9911796707
TMI Blog1993 (11) TMI 139X X X X Extracts X X X X X X X X Extracts X X X X ..... classification list filed by them as "angles, shapes and sections of iron or non-alloy steel not further worked than cold-formed or cold-finished". In respect of this item, the further description given by the appellants in the classification list is "Guide-channel sections, angles/shapes Z Section, Sections for pollution control, equipments shutter lath sections". 4. The appellants are seeking the classification of this item under sub-heading 7210.20 upto 20-2-1988 and thereafter under sub-heading 7216.20 of the Central Excise Tariff Act, 1985. The Deptt. on the other hand are contending that its correct entry is under Chapter 8479.00 as Machines and mechanical appliances having individual functions, not specified or included elsewhere in this chapter attracting duty at 15% advalorem on the ground that the goods are "Angles shapes as sections of Iron - not further worked than cold formed or cold finished". The second item's description of the goods in the classification list is "Flat-rolled products of iron or non-alloy steel of width of 600 mm or more hot-rolled, not clad, plated or coated". In the full description column, the appellants have stated "others" (5 mm and less than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.20 and paid duty at specific rate (which is lower than the ad valorem rate) when supplied to M/s. EICHER Motors, M/s. TELCO, M/s. DCM TOYOTA and M/s. DTL Ancillaries. (iii) TIMS had collected certain amounts from their customers like M/s. Flakt India Ltd., Thermax, M/s. Andrew Yule & Co. Ltd. and M/s. GEC towards development and supply of implements and attachments, cost of tooling and designing of specified rollers, intended for use in the manufacture of collecting electrodes, but had not discharged the duty liability on such developing/designing/tooling charges. (iv) TIMS had raised debit notes/supplementary invoices for certain amount on the customers like M/s. Voltas Ltd., M/s. APHMEL and M/s. Andrew Yule & Co. Ltd., towards differential value between the original invoice value (raised immediately on supply of the goods) and the revised value later worked out consequent on the increase in the cost of raw-materials, as per cost escalation clause provided in the `order of acknowledgement' (known as `price variation claims' in the commercial circle) in support of collecting electrodes supplied to them, and realised the amounts, but had not discharged the duty liabili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and (vii) the facts of collection of packing charges separately from certain customers, for packing of collecting electrodes manufactured in their factory and supplied to them all the above with the intention to evade payment of duty in respect of S. Nos. 3, 4, and 7 above and at advalorem rate in respect of S. Nos. 1, 2, 5 and 6 above (higher than the specific rate of duty) payable thereon. (b)(i) TIMS had failed to file clasification list in respect of parts of motor vehicles manufactured and supplied to M/s. EICHER Motors; M/s. TELCO, M/s. DCM Toyota and M/s. DTL Ancillaries, (ii) in respect of manufacture and clearance of galvanised sections of steel (coated with zinc) and (iii) in respect of manufacture of parts of structures proposed for use in structures, all in contravention of the provisions of Rule 173B of the Central Excise Rules, 1944. (c) TIMS had failed to determine the correct duty payable on the collecting electrodes, parts of motor vehicles galvanised section of steel and parts of structures proposed for use in structures, manufactured in their factory and cleared to various customers, taking into account the tooling designing/developing c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The ld. Collector granted personal hearing to the appellants. However, he was not satisfied with the explanation or with the arguments advanced by the appellants and rejected the same and confirmed the order. 7. The appellants in this case have given the process of manufacture of their products and the classification of the same, before and after 1-3-1986 as follows : Steel strips in Coils, either hot rolled or cold rolled, are "1. fed through a rolling mill wherein work rolls are placed in position and the steel strip is passed through these work rolls, which impart the necessary shape or profile to the strip. The profile is determined by the arrangement of the rolls placed on the machine. By altering the arrangement of the rolls, the profile of the section can be varied according to the requirements and needs. The profiles are rolled in running length and cut to appropriate sizes. We have mills of different capacity and the largest mill can accommodate 1000mm width strips. All the mills have same process mechanism and they are different only to the extent of the size of the strip and the capacity they can handle. 2. ITEM Before 1-3-1986 After 1-3-1986 Guide Chann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C. No.V/04/50/15/70 Cx. Adj. /8/71 dt. 5-2-1991 alleging the following : (a) the sections removed in unfabricated conditions are classifiable under Chapter 72 and not under Chapter 84. (b) the sections supplied to various automobile manufacturers for use as panels are classifiable under 8708 and not under 7216. (c) galvanisation of steel amounts to manufacture and hence classifiable under 7216.30 instead of existing classification under 7216.20. (d) "Z" Purlins are not classifiable under 7216 but are classifiable only under 7308.90 as structurals. (e) proposal to levy duty on tooling charges. (f) proposal to levy duty on packing charges. (g) duty on the amounts collected on price variation. (h) the show cause finaly alleged suppression and misdeclaration of facts and thereby entitling the department to invoke the extended period of limitation." 