2019 (4) TMI 584 - AT - Central Excise

Classification of goods - galvanized silo storage systems - whether the goods classifiable under subheading 8437 1000 of the Schedule to the Central Excise Tariff Act, 1985 as machinery used in milling industry or under heading 9406 0099 as prefabricated building used for storage ? Held that - The adjudicating authority, while passing the order in de novo proceedings does not appear to have complied with the directions of the Tribunal. While examining the issue of classification keeping in view the directions of the Tribunal, he has proceeded on the assumption that the appellant has conceded the classification of the products under Central Excise Tariff Heading 9406 0093 - It has been reiterated that the classification claim of the appellant is under Heading 8437 and further, it has been pointed out that the adjudicating authority has traveled beyond the proposals made in the show-cause notice. The claims that classification has been made under 8437 by certain other manufacturers of similar goods also appear to have been brushed aside by the adjudicating authority. There is no option other than to set aside the impugned order passed, without proper compliance of the directions of the Tribunal, in the case of order dated 13.10.2014 in the last round of litigation - appeal allowed by way of remand.

Issues Involved:
1. Classification of "galvanized silo storage systems"
2. Compliance with Tribunal's remand directions
3. Burden of proof for classification
4. Applicability of General Rules of Interpretation (GRI)
5. Comparison with similar products and competitors
6. Extended period and penalties
7. Consolidated adjudication for all periods

Issue-wise Detailed Analysis:

1. Classification of "galvanized silo storage systems":
The primary issue in these appeals is the classification of "galvanized silo storage systems" manufactured by the appellant. The appellant argues for classification under subheading 8437 1000 of the Central Excise Tariff Act, 1985 as "machinery used in milling industry," while the Revenue contends that the goods fall under heading 9406 0099 as "prefabricated building used for storage."

2. Compliance with Tribunal's remand directions:
The Tribunal had previously remanded the matter for a de novo decision, directing the adjudicating authority to consider multiple aspects, including the nature of the silos, comparison with competitors' products, and the applicability of the Thermax Ltd. case. However, the adjudicating authority, in its de novo order, classified the goods under 9406 0093, allegedly based on the appellant's own submissions, which the appellant denies.

3. Burden of proof for classification:
The appellant contends that the burden of proof for establishing the correct classification lies with the Department. The appellant argues that the Department has not provided any technical literature to support its classification under chapter 94.

4. Applicability of General Rules of Interpretation (GRI):
The appellant argues that the Department incorrectly applied Rule 3 of the GRI without first considering Rule 1. The appellant maintains that Rule 2 is not applicable as their goods are not incomplete or mixed with other materials, thus Rule 3 should not be used to resolve the classification.

5. Comparison with similar products and competitors:
The appellant presented brochures and invoices from competitors, such as B.G. Shirke Construction Technology Pvt. Ltd. and Rostfrei Steels Pvt. Ltd., showing similar products classified under CETA 8437 1000. The adjudicating authority dismissed these comparisons, suggesting that errors in other Commissionerates should not be replicated.

6. Extended period and penalties:
The appellant argues against the invocation of the extended period for demand, citing a bona fide belief in their classification under CETH 8437. They reference the case of CCE, Bangalore v. Pragathi Concrete Products (P) Ltd., asserting that no suppression of facts occurred. They also argue that penalties are not applicable in classification disputes.

7. Consolidated adjudication for all periods:
The Tribunal noted that the adjudicating authority did not comply with its previous directions and that appeals for periods before and after the impugned order are pending. The Tribunal set aside all impugned orders and remanded the issue for a consolidated de novo consideration, directing the adjudicating authority to complete the process within three months, with full cooperation from the appellants.

Conclusion:
The Tribunal found that the adjudicating authority did not properly comply with its remand directions and assumed an incorrect concession by the appellant regarding classification. The Tribunal set aside the impugned orders and remanded the issue for a consolidated de novo consideration, emphasizing the need for compliance with its previous directions and timely adjudication.

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