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TMI Blog1990 (3) TMI 190X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant was charged for contravention of the provisions of Rule 174 read with Section 6 of the Central Excises and Salt Act, 1944, Rule 173B, 173C, 173F and 173G read with Rules 52A, 9(1) and 173Q of the Central Excise Rules, 1944. It was further alleged that the appellants are manufacturers of panels, flush profiles, splice panels, roll formed carriers, round discs, edge profiles, formed stringers etc. of aluminium in their factory at NOIDA. The revenue authorities were of the view that the above articles were used as building materials and were classifiable under Tariff Item 68 of the Central Excise Tariff, and the main raw material used by the appellants for the manufacture of the said products was imported aluminium strips of special grade aluminium alloy, AA 5050 having a special coating of polyester based enamel manufactured by their principals, M/s. Hunter Douglas at Rotterdam, Holland. On their visit to the said factory on 28th September, 1985, the excise officers observed that the factory was working without having applied for a central excise licence and on being asked to explain, Shri Vijay Taneja, Administrative Officer of the factory and Shri Arvind Nanda, Director ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mputer centres and other structures by suitable modifications and these could find their use at the discretion of the buyers. It was also stated that the department admitted that the products were produced out of imported aluminium strips of special grade and cleared from customs on payment of appropriate customs duty. It was also contended that the roll forming on strips was identical to rolling in that it changed its shape by application of compressive forces exerted by rotating rolls. As defined in terminology of Chapter 25 of Central Excise Tariff, rolling is defined as shaping of metal by passing through rolls . Their products do not undergo this process. They had also pleaded that their exposure to the market by way of literature cited was a device for sale promotion. Literature itself says many different uses depending upon buyers as explained previously. It was contended that the products were shapes and sections for use in systems and were, in fact, unusable as structurals as a whole and were not in individual identity. The adjudicating authority had granted a personal hearing and at the time of personal hearing the facts were reiterated. At the time of hearing drawings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther held that the goods manufactured by the appellants had definite name, design and character and were much more than mere shapes and sections and were distinct articles classifiable under Tariff Item 68. He had held that the goods were not shapes and sections. The appellants had also disputed the applicability of the extended period of limitation. He did not accept their plea and was of the view that extended period of limitation was applicable. In regard to the seizure of the goods, he was of the view that classification dispute was there for which department itself took some time in arriving at the correct position, which indicated that there could possibly be grounds for genuine belief on both sides. He was of the view that seizure was not justified and had ordered the release of the goods subject to payment of duty. He had also imposed a penalty of Rs. 10,000.00. 2. Being aggrieved from the aforesaid order, the appellants have come in appeal before the Tribunal. 3. Shri V. Lakshmi Kumaran, the learned advocate who has appeared on behalf of the appellant has reiterated the facts. Shri Lakshmi Kumaran has pleaded that the appellant manufactures aluminium panels used in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ills. He has pleaded that rolling of metals is dealt in Chapter 17 of this book and it is mentioned that In conventional hot or cold-rolling the main objective is to decrease the thickness of the metal. Ordinarily little increase in width occurs, so that the decrease in thickness results in an increase in length. Roll forming is a special type of cold-rolling in which strip is progressively bent into complex shapes by passing it through a series of driven rolls. The thickness of the metal is not appreciably changed during this process. Roll forming is particularly suited to producing long, moulded sections such as irregular-shaped channels and trim. Shri Lakshmi Kumaran has referred to explanation III. He has pleaded that in view of explanation (b) the words subsequently worked after production are not in explanation (iii) (a). He has argued that the appellant is entitled to the benefit of Notification No. 183/84-CE dated 1st August, 1984 and Serial No. 5 of the said notification covers the appellant s case. He argues that the appellant makes the goods from strips. 4. On the limitation aspect, Shri Lakshmi Kumaran, the learned advocate has argued that the demand is hit by lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... articles of aluminium which could be used directly. Shri Tayal has referred to Heading 73.11 of CCCN. He has also referred to page 93 of the paper book and pleaded that when the appellant is the manufacturer, the appellant has to file the classification list and at no stage the appellant has come forward and as such, the extended period of limitation is applicable. 6. In reply Shri V. Lakshmi Kumaran, the learned advocate pleaded that the dispute is only in respect of roll formed products and the dispute is not in respect of structurals. He has referred to the judgment of Steel Authority of India Ltd. v. Collector of Central Excise where it was held that: The making of steel structures from channels, angles, sheets do not amount to manufacture. Accordingly, the question of payment of duty under Tariff Item 68 does not arise. The proper officer of the Central Excise has based the demands on the basis of information furnished in G.P.I./despatch challan. The appellant neither manufactures nor removes new excisable goods. As such, contravention of Rule 9 does not arise, nor they have also contravened the provision of Rule 173F or Rule 173Q, as they did not manufacture any new excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Heading 73.21 of CCCN relates to structures and parts of structures. Shri Lakshmi Kumaran argued that CCCN has been converted into HSN. Now the products falling under Heading 76.04 and 76.10 correspond to 76.08. He further argued that the appellant s products are not finished products. Shri Lakshmi Kumaran argued that the goods manufactured by the appellant fall at serial No. 5 of Notification No. 183/84-CE dated 1st August, 1984. Shri Lakshmi Kumaran also argued that the goods were imported. The appellant had duly paid the countervailing duty on the strips. 