2005 (5) TMI 69 - SC - Central Excise

Classification of goods - whether Chillers were classifiable under Tariff Entry 84.18 or Tariff Entry 8415.00 or 84.19 - Held that - The Assistant Commissioner by his order dated 27-10-1997 was of the view that he Chillers were properly classifiable under Tariff Entry 84.18. The Commissioner relying upon a report of the Central Economic Intelligence Bureau (CEIB) to the effect that other importers of Chillers had been describing them as heat pumps for the purpose of import was of the view that this subsequent fact merited a revision of the order of the Assistant Collector. The Commissioner accordingly directed the Assistant Commissioner Central Excise to appeal to the Commissioner of Central Excise for setting aside the order dated 27-10-1997. The matter was taken up before the Commissioner (Appeals) who decided against the respondent and remanded the matter back to the Assistant Collector for redetermination of the liability - principle of law as enunciated by the Tribunal is correct. Furthermore the CEIB report could not in any event man that Chillers could not be classified under Tariff Entry 84.18 as heat pumps were also classifiable under that tariff entry - Decided against Revenue.

Summary

Issues: Proper exercise of power of revision under Sec. 35E(2) of the Central Excise and Salt Act, 1944; correctness of decision taken by Commissioner (Appeals).

Analysis:
1. The primary issue in this case revolves around the proper exercise of power of revision under Sec. 35E(2) of the Central Excise and Salt Act, 1944. The Supreme Court examined whether the Commissioner of Central Excise had appropriately utilized this power. The relevant provision, Sec. 35E(2), grants the Collector, Central Excise the authority to review decisions or orders passed by subordinate adjudicating authorities. The Court emphasized the necessity for the Commissioner to base his decision on the records available before the adjudicating authority, in this case, the Assistant Commissioner. The Commissioner must ensure the legality and propriety of the decision taken by the Assistant Commissioner, and if found improper, may direct the Department to appeal to the Appellate Authority for further determination.

2. Another aspect of the case involved the correctness of the decision made by the Commissioner (Appeals). The Court acknowledged that while this issue was present, it was not imperative to delve into it extensively as the primary concern was the proper exercise of revisionary powers by the Commissioner of Central Excise. The Court's analysis focused on the procedural adherence and legal validity of the Commissioner's actions under Sec. 35E(2) rather than the specific decision made by the Commissioner (Appeals).

3. The case specifically dealt with the classification of Chillers under different Tariff Entries, namely 84.18, 8415.00, and 84.19. The Assistant Commissioner initially classified Chillers under Tariff Entry 84.18. However, the Commissioner, relying on a report from the Central Economic Intelligence Bureau (CEIB) indicating that other importers described Chillers as heat pumps, deemed it necessary to revise the Assistant Commissioner's order. This led to the Commissioner directing the Assistant Commissioner to appeal to the Commissioner of Central Excise for a redetermination of the classification. Subsequently, the Commissioner (Appeals) decided against the respondent, prompting a challenge before the Customs, Excise & Gold (Control) Appellate Tribunal (CEGAT).

4. The CEGAT held that the Commissioner of Central Excise could not have based his decision on points not arising from the subordinate adjudicating authority's order and could not have relied on new material, ultimately allowing the respondent's appeal. The Supreme Court concurred with CEGAT's interpretation, emphasizing that the CEIB report did not preclude Chillers from being classified under Tariff Entry 84.18, as heat pumps also fell under that entry. Consequently, the Court dismissed the appeals, affirming the correctness of the legal principle articulated by the Tribunal and upholding the classification of Chillers under Tariff Entry 84.18.