2017 (6) TMI 505 - AT - Central Excise

Classification of goods - whether the goods described viz. Switches, relays, fuses, plugs, lamps belong to the Tariff heading 85.13 and 85.36 or any other entry for levy of duty under Third Schedule to the Central Excise Act, 1944? - Held that - Description of goods in tariff entry may depend on the technical literature as well as various technicalities of the goods, which learned adjudicating authority shall have advantage to examine better - to grant fair opportunity of hearing to both sides to place their case before adjudicating authority for his determination of classification and decide leviability, matters are remanded to the Ld. Authority - appeal allowed by way of remand.

Summary

Issues Involved: Classification of goods under the Central Excise Act, 1944; Determination of levy of duty on goods falling under specific tariff headings.

Analysis:

1. Preliminary Issue of Classification: The appellants raised a preliminary issue regarding the correct classification of goods described in the adjudication order under Tariff headings 85.13, 85.36, or any other entry for levy of duty under the Central Excise Act, 1944. The Tribunal noted that the adjudicating authority did not provide reasoning or conduct testing of the goods to determine their classification. It emphasized that proper tests known to law should be applied to decide the classification of goods, considering factors like character, nature, and composition. The Tribunal highlighted that the decision to classify goods under a specific tariff entry without proper analysis would be contrary to law.

2. Examination of Nature and Character of Goods: The Tribunal observed that the adjudicating authority failed to examine the real implication of the nature and character of the goods on their classification under the Central Excise Act, 1944. It stressed that goods falling under the third schedule of the Act attract levy of duty, and if the goods in question do not fall under this schedule, they are not leviable to duty. Both parties agreed on this legal proposition. The Tribunal directed the adjudicating authority to independently determine the character and nature of the goods based on statutory provisions and judicial pronouncements to decide whether they belong to classes covered by the third schedule for levy of duty.

3. Remand for Detailed Examination: Due to the lack of detailed examination in the adjudication order, the Tribunal remanded the matter to the adjudicating authority for a thorough scrutiny of the goods' classification and levy of excise duty. It instructed the authority to conduct a detailed examination, grant a fair opportunity of hearing to both sides, and pass a reasoned and speaking order within a specified timeframe. The Tribunal highlighted the importance of examining technical literature and technicalities of the goods for accurate classification.

4. Leviability of Penalty: The Tribunal declined to express any premature opinion on the leviability of the penalty, emphasizing that the adjudicating authority should decide on the penalty after examining the relevant ingredients and hearing the appellants' defense plea. It directed the authority to grant a reasonable opportunity of hearing to the appellants and pass an appropriate order on the penalty issue.

5. Disposal of Appeal: The Tribunal disposed of the appeal and cross objection based on the above considerations, remanding the matter to the adjudicating authority for a detailed examination and decision on the classification and levy of excise duty. It set a deadline for the authority to resolve the controversy and instructed a thorough examination to ensure a reasoned and speaking order.

This detailed analysis of the judgment highlights the critical issues of classification, levy of duty, remand for examination, and the decision on the penalty, providing a comprehensive overview of the Tribunal's directives and legal considerations.