1986 (9) TMI 205 - AT - Central Excise

Summary

Issues Involved:
1. Jurisdiction of the Tribunal.
2. Classification of Motorised Geared Unit and Motorised Speedall Unit under Tariff Item 30 of CET before 1-3-1982.
3. Applicability of Supreme Court judgments and departmental practices.
4. Retrospective effect of Explanation III added to Tariff Item 30 on 1-3-1982.
5. Restriction of duty demand from the date of show cause notice.

Issue-wise Detailed Analysis of the Judgment:

1. Jurisdiction of the Tribunal:
The preliminary issue raised by the learned SDR was whether the Tribunal had the competence to decide the matter, given that the Karnataka High Court had remanded the matter to the Government of India. The learned counsel for the appellants argued that the High Court's judgment allowed the Tribunal to decide the matter under the amended provisions. The Tribunal agreed with the appellants' counsel, holding that the matter fell within its jurisdiction.

2. Classification under Tariff Item 30 of CET:
The main issue was whether the Motorised Geared Unit and Motorised Speedall Unit were covered under Tariff Item 30, which pertains to "Electric motors, all sorts." The learned counsel for the appellants argued that these units were not covered under Tariff Item 30 before 1-3-1982, as they were classified under Tariff Item 68. He supported this by referring to classification lists and the design of the units, which showed that the motor and gear portions were separate. The learned SDR countered that the final product, as cleared from the factory, was a geared motor and thus fell under Tariff Item 30, which covers electric motors "all sorts."

3. Applicability of Supreme Court Judgments and Departmental Practices:
The appellants' counsel cited the Supreme Court's judgment in Collector of Central Excise v. Oriental Timber Industries, arguing that duty should be levied at the earliest stage when the electric motor comes into existence. The learned SDR argued that the cited judgment was not applicable, as the wording of Tariff Item 30 was different from that of Tariff Item 16B considered in the Supreme Court case. The Tribunal agreed with the SDR, noting that Tariff Item 30's broad scope covered geared motors.

4. Retrospective Effect of Explanation III:
The appellants' counsel argued that Explanation III, added to Tariff Item 30 on 1-3-1982, should be considered prospective. The learned SDR contended that the explanation was clarificatory and thus retroactive. The Tribunal did not delve into the retrospective nature of Explanation III but concluded that Tariff Item 30, as it stood before 1-3-1982, already covered geared motors due to its broad language.

5. Restriction of Duty Demand:
The appellants' counsel requested that if geared motors were classified under Tariff Item 30, the duty demand should be restricted to the date of the show cause notice. The Tribunal observed that the change in departmental practice was evidenced by a trade notice issued on 4.5.76. Therefore, it was appropriate to restrict the duty demand from the date of this trade notice.

Conclusion:
The Tribunal held that the Motorised Geared Unit and Motorised Speedall Unit were covered under Tariff Item 30 of CET before 1-3-1982. The appeal was rejected, but the duty demand was modified to be recoverable from the date of the trade notice, 4.5.76.