1999 (8) TMI 257 - AT - Central Excise

Summary

Issues: Classification of speakers mounted in wooden/plastic enclosures under Tariff Heading 85.18

Analysis:
The appellants filed a classification list claiming classification under Tariff Heading 85.18 at a nil rate of duty for speakers mounted in wooden/plastic enclosures. They argued that no new commodity comes into existence as they simply fit conical speakers inside cabinets. The lower authorities disagreed, stating that a new commodity, speaker columns, was created through a manufacturing process. The learned Advocate for the appellant cited a Supreme Court judgment in Prabhat Sound Studios case, emphasizing that converting duty paid items into a different form does not constitute manufacture under the Tariff description. He argued that the activity undertaken by the appellants did not amount to manufacturing a new commodity.

Opposing View:
The JDR representing the respondent contended that a new product, column speakers, was created by mounting different types of speakers in enclosures, enhancing musical quality. Referring to the Harmonized System of Nomenclature (HSN), he highlighted the distinction between single and multiple loudspeakers. He argued that the activity undertaken by the appellants constituted manufacturing, as reflected in the HSN sub-headings and supported by the Apex Court's judgment in Empire Industries case. The JDR distinguished the present case from the Prabhat Sound Studios case, emphasizing the nature of the commodities involved and the process undertaken.

Rejoinder and Decision:
In response, the appellant's Advocate reiterated that the Tariff was not fully aligned with HSN sub-headings, indicating that all types of speakers should be classified under the same heading. He emphasized the applicability of the Apex Court's judgment in Prabhat Sound Studios, regardless of the commodity involved, as the scope of the expression "whether or not" had been examined. The Tribunal, concurring with the appellant's submissions, noted the similarity between the present case and the Prabhat Sound Studios case. They interpreted the expression "whether or not" as indicating that no additional duty was leviable on speakers mounted in enclosures if they were purchased after paying appropriate duty. Consequently, the Tribunal set aside the lower order and allowed the appeal.