1993 (11) TMI 139 - AT - Central Excise

Issues Involved:
1. Classification of Collecting Electrodes.
2. Classification of Parts of Light Commercial Motor Vehicles (LCV Panels).
3. Duty on tooling/designing and developing charges.
4. Duty on price variations.
5. Classification of galvanised steel sections.
6. Classification of parts of structures.
7. Duty on packing charges.
8. Invocation of extended period of limitation.

Detailed Analysis:

1. Classification of Collecting Electrodes:
The main allegation against the appellant is the misclassification of 'Collecting Electrodes' which are parts of 'Electrostatic Precipitators'. The appellant classified these under Chapter 72 as 'Cold rolled formed sections' instead of Chapter 84, leading to a lower duty payment. The Collector examined various purchase orders, acknowledgements, and invoices, finding that the items were indeed 'Collecting Electrodes' and not mere sections. The Collector relied on Note 1(n) of Chapter 72 and Note 1(f) of Section XV, which exclude machinery parts from Chapter 72. The Collector also invoked Rule 2(a) of the interpretative rules to classify the goods under Chapter 84. The Tribunal confirmed these findings, noting the appellant's own admission and the substantial evidence presented by the department.

2. Classification of Parts of Light Commercial Motor Vehicles (LCV Panels):
The appellant was found to have misdeclared LCV panels supplied to various manufacturers as 'Cold rolled formed metal sections' under Chapter 72 instead of Chapter 87.08, which pertains to parts of motor vehicles. The Collector examined acknowledgements and orders, finding that the items were specifically designed and identifiable as motor vehicle parts. The Tribunal upheld the Collector's findings, noting clear admissions from the appellant's personnel and substantial documentary evidence. The Tribunal also directed the original authorities to consider the appellant's plea for exemption under Notification No. 239/86-C.E., if applicable.

3. Duty on Tooling/Designing and Developing Charges:
The appellant collected charges for tooling, designing, and developing but did not discharge the duty liability on these amounts. The Tribunal found that these charges should be included in the assessable value as they are related to the manufacture of the final product. The appellant's argument that these charges were unrelated to the products was rejected.

4. Duty on Price Variations:
The appellant raised debit notes for price variations due to cost escalation but did not pay the corresponding duty. The Tribunal confirmed that the duty liability on such price variation amounts should be discharged as they form part of the transaction value.

5. Classification of Galvanised Steel Sections:
The appellant conceded that galvanisation of steel amounts to manufacture and agreed to the classification under Chapter 7216.30 instead of 7216.20. The Tribunal accepted this concession and confirmed the duty liability as determined by the Collector.

6. Classification of Parts of Structures:
The appellant cleared 'Z' purlins to job workers for further processing, which included operations like punching and painting. The Collector classified these under Chapter 7308.90 as parts of structures instead of 7216.20. The Tribunal upheld this classification, noting that the additional processing changed the character of the goods, making them parts of structures.

7. Duty on Packing Charges:
The appellant collected packing charges separately but did not include them in the assessable value. The Tribunal directed the original authorities to reconsider the appellant's plea, noting that packing was not done in all cases and was based on customer requirements.

8. Invocation of Extended Period of Limitation:
The Collector invoked the extended period of limitation under Rule 9(2) of the Central Excise Rules, 1944, due to suppression of facts by the appellant. The Tribunal upheld this invocation, citing the appellant's failure to disclose relevant information and the clear admissions from their personnel. The Tribunal referenced the Supreme Court ruling in Collector of Central Excise v. Jay Engineering Works Ltd. and the Madras High Court decision in Limenaph Chemical v. Union of India to support the extended period's applicability.

Conclusion:
The Tribunal confirmed the Collector's findings on most issues, with specific directions to reconsider the appellant's plea for exemption under Notification No. 239/86-C.E. and the inclusion of packing charges in the assessable value. The extended period of limitation was upheld due to the appellant's suppression of facts.

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