1996 (10) TMI 259 - AT - Central Excise

Summary

Issues Involved:
1. Whether the product manufactured by the appellants is a generator or a generating set.
2. Whether the terms "generator" and "generating set" are synonymous.
3. Eligibility for the benefit of Notification No. 20/79.
4. Consideration of time-barred demands.

Issue-wise Detailed Analysis:

1. Whether the product manufactured by the appellants is a generator or a generating set:
The appellants argued that their product, known commercially as a generating set, should be considered a generator. They contended that a generator, as per Notification No. 20/79, should be interpreted as a generator with a prime mover, without which it cannot generate electricity. The Department, however, maintained that a generator is different from a generating set, which includes additional components like an engine base frame, control panel, air cleaner, silencer, fuel tank, and starter. The Department's stance was supported by technical definitions, trade notices, and market enquiries, which consistently distinguished between generators and generating sets.

2. Whether the terms "generator" and "generating set" are synonymous:
The appellants claimed that in commercial parlance, the terms "generator" and "generating set" are interchangeable. They presented technical opinions and trade notices to support this view. However, the Department cited authoritative sources such as the McGraw Hill Encyclopaedia and the World Book Encyclopaedia, which define a generator as a machine that converts mechanical power into electrical power, requiring a separate prime mover. The HSN and CCCN classifications further distinguished between generators and generating sets, with the latter being a combination of a generator and a prime mover.

3. Eligibility for the benefit of Notification No. 20/79:
Notification No. 20/79 provided a concessional rate of duty for generators of 100V and above. The appellants argued that their generating sets should qualify for this benefit. However, the Department and the Tribunal concluded that the notification applied strictly to generators and not to generating sets. This interpretation was based on the technical definitions and the clear distinction made in the HSN and CCCN classifications, which the Tribunal found persuasive despite the appellants' arguments.

4. Consideration of time-barred demands:
The appellants contended that some of the demands raised by the Department were barred by time. The Collector (Appeals) had already granted relief for the portion of the demands that were beyond the normal time limit. The Tribunal did not find it necessary to delve further into this issue, as the primary focus was on the classification of the product and the applicability of the notification.

Conclusion:
The Tribunal upheld the Department's view that the product in question was a generating set, not a generator, and thus not eligible for the concessional rate of duty under Notification No. 20/79. The appeal was rejected, affirming the distinction between generators and generating sets as separate items for excise duty purposes. The Tribunal emphasized the need for strict interpretation of exemption notifications and relied on technical definitions and classifications to reach its decision.