2006 (2) TMI 169 - SC - Central Excise

Whether the fan regulators are classifiable under the sub-heading 8414.20 along with fans or under the sub-heading 8414.99 as parts and accessories ? Held that - Accordingly, the Board clarified in Circular No. 192/26/96, dated 27-3-96 that when the regulators are cleared along with the fans as a whole, they are classifiable under sub-heading 8414.20 but when fan regulators are cleared separately not in combination with the fans they are classifiable as parts & accessories of electrical fans under sub-heading 8414.99 of the Schedule to the Tariff Act. There is a separate sub-heading of parts and accessories in heading 8414. The Sub-heading 8414.91 covers parts and accessories of goods covered by the sub-heading 8414.10 and the sub-heading 8414.99 covers parts and accessories of other goods under the Heading 8414 and the sub-headings 8414.20 and 8414.80. Fan regulators being, accessories of electric fan would thus be covered under the sub-heading 8414.99. Accordingly, we do not find any merit in these appeals and hold that the fan regulators manufactured by the assessee, which are sold as such without the electric fan would be classifiable under sub-heading 8414.99 as accessories of fans.

Summary

Issues:
Classification of 'fan regulators' under Central Excise Act, 1944.

Analysis:
The judgment pertains to two sets of Civil Appeals involving the classification of 'fan regulators' under the Central Excise Act, 1944. The first set of appeals, Civil Appeal Nos. 553-554 of 2001, filed by M/s. North West Switchgear Limited, challenged the classification of 'fan regulators' under sub-heading 8414.20 as opposed to 8414.99. The second set, Civil Appeal No. 4382 of 2001, filed by M/s. Kesharbai Electronics Pvt. Ltd., also contested the classification under sub-heading 8414.99. The appellants argued that the 'fan regulators' should be classified under sub-heading 8414.20 along with fans, citing Central Board of Excise and Customs Circular No. 7/87. However, the authorities maintained that if the regulators are cleared separately, they should be classified under sub-heading 8414.99 as 'parts and accessories'.

The appellants were issued show-cause notices for short payment of duty, contending that 'fan regulators' were accessories of electric fans and should be classified under sub-heading 8414.99 instead of 8414.20. The authorities upheld the classification under 8414.20, but the Commissioner of Central Excise reviewed the order and directed an appeal. The Commissioner upheld the original order, leading to further appeals by both the appellants and the revenue before the Tribunal.

The Tribunal clarified that if the 'fan regulators' are cleared along with fans, they would be classified under sub-heading 8414.20; however, if cleared separately, they should be classified under 8414.99 as 'parts and accessories'. This interpretation was supported by CBEC Circular No. 192/26/96-CX. The judgment referenced relevant tariff headings, noting that 'fan regulators' do not fall under the residuary sub-heading 8414.80 but rather under 8414.99 as accessories of fans.

The Court rejected the appellants' arguments, emphasizing that 'fan regulators' sold separately without electric fans should be classified under sub-heading 8414.99. The judgment confirmed the Tribunal's decision in Civil Appeal No. 4382 of 2001 regarding classification but set aside the penalty imposed. Ultimately, the Court dismissed Civil Appeal Nos. 553-554 of 2001 and confirmed the classification under sub-heading 8414.99 for 'fan regulators' sold separately.