2009 (2) TMI 198 - AT - Central Excise

Parts of Refrigerator Classification demand based on later circular -Clamps, Plate Panel, Washers, Connector pin, Rotor Cover, Support Shelf for freezer, Heater protector, Clip-knob, Buffel cover, Plate timer defrost manufactured by the appellants Circular No. 353/69/97-CX., dated 12-11-1997 - held that - One thing is clear that the earlier circular of the Board has not been withdrawn. In the Baroda Commissioner s Trade Notice as well as the earlier circulars, certain guidelines were issued for classification of the various parts and accessories of air-conditioning and refrigerating machinery demand based on later cicular is not proper and not legal extended period of limitation can not be invoked.

Summary

Issues Involved:
1. Classification of items manufactured by the appellants.
2. Applicability of relevant Trade Notices and Circulars.
3. Eligibility for SSI exemption under Notification 1/93-C.E.
4. Invocation of the extended period under Section 11A(1).

Issue-wise Detailed Analysis:

1. Classification of Items Manufactured by the Appellants
The primary issue concerns the correct classification of items such as Clamps, Plate Panel, Washers, Connector Pin, Rotor Cover, Support Shelf for Freezer, Heater Protector, Clip-Knob, Buffel Cover, and Plate Timer Defrost. The Revenue contends that these items are parts of refrigerators and should be classified under Heading 8418.90, while the appellants argue that they are "pressed/stamped articles of iron or steel" covered by Chapter Heading 73.26 of the First Schedule to the CETA. The appellants relied on several legal precedents, including Bharat Fritz Werner Ltd. v. CCE and Moorco (India) Ltd. v. CC, to support their contention that specific headings exclude general ones and that goods should be classified in the state they leave the factory.

2. Applicability of Relevant Trade Notices and Circulars
The appellants referenced the Vadodara Commissionerate Trade Notice No. 249/86 and argued that the Commissioner failed to consider this notice, which lists parts and accessories of refrigeration and air-conditioning machinery not classified as parts of refrigerators. The appellants also cited the Tribunal's decision in J.A. Enterprises v. CCE, which supported their classification under Chapter 74. The Revenue, however, pointed to a later Board Circular dated 12-11-1997, which clarified that items like liner shelves and middle shelves made of M.S. grills for use in refrigerators are classifiable under Heading 8418.90.

3. Eligibility for SSI Exemption under Notification 1/93-C.E.
The appellants argued that if the items are considered pressed/stamped articles of iron and steel, they would qualify for SSI exemption under Notification 1/93-C.E. Since the value of clearances was below the upper limit specified in the notification, there would be no duty liability. The Commissioner considered this exemption but ultimately classified the items as parts of refrigerators, thus denying the exemption.

4. Invocation of the Extended Period under Section 11A(1)
The appellants contended that the issue involves the interpretation of Section Notes/Chapter Notes of the Central Excise Tariff and that they had a bona fide belief that the items were not parts of refrigerators, based on the Board's Circular and Vadodara Commissioner's Trade Notice. They argued that the extended period under Section 11A(1) could not be invoked due to this bona fide belief. The Revenue, however, argued that the appellants suppressed facts and cleared goods without following the required Central Excise Procedure, justifying the imposition of a penalty.

Judgment Summary:
The Tribunal concluded that the main issue was the classification of the items manufactured by the appellant. The Commissioner relied on the statement of the Managing Director and classified the items as parts of refrigerators without adequately discussing the relevant circulars and trade notices. The Tribunal noted that the earlier Board Circular had not been withdrawn and that the principle enunciated in the circular still holds. The Tribunal found that the items in question would not fall under Annexure A but under Annexure B of the Vadodara Trade Notice, thus supporting the appellants' classification under Chapter 73. The Tribunal also accepted the appellants' argument regarding the bona fide belief and ruled that the extended period under Section 11A(1) could not be invoked. Consequently, the Tribunal set aside the Commissioner's order and allowed the appeal with consequential relief.