2003 (9) TMI 144 - AT - Central Excise

Issues Involved:
1. Classification of "heater control lever" and "panel heater control".
2. Demand of differential duty and penalty.
3. Inclusion of cost of free supply items in the value of goods.
4. Invocation of extended period of limitation under Section 11A of the Act.

Issue-wise Detailed Analysis:

1. Classification of "heater control lever" and "panel heater control":
The appellant contested the classification of "heater control lever assembly" and "panel heater control" under Heading No. 84.15, arguing they should be classified under Heading No. 84.14. The items are used in various models of Maruti cars, both AC and non-AC, to control and regulate air flow inside the car. They function independently of the car air-conditioner and are fitted on the dashboard in conjunction with the blower. The Tribunal noted that these items are not solely or principally used with car air-conditioners as required by Note No. 2(b) of Section XVI of the Tariff. Consequently, classification under Heading No. 84.15 was rejected. The Tribunal also dismissed classification under Heading No. 84.14, as the items do not complete the blower assembly. Instead, the Tribunal found Heading No. 84.79 to be appropriate, classifying the items under Heading No. 8479.90, as their function of air deflection is not specified in any heading from 84.01 to 84.78.

2. Demand of differential duty and penalty:
The Commissioner had confirmed the demand of differential duty and imposed an equivalent penalty under Section 11AC of the Act. However, since the Tribunal overruled the classification under Heading No. 84.15, there were no grounds for demanding differential duty due to misclassification. Consequently, the penalty related to classification was also set aside.

3. Inclusion of cost of free supply items in the value of goods:
The show cause notice sought to include the cost of free supply items provided by MUL in the value of the goods. The appellant had already deposited the amount quantified by the Commissioner before the issuance of the show cause notice. The Tribunal noted that the short payment arose from non-disclosure of information regarding free of cost supplies, but there was no apparent intention to evade duty. Since the extra duty paid was available as credit to the customer, there was no gain to the revenue. Therefore, the penalty under Section 11AC related to this issue was set aside.

4. Invocation of extended period of limitation under Section 11A of the Act:
The show cause notice invoked the extended period of limitation by alleging suppression of facts. However, since the Tribunal overruled the classification under Heading No. 84.15, there were no grounds for demanding duty due to misclassification. The Tribunal did not find it necessary to examine the aspect of limitation further.

Conclusion:
The appeal succeeded, and the Tribunal allowed it with consequential relief. The classification under Heading No. 84.15 was rejected, and the appropriate classification was determined to be under Heading No. 8479.90. The penalties imposed under Section 11AC were set aside, and the Tribunal found no grounds for demanding differential duty or invoking the extended period of limitation.

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