2006 (11) TMI 202 - SC - Central Excise

Whether the Single Panel Circuit Breakers are classifiable under CSH 8535.00 (rate of duty 5%) as claimed by the assessee or under CSH 8537.00 (rate of duty 20%) as per the revenue? Whether the Board s Circular F. No. 32/8/94-CX (Section 37B Order) dated 14-7-2004, which has clarified that the Single Panel Circuit Breakers are classifiable under Chapter 85.37, has retrospective effect? Held that - In the instant case, assessee had filed a classification list effective from 1-3-1993, classifying the Single Panel Circuit Breakers under Heading No. 85.35 and claiming concessional rate of duty at 5% under Notification No. 52/93 dated 28-2-1993. The said classification list was approved by the jurisdictional Assistant Commissioner, on 10-6-1993. Thereafter, the assessee cleared the said goods in accordance with the approved classification list. When this approved classification was proposed to be revised to reclassify the Single Panel Circuit Breakers under Heading No. 85.37 of the tariff, such re-classification can take effect only prospectively from the date of communication of the show cause notice proposing re-classification. In the instant case, the show cause notice was communicated to the assessee only on 31-12-1993. Therefore, as rightly urged by the learned counsel for the respondent, the reclassification can take effect only from 27-4-1994 and accordingly the differential duty can be demanded only from that date. Thus no reason to interfere with the order passed by the Commissioner (Appeals) and as confirmed by the Tribunal. The appeal is accordingly dismissed.

Summary

Issues involved:
Classification of Single Panel Circuit Breakers under CSH 8535.00 or CSH 8537.00, Retroactive application of Board's Circular F. No. 32/8/94-CX dated 14-7-2004.

Detailed Analysis:
1. Classification of Single Panel Circuit Breakers: The primary issue in this case is the classification of Single Panel Circuit Breakers under CSH 8535.00 or CSH 8537.00. The appellant, the Commissioner of Central Excise, Bangalore, argued for classification under CSH 8537.00, attracting a higher duty rate of 20%. The assessee, engaged in manufacturing electrical appliances, classified the products under CSH 8535.00, availing a lower duty rate of 5% under notification No. 52/93. The dispute arose as the panel contained circuit breakers, switches, and other apparatus, leading to conflicting interpretations of tariff headings 85.35 and 85.37.

2. Retroactive Application of Circular: Another issue pertains to the retroactive application of the Board's Circular F. No. 32/8/94-CX dated 14-7-2004, clarifying the classification of Single Panel Circuit Breakers under Chapter 85.37. The appellant contended that the circular, issued after the relevant period of dispute, did not apply retroactively. The respondent argued against the retrospective application of the circular, emphasizing that trade notices had already classified circuit breakers under Heading No. 85.35 or 85.36, which were binding on the Department.

3. Judgment and Analysis: The Supreme Court, after considering the submissions and records, upheld the order passed by the Commissioner (Appeals) and confirmed by the Tribunal. The Court noted that the approved classification list by the Assistant Commissioner, classifying the Single Panel Circuit Breakers under Heading No. 85.35, was effective from 1-3-1993. Any proposed reclassification under Heading No. 85.37 could only take effect prospectively from the date of communication of the show cause notice, which was 31-12-1993. Therefore, the differential duty could only be demanded from 27-4-1994 onwards. Consequently, the appeal was dismissed, and no costs were awarded.

In conclusion, the judgment clarified the classification of Single Panel Circuit Breakers and addressed the issue of retroactive application of the Board's Circular, providing a clear decision based on the effective dates and relevant tariff provisions.