2000 (12) TMI 732 - AT - Central Excise

Issues Involved:
1. Classification of Goods: Whether the items manufactured and cleared by the appellant were "complete cranes" or "parts of cranes".
2. Applicability of Duty: Determining the correct duty applicable based on the classification.
3. Limitation: Whether the demand for differential duty was barred by limitation.

Issue-wise Detailed Analysis:

1. Classification of Goods:

The primary issue was whether the items manufactured at the appellant's Growth Shop were "complete cranes" or "parts of cranes." Initially, the appellant classified these items as "crane parts" exempt from duty under Notification No. 118/75-C.E. However, the Assistant Commissioner issued a show cause notice in 1984 alleging that the items were complete cranes, not parts, and thus not eligible for the exemption. This dispute reached the Patna High Court, which ruled in favor of the Revenue, holding that the appellant manufactured complete cranes. The appellant challenged this decision in the Supreme Court, where the matter was pending.

With the introduction of the Central Excise Tariff Act, 1985, cranes were classified under Heading 84.26 with a duty of 15% ad valorem, while crane parts fell under Heading 84.31 with a higher duty of 20% ad valorem. The appellant continued to classify their product as complete cranes based on the Patna High Court's ruling and paid 15% duty. However, a show cause notice issued on 13-8-1990 by the Commissioner, Central Excise, Patna, demanded differential duty, alleging that the items were parts of cranes, not complete cranes.

The Tribunal noted that the classification issue had already been decided by the Patna High Court in favor of the Revenue, and since there was no interim order from the Supreme Court staying the High Court's decision, both parties were bound by it. Therefore, the Tribunal held that the goods should be classified as complete cranes under Heading 84.26, and the differential duty demand was set aside.

2. Applicability of Duty:

The classification directly impacted the duty applicable. Based on the Patna High Court's ruling, the Tribunal held that the goods were complete cranes, attracting a duty of 15% ad valorem under Heading 84.26. The Tribunal criticized the Department for shifting its stance to classify the goods as parts of cranes post-1986 to attract a higher duty of 20% ad valorem. It emphasized that the purpose of classification is to determine the correct head and entry under the law, and the rate of duty is secondary.

3. Limitation:

The Tribunal also addressed the issue of limitation. The show cause notice dated 13-8-1990 covered the period from January 1989 to January 1990, which was beyond the six-month statutory period. The notice did not allege any suppression of facts or misstatement by the appellant. The Tribunal found that the appellant was following the Patna High Court's order, which they were legally bound to follow. Therefore, the Tribunal held that the demand was barred by limitation, and no case for invoking the extended period was made out by the Department.

Separate Judgments:

Judicial Member (Archana Wadhwa):
Held that the goods were complete cranes based on the Patna High Court's ruling and set aside the differential duty demand and penalty. She emphasized that the Department could not shift its stance post-1986 to classify the goods as parts of cranes.

Technical Member (P.C. Jain):
Disagreed with the Judicial Member, holding that the appellants did not provide evidence to prove that the goods were complete cranes. He upheld the demand for differential duty and penalty, stating that the goods were parts of cranes and the demand was not barred by limitation due to suppression of facts.

Third Member (S.N. Busi):
Agreed with the Technical Member, stating that the appellants did not produce evidence to show that the goods were complete cranes. He held that the goods were parts of cranes and upheld the demand for differential duty and penalty, finding no time-bar.

Final Order:
In view of the majority opinion, the Tribunal held that the goods were parts of cranes and the demand was not hit by time-bar. The appeal was rejected.

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