2001 (6) TMI 226 - AT - Central Excise

Summary

Issues:
Classification of Time Recording Terminal (TRT) under sub-heading No. 8471.00 or 8473.00 of the Central Excise Tariff Act, 1985.

Detailed Analysis:

1. Issue of Classification under Sub-heading No. 8471.00:
The appellants were found manufacturing Time Recording Terminals (TRT) without being registered with the Central Excise Department. The show cause notice alleged that TRT falls under sub-heading No. 8471.00, attracting a central excise duty of 15% ad valorem. The notice claimed that TRT machines satisfied the conditions under Chapter Note 5(b) of Chapter 84, making them classifiable under sub-heading 8471.00. The Commissioner of Central Excise confirmed the demand and imposed a penalty after considering the party's reply.

2. Judgment and Analysis:
The appellate tribunal heard arguments from both sides regarding the classification of TRT machines. The Department sought to classify TRT under sub-heading 8471.00, while the party argued for classification under sub-heading 8473.00. The tribunal examined the provisions of Chapter Note 5(b) of Chapter 84 and noted that TRT machines did not process data but only recorded certain data for retrieval and report preparation. The tribunal referenced a previous case where a similar item was classified under sub-heading 91.06 instead of 8471.00. Despite agreeing with the tribunal's findings in the cited case, the current tribunal could not classify TRT under sub-heading 91.06 as it was not pleaded by either party. Citing legal precedent, the tribunal ruled out the classification under sub-heading 8471.00, allowing the appeal and setting aside the Collector's order.

3. Legal Precedent and Final Decision:
The tribunal referenced a previous decision regarding the impermissibility of recovering duty under a tariff heading different from that proposed in the show cause notice. Citing the case law, the tribunal concluded that TRT machines could not be classified under sub-heading 8471.00. As a result, the appeal was allowed, and the Collector's order was set aside, providing consequential relief as necessary.

In conclusion, the judgment resolved the issue of classification of TRT machines under the Central Excise Tariff Act, ruling out sub-heading 8471.00 and allowing the appeal based on legal precedent and detailed analysis of the item's functions and characteristics.