2005 (4) TMI 71 - SC - Central Excise

Classification of an electric flour mill - Classification under Tariff Heading 8437 or under 8509 - Held that - Tribunal had noted that the Gujarat High Court had held in the appellant s own case that the goods manufactured by the appellant were not classifiable under Tariff Entry 33-C of the Central Excise and Salt Act 1944 as it stood prior to its amendment 1985 which related to domestic appliances and was classifiable under the residuary Tariff Entry 68. It also noted that Tariff Entry 33-C was substantially the same as Tariff Heading 8509. In these circumstances logically the Tribunal should have followed the decision of the Gujarat High Court and affirmed that the appellant s goods were not classifiable under Tariff Heading 8509. However the Tribunal relied upon the decision of this Court in Nat Steel Equipment Pvt. Ltd. v. Collector of Central Excise reported in 1988 (1) TMI 38 - SUPREME COURT OF INDIA and held that the machines were properly classifiable as a domestic appliance under Tariff Heading 8509. It is not for us to question the correctness of the earlier decision of the Tribunal since the appeal therefrom has already been dismissed by this Court. Nevertheless we can certainly hold as we do that the advent of the Circular in 5-12-1994 after the earlier decision was rendered was a relevant factor which should have been considered by the Tribunal untrammeled by the earlier decision rendered by the Tribunal. Furthermore it may be noted that the Revenue ought to have considered the issue of classification on the basis of relevant material adduced by the parties. It does not appear from the records as produced before us that any such evidence was adduced - Matter remanded back - Decided in favour of assessee

Summary

Issues: Classification of electric flour mill under Central Excise Tariff Act, 1985.

Analysis:
1. The primary issue in the appeal was the classification of an electric flour mill under the Central Excise Tariff Act, 1985. The appellant argued for classification under Tariff Heading 8437, while the Revenue contended it should be classified under 8509.

2. The Revenue issued a show cause notice demanding payment of Rupees one lakh nine hundred and eighty-four from the appellant. Additionally, a penalty of Rupees two thousand and six hundred was imposed under various Central Excise Rules.

3. The Tribunal rejected the appellant's appeal based on a previous decision where it classified the flour mill under Tariff Heading 8509. The appellant raised concerns about the Tribunal's reliance on this earlier decision, especially after a Circular issued by the Central Board of Excise and Customs in 1994 clarifying the classification under Heading 84.37.

4. The appellant argued that the Tribunal erred in relying on its earlier decision, as the Circular issued in 1994 provided clarity on the appropriate classification of domestic flour mills under Heading 84.37. The appellant contended that the respondent authorities should have followed this Circular.

5. The appellant's counsel highlighted the relevance of the Circular issued in 1994, emphasizing that it should have influenced the classification decision. However, the respondent's counsel argued that since the earlier decision had been affirmed by the Court, the Circular did not hold significance.

6. The Court opined that the appeal should be allowed in favor of the appellant, considering the arguments presented by the appellant's counsel.

7. In a detailed analysis, the Court reviewed the previous decisions and the Gujarat High Court's ruling on the classification of goods manufactured by the appellant. The Court noted discrepancies in the Tribunal's decision-making process and emphasized the importance of considering relevant factors like the Circular issued in 1994.

8. Consequently, the Court allowed the appeal, set aside the Tribunal's decision, and remanded the matter back to the Assistant Commissioner Central Excise for a fresh decision on the classification of the appellant's goods. The Court clarified that it was not expressing any view on the merits of the case.

9. In another related appeal, based on the decision in Civil Appeal No. 96/2000, the Court allowed and disposed of the appeal in similar terms as the primary appeal.