1992 (10) TMI 150 - AT - Central Excise

Issues Involved:
1. Classification of anti-creep bearing plates.
2. Classification of brake blocks.
3. Applicability of the extended period of limitation for the demands.

Detailed Analysis:

1. Classification of Anti-Creep Bearing Plates:
The primary issue in Appeal Nos. E/2788/88, E/1516/91, and E/2846/91 is the classification of anti-creep bearing plates. The appellants contended that these should be classified under Heading 7307.10 as castings of iron, benefiting from Notification 208/83. The Department, however, classified them under Heading 7302.90 as "other material specialized for jointing or fixing of rails."

The Tribunal examined the function of anti-creep bearing plates, noting that they are placed between the rail and wooden sleepers and fixed with spikes/screws to reduce wear and prevent longitudinal creep. The Tribunal found that these plates, along with spikes and screws, are indeed materials for fixing the rails, supported by technical literature recognizing bearing plates as rail fixtures and fastenings. Consequently, the Tribunal rejected the appellants' contention and held that anti-creep bearing plates fall under Heading 7302.90, which covers railway track construction material specialized for jointing or fixing rails.

2. Classification of Brake Blocks:
In Appeal No. E/1517/91, the issue was the classification of brake blocks. The appellants argued for classification under Heading 73.07 as castings of iron, citing that the brake blocks are merely castings yet to be machined. The Department classified them under Heading 86.07 as "parts of railways or tramway locomotives or rolling stock."

The Tribunal noted the absence of evidence regarding any machining undertaken by the buyers (Ministry of Railways). Given that Chapter 86 specifically covers parts of railway locomotives, and considering that brake blocks are used as part of the braking system in rolling stock, the Tribunal concluded that brake blocks are more appropriately classified under Heading 8607.00. Classification under Heading 73.07 was ruled out as it is more general, while Heading 86 is more specific for parts of railway locomotives.

3. Applicability of Extended Period of Limitation:
The appellants contended that the demands were barred by limitation, as they had been filing declarations under Notification No. 111/78, declaring the manufacture of bearing plates and brake blocks as iron castings under Heading 7307.10. They argued that their failure to take out a Central Excise Licence did not amount to suppression, given their bona fide belief based on previous classifications and exemptions.

The Tribunal found that there was a long-standing practice of classifying castings under TI 25 and that the exemption under Notification 208/83 continued for castings under Heading 73.07 even after the new tariff introduction in 1986. The appellants' declarations during the relevant period supported their bona fide belief. The Tribunal referenced the Supreme Court rulings in Chemphar Drugs and Liniments and Padmini Products, emphasizing that something positive beyond mere inaction or failure is required to invoke the extended period of limitation.

Consequently, the Tribunal held that the extended period of limitation was not applicable. The demands in Appeal Nos. E/1516/91 and E/1517/91 were entirely barred by limitation. For Appeal Nos. E/2788/88 and E/2846/91, the demand was confirmed only for six months prior to the issue of the show-cause notice.

Conclusion:
1. Anti-creep bearing plates are classified under Heading 7302.90.
2. Brake blocks are classified under Heading 8607.00.
3. The demands in Appeal Nos. E/1516/91 and E/1517/91 are set aside on the ground of limitation. The demands in Appeal Nos. E/2788/88 and E/2846/91 are confirmed for the periods of six months prior to the issue of the show-cause notices. Penalties in all four appeals are set aside as unwarranted.

The appeals are disposed of accordingly.

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