7. On the limitation aspect, Shri Lakshmi Kumaran argued that no extended period of limitation can be invoked. The appellant was under the honest belief that he was entitled to the benefit of Notification No. 183/84-CE and the Collector himself was in doubt as to the tariff entry. In support of his argument, he has referred to a judgment of the Supreme Court in the case of Padmini Products v. C.C.E. reported in 1989 (43) E.L.T. 195 (SC). Shri Lakshmi Kumaran further argued that in this matter the quantum of duty has been left out to be worked by the Assistant Collector and the penalty has been levied without looking into th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any other item. The appellant s contention is that the shapes and sections will include wrought products of solid section. Solid section mentioned in explanation (iii) has to be contrasted with hollow section and semi-hollow section described in explanation (x) and (xa). The appellant has further argued that it was never the case of the revenue that shapes and sections in question were not of solid section. Regarding clause (b) of explanation (iii) it has been contended by the appellant that generally casting or sintered products are unwrought materials and since T.I. 27(3) covers wrought materials only, the said clause (b) contemplates further working on the casting or sintered products to make it fall under T.I. 27(3), subject to the condition that the said processes should not result in classification of the product elsewhere in the Tariff Item. This was the only harmonious way of reading the Explanation. The department, on the other hand, has taken the view that the goods were not covered within the scope of the entry read with its explanation as the goods do not satisfy the condition of solid section. The revenue is of the view that explanation (iii)(b) which uses the expressi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f aluminium strip and then punched, fixing clip with raw material as aluminium strips are made by roll formed out of aluminium strip and then punched and in most of these cases raw material acquired distinct shape of an article and he had taken the view that using the term shape and sections the intention was clear to extend this term first to manufacture akin to sheets, plates and bars etc. in the company of which the expression shape and section occurred. He has taken the view that the shapes and sections would take colour from the words preceding i.e. plates, sheets, etc. Shri V. Lakshmi Kumaran, the learned advocate for the appellant during the course of arguments has pleaded that he does not press the item, namely aluminium carrier, aluminium round, aluminium stringer, aluminium carrier splice, aluminium width adjustment splice, aluminium universal bracket and aluminium fixing clip and these items fall under Tariff Item 68. We have perused the pictures of the items in dispute, namely, aluminium perforated panel, aluminium panel, aluminium flush profile, aluminium splice panel and aluminium edge profile. There is no punching. These five items are roll formed into the said s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated as structural and they cannot bear any weight or load. We find force in the arguments of the learned advocate. Hon ble Supreme Court in the case of Bharat Forge and Press Industries (P) Ltd. v. C.C.E. reported in 1990 (45) E.L.T. 525 (SC) had considered the question of classification of pipe fittings under T.I. 26AA in preference to T.I. 68. There is no sub-heading corresponding to Heading 76.08 in T.I. 27. It is also not disputed that on the five items in dispute there is no punching or drilling. Accordingly, we are of the view that the goods fall under T.I. 27(3) and the appellant is entitled to the benefit of Notification No. 183/84-CE dated 1st August, 1984 (Sl. No. 5 of the table). 9. On the limitation aspect, the appellant has argued that he was under the honest belief that the goods fall under T.I. 27(3) and the appellant was entitled to the benefit of Notification No. 183/84-CE dated 1st August, 1984 (Sl. No. 5 of the table). Shri Lakshmi Kumaran, the learned advocate, has relied on the judgment of the Supreme Court in the case of Padmini Products v. Collector of Central Excise reported in 1989 (43) E.L.T. 195 (SC) where the Supreme Court has held as under :- We a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t apply for any central excise licence and did not pay duty. Even the revenue authorities were also not sure as to under which tariff item the goods manufactured by the appellant fall. In view of the decision of the Gujarat High Court in the case of Gujarat State Fertilizer Co. Ltd. and another v. Union of India and others reported in 1988 (34) E.L.T. 442 (SC), we hold that the earlier show cause notice issued by the Deputy Collector was illegal and quashable. For the latter show cause notice issued by the Collector, we would like to observe that the Hon ble Supreme Court in the case of Padmini Products v. Collector of Central Excise reported in 1989 (43) E.L.T. 195 (SC) had observed that extended period of 5 years inapplicable for mere failure or negligence of the manufacturer to take out licence or pay duty when there was scope for doubt that goods were not dutiable. Unless there was evidence that the manufacturer knew that goods were liable to duty or he was required to take out a licence. For invoking extended period of five years limitation duty should not have been paid, short levied or short paid or erroneously refunded because of either any fraud, collusion or wilful mis-st ..... X X X X Extracts X X X X X X X X Extracts X X X X
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