1985 (9) TMI 197 - AT - Central Excise

Issues Involved:
1. Classification of gas lighters under Central Excise Tariff Item 39.
2. Applicability of exemption from duty under Notification No. 176/77-C.E.
3. Compliance with procedural requirements for classification list submission.
4. Validity of the Assistant Collector's order and subsequent appeals.

Issue-wise Detailed Analysis:

1. Classification of Gas Lighters under Central Excise Tariff Item 39:
The primary issue in this appeal was whether the gas lighters manufactured by the appellants, which work on the Piezo-electric principle and are referred to as "Electronic Lighters," were classifiable under Item 39 of the Central Excise Tariff. The description of Item 39 at the relevant time was "Mechanical Lighters," which included any mechanical or chemical contrivance for causing ignition. The appellants argued that their lighters did not contain any mechanism such as stone, flint, file, or spring, nor did they use gas or petrol for ignition, thus not conforming to the description of mechanical lighters in T.I. 39. The Collector (Appeals) observed that the lighters used piezoelectric crystals to create an electrical charge, which ignited the gas. Despite this, the Collector (Appeals) concluded that the lighters were mechanical contrivances because the electrical charge was induced by mechanical action. The Tribunal found this reasoning fallacious, stating that the mechanical action only initiated an electrical phenomenon, and thus, the lighters could not be termed mechanical contrivances. The Tribunal concluded that the lighters were electronic and not mechanical, and thus, not classifiable under Item 39 as it stood at the relevant time. The Tribunal noted that the Central Board of Excise and Customs had also accepted this position in its Tariff Advice No. 71/81, and the amendment to Item 39 in 1982 to include electrical and electronic lighters further supported this view.

2. Applicability of Exemption from Duty under Notification No. 176/77-C.E.:
The appellants had argued that their capital investment on machinery and equipment was below Rs. 10 lakhs, and they had not cleared any excisable goods during the preceding year, making them eligible for exemption from duty under Notification No. 176/77-C.E. The Tribunal did not delve into this issue, stating that the appeal was solely concerned with the classification of the goods, and any relief regarding exemption from duty would have to be sought in separate proceedings.

3. Compliance with Procedural Requirements for Classification List Submission:
The appellants had initially filed a classification list under protest, declaring the goods under T.I. 39, to obtain clearance until the excisability question was determined. The Assistant Collector had directed the appellants to file a classification list for "electrical gas lighter," but no speaking and appealable order was passed. The appellants appealed to the Appellate Collector, who entertained the appeal and passed an order on it. The Tribunal noted that the appellants were entitled to appeal against the Assistant Collector's decision without filing a classification list again, and since the Appellate Collector had entertained the appeal, it was too late to argue that the appellants should not have appealed.

4. Validity of the Assistant Collector's Order and Subsequent Appeals:
The Assistant Collector had concluded that the product was a mechanical lighter falling under T.I. 39. The appellants requested a speaking order, which was not provided, leading them to appeal to the Appellate Collector. The Appellate Collector upheld the classification under T.I. 39, but the Tribunal found this reasoning erroneous. The Tribunal concluded that the lighters were classifiable under Item 68, not Item 39, and allowed the appeal accordingly.

Conclusion:
The Tribunal allowed the appeal, concluding that the gas lighters were classifiable under Item 68 of the Central Excise Tariff, not Item 39, as they were electronic and not mechanical contrivances. The Tribunal did not address the issue of exemption from duty under Notification No. 176/77-C.E., as it was beyond the scope of the current appeal.

← Previous Next →