2018 (6) TMI 912 - AT - Central Excise

Classification of goods - Guest Room Control Systems (GRCS) - It appeared to the revenue that the said systems works as Thermosystem to the Air Conditioner and is remote switch of Guest Room Control System, which controls the temperature of Air Conditioner by switching it on and off automatically and acts as a Thermostat switch - whether the goods are classified under chapter sub heading 85.37 or Chapter sub heading No. 9032.11 of CETA? - Held that - The adjudicating authority has confirmed the demand on the ground that GRCS Guest InnLink/ Maestro on its own is a power distribution unit, however it becomes a temperature control unit when attached to the temperature control device and its relevant classification will undergo a shift from chapter heading 8537.00 to 9032.11 of the CETA, 1985 held that the said product has temperature control device i.e thermostat attached to it is classifiable under chapter heading 9032.11 and Parts of the said control system would be classifiable under chapter sub heading 9032.91 instead of 8538.00. The adjudicating authority has passed the impugned order based upon the remand directions of the tribunal as wherever he found that thermostat was attached to the system he classified the same under chapter 90.32. The Appellant never challenged the remand order of the Tribunal and at this stage they cannot interpret the chapter subheading and find infirmity in Tribunal s order - the adjudicating authority has rightly confirmed the demands. Time Limitation - Held that - The Appellant never disclosed the fact to the department that the system is also used for temperature control either in classification list or otherwise - demand has been rightly made by invoking extended period of limitation. Appeal dismissed - decided against appellant.

Summary

Issues:
Classification of goods under chapter sub heading 9032.11 and 9032.91 of CETA, liability for duty, benefit of Notification No. 8/99, differential duty demand, penalty imposition, remand order interpretation, technical expert opinion relevance, time-barred demands.

Classification of Goods under Chapter Sub Heading 9032.11 and 9032.91:
The Appellant, engaged in manufacturing Guest Room Control Systems, faced a dispute regarding the classification of their systems under chapter sub heading 85.37 or 9032.11 of CETA. The revenue contended that the systems acted as a Thermostat switch classifiable under 9032.11, not eligible for the benefit of Notification No. 8/99. The adjudicating authority confirmed the demand under 9032.11, denying the Appellant's exemption claim. The Tribunal remanded the matter for technical expert opinion to determine if the systems could be classified under 90.32 based on the principal function of temperature control. The adjudicating authority, after verification and technical analysis, held that when a specific switch was connected to a thermostat, the system functioned as a Temperature Control Unit, falling under 90.32. The Appellant's failure to disclose the presence of a thermostat led to the demand confirmation under 9032.11, along with penalty imposition.

Liability for Duty and Benefit of Notification No. 8/99:
The dispute revolved around the Appellant's liability for duty at 24% BED, 6% SED for the period 02.06.1998 to 29.02.2000. The Appellant's claim of exemption under Notification No. 8/99 was challenged due to the classification issue. The adjudicating authority confirmed the duty demand, emphasizing the misclassification of the product under 9032.11. The Appellant's failure to disclose relevant information resulted in the denial of the benefit of the notification and subsequent penalty imposition.

Remand Order Interpretation and Technical Expert Opinion:
The Tribunal's remand order directed the consideration of technical expert opinion to determine the classification based on the principal function of the systems. The adjudicating authority, following the remand directions, classified the systems under 9032.11 when a thermostat was attached, shifting the classification from 8537.00. The Appellant's challenge to the remand order interpretation was dismissed, as the order had attained finality, and the demands were confirmed based on technical analysis and verification.

Time-Barred Demands and Penalty Imposition:
The Appellant's failure to disclose crucial information regarding the use of the systems for temperature control led to the demands being considered time-barred. The penalty imposition was upheld due to the non-disclosure and misclassification issues. The adjudicating authority's decision to confirm the demands and impose penalties was deemed appropriate, considering the lack of disclosure and misclassification by the Appellant.

This comprehensive analysis highlights the key issues of classification, duty liability, benefit claims, remand order interpretation, technical expert opinion relevance, time-barred demands, and penalty imposition in the legal judgment delivered by the Appellate Tribunal CESTAT MUMBAI.