2014 (12) TMI 620 - AT - Central Excise

Demand of differential duty - Finalization of Provisional assessment - Principle of natural justice - Matter earlier remanded back by Tribunal - Commissioner passed the re-assessment order - Held that - After considering all the relevant aspects, namely, the product s functions and its usage, technical literature, HSN Explanatory Notes, various Tribunal and Apex Court decisions relevant to the classification the product, the Tribunal has recorded a detailed finding and has classified the product. Therefore, it cannot be the case that the appellant were never afforded an opportunity to canvass their views. In this factual position, we do not any merit in the appellant s contention that they should have been given one more opportunity by the assessing officer as regards the proposed classification. In any case, the assessing officer was neither directed to give such an opportunity nor could he have come to a different view, in view of the decision this Tribunal with respect to classification which is binding on the lower authorities. The lower authorities have merely carried out the directions of this Tribunal to re-calculate the duty and in the absence of any challenge to such re-calculation by the appellant, the present appeal is liable to rejected and we hold accordingly. Tribunal set aside the final assessment done by the lower authorities and directed the assessing officer to undertake re-assessment as per the classification decided by the Tribunal and to re-compute the differential duty liability. Thus the remand order passed by the Tribunal restored the provisional assessment resorted to earlier by setting aside the final assessment order and it is in pursuance of the said remand order, the jurisdictional Dy. Commissioner passed the re-assessment order and confirmed the differential duty liability. - amount of duty demand confirmed is much less than the amount specified in the show cause notice issued for finalization of provisional assessment. In the notice dated 1-3-98 which was issued for finalization of provisional assessment, the differential duty sought to be recovered was ₹ 37.05 Crore approx whereas in the final assessment order, the demand confirmed is only ₹ 5,30,86,840/- which is much less than that proposed in the notice. Thus there is no infirmity in the assessment order passed by the Deputy Commissioner as the enhancement of rate of duty has not resulted in confirmation of any amount more than that proposed in the show cause notice. - Decided against assessee.

Issues Involved:
1. Classification of Modified Vapour Absorption Chillers (MVAC).
2. Applicability of Notification 155/86-CE.
3. Requirement of Show Cause Notice under Section 11A.
4. Provisional vs. Final Assessment.
5. Authority of Deputy Commissioner to confirm duty demand.
6. Tribunal's power to enhance duty demand.

Issue-wise Detailed Analysis:

1. Classification of Modified Vapour Absorption Chillers (MVAC):
The primary issue revolves around the classification of MVAC manufactured by the appellant. The appellant classified MVAC under CETH 8418 as heat pumps, claiming benefits under Notification 155/86-CE. However, the Tribunal previously held that MVACs are not heat pumps but complete refrigerating equipment, classifiable under CETH 8418.10. This classification was reaffirmed by the Tribunal, and the lower authorities were directed to re-calculate the duty based on this classification.

2. Applicability of Notification 155/86-CE:
The appellant claimed benefits under Notification 155/86-CE, which was applicable to heat pumps. The Tribunal, in its earlier order, concluded that MVACs do not qualify as heat pumps, thus denying the benefit of the notification. The Tribunal's decision was based on the function and usage of MVACs, which were primarily used in cooling mode and not as heat pumps.

3. Requirement of Show Cause Notice under Section 11A:
The appellant argued that a show cause notice under Section 11A should have been issued for the differential duty demand. However, the Tribunal held that since the assessments were provisional, no separate show cause notice under Section 11A was required. The Tribunal referenced the Mafatlal Industries case, which clarified that recoveries or refunds consequent upon the adjustment under Rule 9B are not governed by Section 11A or Section 11B.

4. Provisional vs. Final Assessment:
The Tribunal emphasized that provisional assessments retain their provisional character for every purpose, including classification and rate of duty. The finalization of provisional assessments does not necessitate a show cause notice under Section 11A. The Tribunal cited various judgments, including the Indian Oil Corporation and L.M. Glassfiber cases, to support this view.

5. Authority of Deputy Commissioner to Confirm Duty Demand:
The appellant contended that the Deputy Commissioner was not empowered to confirm the demand at a higher rate of duty (60%) for the periods 91-92 and 92-93. The Tribunal rejected this argument, stating that the Deputy Commissioner acted in accordance with the Tribunal's directions to re-calculate the duty based on the correct classification. The Tribunal also noted that the confirmed demand was less than the amount proposed in the show cause notice issued for finalization of provisional assessment.

6. Tribunal's Power to Enhance Duty Demand:
The appellant argued that the Tribunal does not have the power to enhance the duty demand confirmed on the assessee. The Tribunal dismissed this argument, stating that the re-calculation of duty was based on the correct classification as determined by the Tribunal. The Tribunal's directions were limited to re-calculating the duty based on the classification of MVAC as refrigerating equipment, and there was no enhancement of the duty demand beyond the scope of the show cause notice.

Conclusion:
The Tribunal dismissed the appeal, upholding the classification of MVAC under CETH 8418.10 as refrigerating equipment and confirming the differential duty demand. The Tribunal found no merit in the appellant's arguments regarding the requirement of a show cause notice under Section 11A, the authority of the Deputy Commissioner, and the Tribunal's power to enhance the duty demand. The Tribunal's decision was based on a detailed analysis of the facts, technical literature, and relevant legal precedents.

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