8. The appellants have stated that they are manufacturers of plain sections as cold formed with on line punching, and fabricated sections for collecting electrode with weldments. It is the case of the appellants that whenever sections were cleared in a fabricated form they merit classification under sub-head ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the use of weldments and on line punching. Therefore, they deny the allegation that they have cleared the goods of Chapter 84 as under 72. They state that the Collector has wrongly proceeded to come to the conclusion that the plain cold rolled formed sections would come under Chapter 84 on the basis of three purchase orders without any reasonable basis. They further state that the clearances for APHMEL had been made in three parts as bottom ted poles, top ted poles and modules. Clearances were effected under the same purchase order and duty paid under Chapter 84 for bottom and top ted poles as it involved the process of welding, they had paid duty under Chapter 72 for the modules as they were plain sections, as per the approved classification list. Therefore, in the light of approved classification list, price list filed alongwith the contract copies and the same having been approved by the department and checked the gate passes, the inference of suppression and misclassification arrived at by the ld. Collector is not sustainable. 9. The appellants further state that the ld. Collector has misinterpreted the section & chapter notes, while deciding the re-classification of both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unds of appeal as detailed above pleaded for allowing the appeal both on merits and on time-bar. The ld. advocate pointed out to the statement of Sh. Balakrishna to show that what is being done by assessee on the steel section does not make it an identifiable part. He also pointed out to the letter dt. 10-12-1990 issued by D.C.M. Toyota Ltd. in support of their plea. Besides referring to the designs and drawings to show that the goods continue to remain as plain section and cold roll section. He pleaded that these sections have alternate uses and in this context referred to a few passages from the article "The abc's (and q) of cold-formed Steel Design" by Paul A Seaburg appearing in the book "Civil Engineering A SCE January, 1981". At page 52 of this book, a passage is referred to, which reads as follows : "Almost all steel building now use cold formed Steel products in same manner. Approximately 70% of the components by weight of a typical pre-engineered metal building are cold-formed members. They are used in the floor systems of High rise buildings, as permanent form work for concrete bridge decks, components of trusses and storage racks, diaphrams to resist seismic forc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing adopted by competing units and also referred to their gate passes. The ld. advocate pointed out that ld. Collector did not rebut to these materials produced before him. He drew his support from the note 1(n) of Chapter 72 and also the explanatory notes appearing at page 1001 of HSN. He further submitted that section note 3 of section XVII is not applicable and hence classification under Chapter 86, has to be ruled out. In this context, the ld. advocate relied on the ruling of the Tribunal, rendered in the case of Shivaji Works Ltd. v. Collector of Central Excise, Aurangabad & Pune as reported in 1994 (69) E.L.T. 674 (Tri.) = 1993 (22) ETR 598. It is his plea that Rules of interpretation can not be seen, when chapter notes can decide the classification. In this context he relied on the ruling rendered in the case of Rajasthan Synthetic Industries Ltd. v. Collector of Central Excise as reported in 1989 (42) E.L.T. 24 (T). 12. As regards the item pollution control, the ld. advocate pointed out that this item was converted into 'Collecting electrodes'. The department had classified this item under chapter sub-heading 84.21; while the party had pleaded for sub-heading 7216.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g rendered in the cased of Telco v. Collector of Customs as reported in 1990 (50) E.L.T. 571 para 11 and 12 and that of the ruling rendered in the case of Central Railway v. Collector of Customs, Bombay as reported in 1984 (16) E.L.T. 510. He reiterated the findings of the ld. Collector as regards the item "collecting Electrode" and 'Z purlin'. On time bar also, the ld. JDCR relied on the findings of ld. Collector and cited the decision rendered by Madras High Court in the case of Limenaph Chemical v. Union of India as reported in 1993 (68) E.L.T. 77 para 12 & 15. 15. We have carefully considered the submissions of both the sides, perused the entire evidence, case law and the order of the ld. Collector. As can be seen the issues involved has been summarised in the show cause notice, which is extracted above. We will proceed to record our findings on the basis of the issues dealt in the Order-in-Original. Collecting Electrodes (i) The main allegation of the department against the assessee is that the company had classified the item 'Collecting Electrodes', which are parts of 'Electrostatic Principitors' under chapter 84, cleared and supplied the same to the customers na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mine the evidence of the department in support of this charge. The ld. Collector has examined the purchase orders placed by the customers for the supply of Collecting Electrodes, and the acknowledgements or orders and invoices issued by M/s. T.I.M.S. The ld. Collector has found that in all these documents the item is referred as `Collecting Electrodes Sections/Plates' only except in the connected GP 1's the item supplied