1987 (8) TMI 119 - HC - Central Excise

Summary

Issues:
1. Classification of goods under Tariff Item 33(2) or 33(3) of Central Excise Tariff.
2. Refund of duty paid under Section 11B, sub-section (3), Central Excises and Salt Act.
3. Challenge to the order of the Assistant Collector dated 18-11-1981.

Detailed Analysis:

1. The petitioner, a company manufacturing refrigeration and air-conditioning appliances, contested the classification of the assembly of electric motors and blades under Tariff Item 33(2) of the Central Excise Tariff. They argued that the assembly did not constitute an electric fan and should not be classified as such. The Government, during revision, acknowledged that the goods were not correctly classified under Tariff Item 33(2) and suggested they could fall under Tariff Item 33(3) as "Electric Fans not otherwise specified." However, the Government referred the classification back to the lower authorities for reconsideration, allowing the petitioners to present evidence and be heard on the matter.

2. Following the revision, the petitioners sought a refund of the duty paid under Section 11B, sub-section (3) of the Central Excises and Salt Act. The Assistant Collector issued a show cause notice challenging the refund claim, asserting that the goods were classifiable under Tariff Item 33(3). The petitioners argued that without a proper classification under Tariff Item 33(3), no adjustment or demand for duty could be made. The Assistant Collector, in his order dated 18-11-1981, incorrectly assumed that the goods were classified under Tariff Item 33(3 based on the revision order, leading to a refusal of the refund claim.

3. The Assistant Collector's order was challenged on the grounds of misdirection, as the Government had not conclusively determined the classification under Tariff Item 33(3, leaving it open for the lower authorities to decide after due process. The court cited precedent emphasizing that duty adjustments cannot be made without a valid demand, and in this case, no proper classification had been established under Tariff Item 33(3. Therefore, the petition was allowed, and the matter was not remanded back to the Government since the classification issue was to be resolved by the lower authorities.

In conclusion, the judgment addressed the classification dispute under the Central Excise Tariff, the entitlement to a refund under the relevant Act, and the erroneous assumptions made by the Assistant Collector, ultimately upholding the petitioner's claim for a refund and emphasizing the need for a proper classification determination by the lower authorities.