1992 (3) TMI 173 - AT - Central Excise

Summary

Issues Involved:
1. Classification of control panel assemblies.
2. Applicability of extended period of limitation for duty demand.

Issue-wise Detailed Analysis:

1. Classification of Control Panel Assemblies:
The appellants, an SSI registered unit, manufacture electrical control panel assemblies at their Pune Unit. These assemblies were classified under TI-68 as components and spares of hoists, a classification approved by the jurisdictional Assistant Collector of Central Excise since 1975. However, the Anti-evasion unit of Central Excise Collectorate of Pune, during a visit on 25-10-1985, found that these control panels, which had 'start and stop' functions, should have been classified under TI 30B as motor starters. A show cause notice invoking the proviso to Section 11A(1) of the Act was issued on 31-3-1986, leading to the impugned order in January 1987, which classified the items as motor starters under TI 30B and confirmed the entire demand.

The appellants contended that the control panel assemblies were different from motor starters, as supported by dictionary definitions and an Expert Certificate from the Government Engineering College, Pune. The control panels were designed to control the flow of electric current, stop the motor by disconnecting power supply, and apply brakes to bring the motor to an instant stop, among other functions.

The respondent argued that since the item performed 'start' and 'stop' functions, it fell within the scope of TI-30B, which is broad in coverage. The Tribunal noted that motor starters control the working of the machine, i.e., to start and stop the operations of an electric motor. The control panel assembly in question performed these functions and thus operated on the principle of a motor starter.

The Tribunal referred to the Sahney Paris Rhone Ltd. case, which held that a starter motor is essentially an electric motor and should be classified under TI-30. Applying this ratio, the Tribunal held that the control panel assembly is classifiable under TI 30B and not under TI 68, as the definition in the statute is clear and unambiguous.

2. Applicability of Extended Period of Limitation for Duty Demand:
The extended period of limitation was invoked on the grounds that the appellants failed to provide true and complete technical data of the control panel assembly while filing classification lists. The demand of Rs. 9,90,771.07 was raised for the period from 1-1-1981 to 31-12-1985. The appellants had been submitting classification lists since 1975, which were approved from time to time. There was no evidence that they withheld information to evade duty. The Department had the opportunity to verify the nature and function of the goods before approving the classification lists.

The Tribunal referred to the Supreme Court's decision in Collector of Central Excise v. Chemphar Drugs and Liniments, which emphasized that suppression must be proven for the extended period to apply. In this case, there was no evidence that the appellants treated the control panel assembly as motor starters, and no penalty was imposed in the impugned order, indicating that suppression was not conclusively established.

Therefore, the Tribunal held that the demand for the period up to 30-9-1985 was barred by limitation, and the Department could levy duty only for the period from 1-10-1985 to 31-12-1985. The classification of the control panel assembly under TI-30B was upheld, and the demand was valid for the specified period only.

Conclusion:
The appeal was disposed of by classifying the control panel assembly under TI-30B and limiting the duty demand to the period from 1-10-1985 to 31-12-1985.