to M/s. Flakt India, A.PH.M.E.L. & M/s. Andrew Yule are described as `CR Sections' falling under Chapter 72. The ld. Collector has also noticed that purchase order placed by M/s. Flakt India bearing No P-70/339/444 dt. 21-8-1989 was for supply of `Collecting plates' as per drawing No K-2400212 Group 27. The related order of acknowledgement No 7892539 dt. 29-8-1989 also shown as for supply of Cold rolled formed fabricated Collecting Electrodes as per Flakt Drawing No. K-2400212 including weldments. The ld. Collector has also referred to another purchase order No. P-70/336/512 dt. 29-7-1986 was for supply of Cold rolled formed Collecting Elec- trodes as per drawing No. KW 28220093C with weldments welded to section. "The related order of Acknowledgement No. 7862609 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other heading. The ld. Collector has also relied on Rule 2(a) of interpretative rules to come to the conclusion that the goods are classifiable under chapter 84. We have carefully considered these findings and we do not find any infirmity in this order and hence we confirm these findings. (iii) We have also independently examined the other materials on record and we find that these materials clinch the issue. These materials are now referred herein below: (a) The purchase order No. P76 - 310.009 dt. 5-4-1990 of M/s. Flakt India Ltd.(Page 190-193 of paper book) reveals that although, the description in the order of the goods is shown as "Forming and supply of collecting plate sections made out of 1.6 mm/1.5 mm C.R. Sheets conforming to l.S. 513 Grade `O' as per our Drg. No. V-2554080-43 including labour and materials (length: 14060 mm, width 750 mm) the exemption of clauses of the order reveals that - (i) "7.1 All materials are subject to the inspection by us/our client prior to despatch. The buyer requires at least 4 weeks advance to depute their Inspection Engineer to supplier's work for conducting inspection. I set of Raw material Test Certificate must be forwa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd., APHMEL, BHEL, Flakt, L&T, GEC and Thermax. He admitted and agreed that regarding Collecting Electrodes supplied to M/s. Flakt, wherever post rolling operations (punchings) were made off the line excise duty on advalorem would be paid; on the Modules supplied to M/s. APHMEL with notching and that he also agreed to discharge duty liability on packing charges where duty was payable on advalorem basis. (d) Shri M. Sankaran, Technical Service Manager also admitted that "Technically speaking, they supply collecting electrodes to M/s. Andrew Yule by clearing various components from the factory and assembling it at site". He admitted likewise for supplies made to M/s. APHMEL, Voltas Ltd., GEC, L&T, Thermax, BHEL and Flakt India Ltd. (e) Shri R. Neelakantan, Sales Manager corroborated the statements given by above witnesses. He admitted that "Collecting Electrodes Sections were used in electrostatic precipitator, that automobile sections such as floor/side/front/rear panels are used in the manufacture of light commercial vehicles; that the panels supplied to M/s. Allwyn, Nissan & other similar customers are used only in the manufacture of light commercial vehicles". In hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The minutes of the meeting held between M/s. Andrew Yule & Co. Ltd. and TIMS on 8-9-1988 and other correspondence also supports the dept's plea. They have specifically placed orders for `complete manufacture and supply of collecting electrodes flat types, furnishing the details of the connected drawing numbers. (g) The examination of evidence placed in respect of M/s. APHMEL also confirms the department's charge. Shri K. Neelakantan, Sales Officer in his statement dt 20-8-1990 has confirmed supply of collecting electrode sections to them and its use in the electrostatic precipitators. (h) Thus it is clear that as per exclusion clause contained in Section Note 1(f) of Section XV of CET, 85, Articles covered under Section XVI (i.e. machinery, mechanical appliances and electrical goods) are excluded from the purview of chapter 72 and 83. As such, a machinery part irrespective of the constituent material and process of manufacture will automatically get covered under chapter 84 or 85. Thus the classification adopted and confirmed by ld. Collector is correct and we approve of the same. 16. Parts of Light Commercial Motor Vehicles - The next main allegation is that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these items to the department and that they had misdeclared. Hence, in the light of the appellants' own admission and confessions, the larger period is clearly attracted and the confirmation of duty for larger period is clearly justified. In this context the ruling of the Hon'ble Supreme Court in the case of Collector of Central Excise v. Jay Engineering Works Ltd., Calcutta as reported in 1989 (39) E.L.T. 169 (S.C.) is clearly attracted. The ruling of the Hon'ble Madras High Court as in the case of Limenaph Chemical v. Union of India (Supra) also supports the department's case. The ld. Advocate relied on the classification lists having been checked and confirmed for earlier period. But the fact of misdeclaration has come to light on a thorough investigation and in view of clear admission by the witnesses, there is no defence left for the appellant and the plea now raised is not acceptable. The rulings relied are clearly distinguishable. The ld. Advocate had further contended alternately that if the cold sections are considered as parts of motor vehicles then also they would be entitled to the benefit of Notification No. 239/86-C.E., dt. 3-4-1986. The lower authorities have not con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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