1997 (9) TMI 194 - AT - Central Excise

Issues Involved:
1. Jurisdiction and legality of the Commissioner's order withdrawing permission under Rule 173G(1).
2. Interpretation of discretionary power under Rule 173G(1) [Proviso (ii)].
3. Requirement of a speaking order.
4. Classification of wiring harness under Central Excise Tariff.
5. Determination of manufacture under Section 2(f) of the Central Excise Act, 1944.
6. Limitation period for differential duty demand under Section 11A of the Central Excise Act, 1944.

Issue-wise Detailed Analysis:

1. Jurisdiction and Legality of the Commissioner's Order:
The appellants challenged the order of the Commissioner of Central Excise, Meerut dated 28-2-1997, which withdrew the permission granted under Rule 173G(1) [Proviso (ii)]. The Commissioner had initially granted permission on 7-7-1995 but issued a show-cause notice on 22-1-1997 for its withdrawal, citing "not in Revenue's interest." The appellants argued that the withdrawal was illegal and beyond the Commissioner's jurisdiction.

2. Interpretation of Discretionary Power under Rule 173G(1) [Proviso (ii)]:
The appellants contended that the Commissioner's discretion under Rule 173G(1) [Proviso (ii)] should be construed as a duty to grant permission if the conditions were met, i.e., removal of more than 3000 consignments in the previous calendar year. They cited various Apex Court decisions to support their argument that "may" should be read as "shall" when the statute imposes a duty. The Tribunal agreed, noting that the discretionary power was for the benefit of the assessees and should be exercised when the specified conditions existed. The Tribunal found that the Commissioner's withdrawal of permission was inconsistent with the statutory duty under Rule 173G(1) [Proviso (ii)].

3. Requirement of a Speaking Order:
The appellants argued that the Commissioner's order was non-speaking and could be set aside on that ground alone. The Tribunal did not delve deeply into this argument, as it had already found substantive reasons to set aside the order based on the improper exercise of discretion.

4. Classification of Wiring Harness under Central Excise Tariff:
In the separate judgment involving the classification of wiring harness, the Tribunal upheld the classification under sub-heading 8544.00 of the Central Excise Tariff. The assessees argued that the items should be classified under sub-heading 8714.00 as "parts of scooters." However, the Tribunal found that the items were insulated wires and cables fitted with connectors, falling under sub-heading 8544.00, supported by HSN Explanatory Notes and Trade Notice No. 255/88.

5. Determination of Manufacture under Section 2(f) of the Central Excise Act, 1944:
The Tribunal also addressed whether the fitting of wires and cables with connectors amounted to manufacture. It held that the process resulted in a new, distinct commercial commodity with a different name, character, and use, thus constituting manufacture under Section 2(f) of the Central Excise Act, 1944. The Tribunal noted that a change in tariff heading is not necessary for determining manufacture.

6. Limitation Period for Differential Duty Demand under Section 11A of the Central Excise Act, 1944:
The Tribunal upheld the demand for differential duty for six months prior to the show-cause notice, as the classification list was provisionally approved and finalised with the adjudication order. The Tribunal distinguished the case from other cited cases by noting that the demand followed the final assessment, making it sustainable under Section 11A.

Conclusion:
The Tribunal allowed the appeal against the Commissioner's order, setting aside the withdrawal of permission under Rule 173G(1) [Proviso (ii)], and upheld the classification and differential duty demand in the separate judgment involving wiring harness. Both appeals in the latter case were rejected.

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