were specifically designed for medical purposes, with the Aluminum Casing aiding in directing Infra-red radiation for medical treatment. He highlighted that there had been no change in the product itself to warrant a sudden reclassification based on subsequent assessing authorities' opinions.

The Department contended that the impugned goods were simply Infra-red Lamps and should be classified under sub-heading 8539.90. However, they could not explain how duty could be charged on the resultant goods when they were manufactured using duty-paid Infra-red Lamps falling under the same sub-heading, with no change in the nature or character of the goods.

After considering the arguments, technical literature, and case records, the Tribunal found that the impugned goods were indeed being manufactured using Infra-red Lamps classified under Heading 8539.90. They concluded that if the resultant product was essentially Infra-red Lamps with no new characteristics, the Department could not justify charging duty under the same heading again. The Tribunal supported the Appellant's arguments, noting the long-standing classification under Heading 90.18 for medical purposes and the specific function of the Aluminum Casing in focusing Infra-red radiation on the body parts being treated. They referenced the Harmonized System's Alphabetical Index and Explanatory Notes, which differentiated between Infra-red Lamps and Infra-red Ray apparatus for medical purposes under different sub-headings.

Based on their findings, the Tribunal ruled that the Infraphil - HL 4307 apparatus was appropriately classifiable under Heading 90.18 for instruments and appliances used for medical purposes. Consequently, the Department's Appeal was rejected, and the Appellant's appeal was allowed, overturning the related order-in-Appeal. The judgment was pronounced in open court on 19-8-2008.