1998 (3) TMI 425 - AT - Central Excise

Issues Involved:
1. Classification of intermediate graphite products.
2. Validity of the differential duty demand.
3. Interpretation of Tariff Items 67 and 68.
4. Consistency of the appellant's classification claims.
5. Validity of the Assistant Collector's reclassification letter.

Detailed Analysis:

1. Classification of Intermediate Graphite Products:
The appellant is involved in the manufacture of graphite electrodes and anodes, with intermediate products such as Green Blanks, Baked Blanks, Pitch Impregnated Blanks, and Rebaked Blanks. The dispute centers on whether these intermediate products should be classified under Tariff Item 67 or the residuary Tariff Item 68. The appellant contends that these blanks fall under Tariff Item 68, as they are not yet graphite electrodes. The department argues they fall under Tariff Item 67.

2. Validity of the Differential Duty Demand:
The lower authorities confirmed a differential duty demand of Rs. 34,85,483.36 against the appellant, based on eight show cause notices. The appellant had initially filed a classification list claiming the blanks under Tariff Item 68, which was provisionally approved but later reclassified under Tariff Item 67 by the Assistant Collector. The appellant did not appeal this reclassification, leading to the issuance of the show cause notices and the subsequent confirmation of the duty demand.

3. Interpretation of Tariff Items 67 and 68:
Tariff Item 67 covers "Graphite Electrodes and Anodes, all sorts," while Tariff Item 68 is a residuary entry for "All other goods, not elsewhere specified." The Tribunal emphasized that the term "all sorts" in Tariff Item 67 indicates that not only fully manufactured graphite electrodes but also intermediate products like blanks fall under this entry. The Tribunal rejected the appellant's argument that only fully manufactured electrodes should be classified under Tariff Item 67, stating that such an interpretation would render the term "all sorts" redundant.

4. Consistency of the Appellant's Classification Claims:
The Tribunal noted the inconsistency in the appellant's classification claims. While the appellant cleared the blanks to their Bangalore factory under bond as Tariff Item 67 goods, they claimed the same blanks under Tariff Item 68 for sales. The Assistant Collector's final approval of the classification list under Tariff Item 67 was not appealed by the appellant, leading to the conclusion that the appellant's shift in stance was unsupported and prejudicial to their case.

5. Validity of the Assistant Collector's Reclassification Letter:
The Tribunal addressed the appellant's argument regarding the Assistant Collector's letter dated 29-7-1981, which reclassified the products under Tariff Item 68. The Tribunal found that the initial classification list was finalised under Tariff Item 67 and was not challenged by the appellant. The subsequent reclassification by the Assistant Collector was deemed without legal sanctity as it was not a reasoned and speaking order. The Tribunal upheld the lower authorities' decision that the reclassification letter was a nullity in law and without binding force.

Conclusion:
The Tribunal rejected the appeal, upholding the impugned orders. The intermediate graphite products were correctly classified under Tariff Item 67, and the differential duty demand was valid. The appellant's inconsistent classification claims and failure to appeal the initial classification decision weakened their case. The Assistant Collector's reclassification letter was invalid, reinforcing the finality of the initial classification under Tariff Item 67.

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