1996 (3) TMI 211 - AT - Central Excise

Summary

Issues: Classification of Modem, Cartridge Tape Drive (CTD), and Passive Hubs under the Central Excise Tariff Act, 1985; Invocation of extended period of limitation; Imposition of penalty.

Classification of Modem:
The appeal involved the classification of Modem, specifically Data Modem and Fax Modem, under the Central Excise Tariff Act. The appellant, TVS, classified these products under Heading No. 84.71, while the Revenue classified them under Heading No. 85.17. The tribunal analyzed the functionality of modems, referring to the HSN Explanatory Notes, and concurred with the Revenue's classification under Heading No. 85.17, which covers electrical apparatus for line telephony. The tribunal relied on the internationally accepted nomenclature from the HSN for classification guidance.

Classification of Cartridge Tape Drive (CTD):
The issue of classifying CTD under the Tariff Act was addressed. TVS sought classification under Heading No. 84.71, but the Revenue proposed classification under Heading No. 84.73. The tribunal examined the nature of CTD as a back-up system for compatible machines, emphasizing its role as a separately housed unit for backing up data. It upheld the Revenue's classification under Heading No. 84.73, which covers parts and accessories suitable for use with specific machines, in this case, machines of Heading No. 84.71.

Classification of Passive Hubs:
The classification of Passive Hubs was left unresolved by the Collector of Central Excise, Bangalore. As no finding was recorded on this product, the tribunal did not address its classification. However, the demand related to Passive Hubs was vacated due to the expiration of the limitation period, as no mis-declaration by TVS was established.

Invocation of Extended Period of Limitation:
The Collector invoked the extended period of limitation based on alleged suppression of relevant facts by TVS. The tribunal analyzed the timeline of show cause notices and approvals by Central Excise Officers. It concluded that there was no positive suppression by TVS and that the demand could only be sustained within the normal period of limitation. The tribunal found no grounds for the imposition of a penalty, considering the technical nature of the matter and the absence of deliberate suppression.

Conclusion:
The tribunal agreed with the Revenue's classification of Modem and CTD under specific headings of the Tariff Act. It held that the demand could only be upheld within the normal period of limitation, not the extended period. Consequently, the penalty was deemed unwarranted. The appeal was disposed of accordingly, with decisions made on each issue of classification and limitation.