1994 (8) TMI 135 - AT - Central Excise

Issues Involved:
1. Competence of the Additional Collector to issue the show cause notice invoking the extended period under the proviso to Section 11A.
2. Classification of "Bare Chassis of 2400 mm WB" under sub-heading 8706.30.
3. Justification of invoking the extended period beyond six months for confirmation of the demand.

Issue-wise Detailed Analysis:

1. Competence of the Additional Collector to Issue the Show Cause Notice:
The appellants argued that the show cause notice invoking the extended period under the proviso to Section 11A was void and illegal since it was issued by the Additional Collector and not the Collector, who alone was empowered to issue it. They cited the judgment of the Gujarat High Court in the case of M/s. Gujarat State Fertilizer Co. Ltd. to support their contention.

The respondents countered by stating that the Additional Collector was competent to issue the show cause notice as per the definition in Rule 2(B) of the Central Excise Rules, which includes "Additional Collector" within the ambit of "Collector." The Tribunal referred to the case of Collector v. Aromatic Intermediates & Chemicals, which held that "Collector" includes "Additional Collector" for the purposes of the Central Excises & Salt Act, 1944. Therefore, the Tribunal found no merit in the appellants' contention and held that the show cause notice issued by the Additional Collector was valid.

2. Classification of "Bare Chassis of 2400 mm WB":
The Additional Collector classified the "Bare Chassis of 2400 mm WB" under sub-heading 8706.30, asserting that they were principally designed for motor vehicles falling under sub-heading 87.03, which are meant for transporting persons. The appellants contended that the chassis were correctly classified under sub-headings 8706.20 and 8706.40, meant for vehicles under sub-headings 8702 and 8704, respectively.

The Tribunal examined the relevant headings and sub-headings, noting that the chassis in question were declared in the classification list under sub-headings 8706.20 and 8706.40. The Tribunal found that the Department failed to discharge the onus of proving that the chassis were specifically designed for vehicles under Heading 87.03. The Tribunal cited the Supreme Court's ruling in Collector of Central Excise v. Calcutta Steel Industries, which held that the onus of proof is on the Department to show that the goods fall under a particular tariff item. Consequently, the Tribunal held that the Additional Collector's finding that the chassis were classifiable under sub-heading 8706.30 was not sustainable.

3. Justification of Invoking the Extended Period Beyond Six Months:
The appellants argued that the demand was time-barred and that they had not suppressed any information, as the classification list was approved by the proper officer. The respondents contended that the appellants had failed to furnish full information regarding the chassis, justifying the invocation of the extended period under the proviso to Section 11A.

The Tribunal noted that the appellants had declared the chassis and their uses in the classification list, and the Assistant Collector had the opportunity to seek further information or make independent inquiries before approving the classification. The Tribunal referred to the Supreme Court's ruling in Collector of Central Excise v. Chemphar Drugs & Liniments, which held that something positive, other than mere inaction or failure, is required to invoke the extended period. The Tribunal found no evidence of deliberate suppression of facts by the appellants and held that the Additional Collector's order confirming the demand for the extended period beyond six months was not sustainable.

Conclusion:
The Tribunal concluded that:
1. The Additional Collector was competent to issue the show cause notice.
2. The classification of the "Bare Chassis of 2400 mm WB" under sub-heading 8706.30 was not sustainable.
3. The invocation of the extended period beyond six months for confirmation of the demand was not justified.

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