1997 (9) TMI 195 - AT - Central Excise

Summary

Issues: Classification of goods under sub-heading 8544.00, Differential duty demand for a period prior to the issue of show cause notice

In this case, the issue revolves around the classification of goods under sub-heading 8544.00 of the Central Excise Tariff Act, 1985 and the validity of the differential duty demand for a period prior to the issuance of the show cause notice. The appellants, manufacturers of specific cable harnesses for scooters, had classified their products under sub-heading 8714.00 initially but were later issued a show cause notice proposing re-classification under sub-heading 8544.00. The Assistant Collector confirmed the re-classification and demanded differential duty. The lower appellate authority upheld the re-classification but limited the demand for differential duty. The appellants challenged the classification and the differential duty demand for the six-month period, while the Revenue appealed against the dropped demand beyond six months.

Classification Dispute:
The dispute centered on whether the goods, being an assembly of insulated wires and cables with connectors, should be classified under sub-heading 8544.00 or sub-heading 8714.00. The tribunal analyzed various legal provisions, including Rule 3(a) for interpretation of the tariff, Note 2(a) to Section XVI, and HSN Explanatory Notes. The tribunal concluded that the goods fell under sub-heading 8544.00 due to their specific description and nature as per the tariff provisions and explanatory notes.

Manufacture and Classification:
The tribunal rejected the argument that no manufacture occurred as the goods were merely wires and cables fitted with connectors. It held that a distinct commercial commodity emerged after the manufacturing process, meeting the criteria of a new product with a different name, character, and use. The tribunal clarified that a change in tariff heading was not necessary for a product to be considered manufactured.

Differential Duty Demand:
Regarding the differential duty demand for the period prior to the show cause notice, the tribunal found the demand sustainable. It noted that the final assessment and approval of the classification list occurred after the issuance of the notice, justifying the demand for the six-month period. The tribunal distinguished a relevant case law and upheld the validity of the differential duty demand for the specified period.

Judgment:
The tribunal rejected both appeals, upholding the classification under sub-heading 8544.00 and affirming the differential duty demand for the specified period. It found no reason to interfere with the lower appellate authority's decision on dropping the demand for the period before 25-3-1987 as time-barred. The judgment emphasized the correct classification under the tariff provisions and the validity of the differential duty demand based on the timeline of assessment and approval.