1995 (11) TMI 138 - AT - Central Excise

Issues Involved:
1. Classification of the goods under the Central Excise Tariff.
2. Eligibility for the benefit of Notification 57/93, dated 28-2-1993.

Detailed Analysis:

1. Classification of the goods under the Central Excise Tariff:

The appellants are engaged in the manufacture of consumer electrical products, including radio sets with in-built sound recording and reproducing appliances. They classified their goods under Chapter 8527.00 and claimed the benefit of Notification 57/93, dated 28-2-1993, which allows a concessional rate of duty to radio sets including transistor sets at 10% ad valorem. The Assistant Collector approved the classification under Chapter 8527.00 but denied the concessional rate of duty, reasoning that the goods were not purely radio sets/transistor sets due to their additional sound recording and reproducing capabilities.

2. Eligibility for the benefit of Notification 57/93, dated 28-2-1993:

The main contention revolves around whether the radio sets with sound recording and reproducing facilities manufactured by the appellants fall under the exemption provided by Notification 57/93. The Collector (Appeals) upheld the Assistant Collector's decision, stating that in common parlance and trade, radio sets and radio cassette recorders or stereos are not considered the same. Therefore, the exemption could not be extended to the appellants' products.

The appellants argued that their products should be considered radio sets as their primary function is receiving radio broadcast programs. They asserted that the additional sound recording and reproducing apparatus should not exclude them from the exemption. They referenced the tariff item 85.20 and 8527.00, which includes receptive apparatus for radio broadcasting whether or not combined with sound recording or reproducing apparatus.

The appellants relied on several judicial decisions to support their claim that the presence of additional functionalities does not disqualify their products from being classified as radio sets under the exemption notification. They emphasized that the main function of their products is to receive radio broadcasts, and the additional features are incidental.

The respondent contended that the wording of the notification at Sl. No. 10A is clear and specific to radio sets including transistor sets, and does not cover all radio broadcasting apparatus. The respondent argued that the description in the tariff entry should not influence the interpretation of the exemption notification, and the common trade parlance should be the basis for determining the applicability of the exemption.

Judgment:

The Tribunal considered the submissions from both sides and determined that the primary function of the appellants' products is to receive radio broadcasts. The Tribunal referenced previous decisions where it was held that the addition of other functionalities does not exclude a product from the scope of an exemption notification if its primary function aligns with the exemption criteria.

The Tribunal concluded that the goods manufactured by the appellants are indeed capable of receiving radio broadcasts, and the additional sound recording and reproducing apparatus does not disqualify them from being considered radio sets under the exemption notification. The Tribunal emphasized that the main function of the radio sets, i.e., receiving broadcasts, is fulfilled by the appellants' products. Therefore, the presence of additional features does not take them out of the purview of "radio sets including transistor sets" as per Notification 57/93.

The Tribunal found that the common parlance test applied in previous cases does not alter the classification of the appellants' products as radio sets. The Tribunal also noted that the HSN classification supports the inclusion of radio sets with additional features within the same category.

Conclusion:

The Tribunal allowed the appeals, granting the appellants the benefit of Notification 57/93, dated 28-2-1993, with consequential benefits. The judgment emphasized that the primary function of the appellants' products is the reception of radio broadcasts, and the additional features do not exclude them from the exemption provided by the notification.

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