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TMI Blog2002 (5) TMI 799X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The classification lists were duly approved under Heading 8535.00 with eligibility of Notification No. 52/93 by the proper officer. The dispute in the appeal before us, originated on 1-3-94 with the issue of show cause notice No. 17/94, dated 1-3-1994 proposing a change the classification of Circuit Breakers under 85.37; duty was demanded on Circuit Breakers Indoor and Outdoor and Circuit Breaker with Control Panels under Heading 85.37 cleared during the period 1-3-1993 to 31-12-1993. This notice also alleged suppression of information to invoke the longer period of limitation under Section 11A(i) proviso. Two other show cause notices viz. dated 13-4-94 for the period 1-1-94 to 28-2-94 and dated 29-8-94 for the period 1-3-94 to 31-7-94 where clearance were made under Heading 8535,00 read with Notification No. 52/93 and 46/94 were issued on similar grounds. The Commissioner did not accept the plea of the appellants and confirmed the duty demand of Rs. 3,09, 62,619 as made out in these three show cause notices and imposed penalty of Rs. 75 Lacs, under Rule 173Q of the Central Excise Rules, after coming to the conclusion that provision of Rule 9(1) read with Rules 173B, 173E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircuits (for e.g. switches fuses, lighting arresters, voltage limiters, surge suppressors, plugs, junction boxes) for a voltage exceeding 1000 Volts. 85.36 Electrical apparatus for switching or protecting electrical circuits, or for making connections to or in electrical circuits (for e.g. switches, surge suppressors, plugs, sockets, lamp-holders, junction boxes) for a voltage not exceeding 1000 Volts. 85.37 8537.00 Boards, panels (including numerical control panels), consoles, desks, cabinets and other bases, equipped with two or more apparatus of Heading No. 85.35 or 85.36, for electrical control or the distribution of electricity including those incorporating instruments of apparatus of Chapter 90, other than switching apparatus of Heading No. 85.17. Circuit Breaker as defined in the Chambers' Science and Technology Dictionary is a device for opening electrical circuit under abnormal operating conditions e.g. excessive current, heat etc. A plain reading of the Headings would show that Headings 85.35 and 85.36 relate to individual and independent components such as switches, relays, fuses etc. which are meant for switching or protecting the electrical circuits or for ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts manufactured. While they have sought classification of Circuits Breakers under Heading 85.35 and Control Panel separately under Heading 85.37, it is a fact that they failed to declare that the control mechanism is an integral part of the Circuit Breakers or that the entire assembly i.e. Circuit Breaker with integrated control devices or associated control devices are tested and cleared as a single unit. The classification list merely describes the goods as HT Circuit Breakers of various types as per Annexure-I which gives 5 categories. 1. Vaccume Circuit Breakers of various types. 2. SF 6 Circuit Breakers of various types. 3. Indoor and Outdoor Circuit Breakers of various types. 4. Pole mounted Auto Re-Closers of various types. 5. Sectionalisers of various types. Whereas, the purchase orders and invoices show that what is manufactured and cleared to their customers is a whole system consisting of breakers and control devices. I am unable to accept the assessee's claim that mere inclusion of all these in the purchase orders/invoices would not make it a single unit, in view of the fact that the Chief Manager (Marketing) Shri K.V. Ranganath, in his s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f two or more devices of relays, volt meters, ammeters, switches etc. We, therefore, cannot find or persuade ourselves, to agree to arrive at a finding, that material exists to conclude, that the entity under classification, should be considered to be "Boards, panels etc. equipped with two or more apparatus of Headings 85.35/85.36, 90 etc. de hors the accessory. This is an essential requirement for arriving at classification under Heading 85.37. The lower authority should get expert opinion, on record, if necessary, to determine, what the entity and its essential parts would encompass and constitute; thereafter they should proceed to determine the classification under the appropriate Headings. One cannot first relying on the Purchase Orders/Invoices descriptions of "whole system" and not agreeing with the appellants submission that in itself will not make a single unit and relying on the statements, which have been found by us to admit and indicate the 'Controls' to be in nature of "accessories" and not "integral parts", has upheld the suppression. No material has been brought on record as to what positive acts of non-feasance or malfeasance were committed on the part of the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e applicable retrospectively in operation, as held in HM Bags Manufacturing Co., 1997 (94) E.L.T. 3 (S.C.). If the department wants to rely upon this order, they have to give an opportunity to the appellants to contest the same and can apply the same only to issues open on or after 14-7-1994. (e) The appellants have submitted that the clearances were made after due approval of the Classification Lists. The adjudicator has determined, that there were suppression of facts, with intent to evade. We have considered the submission. The Classification Lists, as filed and approved, are required to declare, in Column as presented in the proforma, which reads as follows - Full description of each item of the goods produced, manufactured or warehoused including specification (e.g. size number of counts, horse power sort No. etc.) as the case may be together with the description as would appear in the invoice. There Circuit Breakers of difference Capacities/Models are mentioned. However, the Commissioner has found, that... "they failed to declare the control mechanism in an integral part of the Circuit Breaker or that the entire assembly i.e. Circuit Breaker with integrated control device ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the house hold, say for operating an air-conditioner, water heater or slightly heavier electrical appliances, would have certain protective fuses to protect the equipment from electrical surges. These switches are known as Miniature Circuit Breakers (MCB) which are also classifiable under 85.35. (v) The circuit breakers (both indoor and outdoor) are correctly classifiable under Heading 85.35. The relevant HSN notes also supports this submission. Infact Heading 85.35 is meant for circuit breakers of 1000V and above whereas 85.36 will cover circuit breakers less than 1000V. If the argument of the Revenues argument that the circuit breakers of high voltage like 11KV and 33KV are themselves classifiable under 85.37 is correct, then some of the items mentioned in Heading will be redundant and otiose. (vi) ITC (HS) which is the nomenclature adopted by the Ministry of Commerce, Government of India has specifically classified both Vacuum circuit breakers and SF6 circuit breakers of different kilo volts under 85.35 and not under 85.37. Annexure III (vii) The Heading 85.37 cover boards, panels, consoles, and other bases equipped with two or more apparatus of Heading No. 85.35 for electri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontrols. (ix) The question now is the classification of a combination of the control panels with the circuit breakers. It is alleged in the show cause notice that in respect of outdoor circuit breakers the control panel is not housed inside the circuit breaker but is kept separately in the location and the same are cleared separately not being attached to each other and that in respect of indoor circuit breakers, the appellants usually house the control panel in the circuit breaker itself. The question regarding the classification of the combination is therefore to be decided by reading the relevant section notes and the interpretative notes. Note 4 to Section XVI reads as under : "Where a machine (including a combination of machines) consists of individual components (whether separate or interconnected by piping, by transmission devices, by electric cables or by other devices) intended to contribute together to a clearly defined function covered by one of the Headings in Chapter 84 or Chapter 85, then the whole falls to be classified in the Heading appropriate to that function". According to this Section Note when a circuit breaker and the control panel are cleared together ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ormally sell the control panel separately. The price of the control panel is also much less as compared to the corresponding circuit breaker. For example a 11KV control panel is sold at a price of Rs. 45,000 vide invoice No. 51587, dated 3-6-93 whi1e a corresponding circuit breaker model is sold at price of Rs. 1,82,600 vide invoice No. 51441, dated 31-3-93. Thus the value control panel will be less than 25% value of the circuit breaker. (xi) Technical books wil1 also clarify that the control panel is a necessary adjunct, the circuit breakers. Photo copies of the relevant extracts of technical books are collectively enclosed as the control panel which is housed in the same housing of the circuit breaker or sent separately along with the circuit breaker loses its identity as a control panel and is to be treated as a circuit breaker by virtue of Note 4 to section XVI. Thus levying a separate excise duty on the control panel whenever the same is cleared along with the circuit breaker under 85.37 does not arise. Therefore the appellant were right in classifying it under Heading 85.35. (xii) Viewed from another angle, the control panel with circuit breaker whether housed in the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot arrive at any findings on submissions made on merits and also on the logic of the Section 37B orders, as made before us. We keep the same, to be redetermined in the remand proceedings. (g) Since we do not find any suppression and clearance have been affected after following the procedure established by law, we do not uphold the case and cause for a penalty in the facts of this case. 4. In view of the finding, we set aside the order, the penalty and direct that the issue of classification on merit be redetermined and demand if any be quantified, for the periods as arrived herein. Appeal disposed off in above terms. Sd/- (S.S. Sekhon) Member (Technical) 5. [Contra per : S.L. Peeran, Member (J)]. - With due respects to my learned brother, I am unable to agree with my ld. brother's findings expressed in his order. Hence, I am writing a separate order as under : - 6. The stay application of the appellants was heard on 25-9-2001 and vide Stay Order No. 540/2001, dated 25-9-2001 the waiver of pre-deposit of Rs. 3,09,62,619/- and penalty of Rs. 75,000/- was allowed solely on the basis of prima facie view expressed in the Misc. Order No. 229/2001, dated 28-8-2001 by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a careful consideration of the submissions made by both sides in the matter. I am satisfied that this is a case which requires to be remanded for de novo consideration on all points i.e. both on merits as well as on time-bar. It is not the proper for us to express our opinion even on time-bar as the documents have been produced before us for the first time at the time of hearing. Appellant's Counsel also produced enormous evidence with regard to classification list filed from time to time as well as various technical specifications and extracts from various books. Counsel has also produced pamphlets of the item in question. All these materials was not before the original authority and the same has not been examined. Further more, the Bench did not hear in detail on technical aspects and on the issue of classification, even on time-bar but had restricted itself to hear on the violation of principles of natural justice and order being not a speaking order, therefore the matter has to go back to the original authority for de novo consideration. The original authority is entitled to take expert opinion, if he feels necessary with regard to impugned goods and also seek explanation from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the department under L-4 licence and started manufacturing this particular product from 1986. After introduction of Tariff Act, 1985 they filed classification list 99/86 effective from 1-3-86 and it was approved on 9-7-86 by the Assistant Collector, Division No. VII. They have also been filing classification list for the subsequent period as and when there were changes in the budget or otherwise and all the classification lists were accordingly approved by the Assistant Collector. The item in dispute HT circuit breakers up to 33 KV were declared to fall under Heading 8535.00 attracting 15% duty and they have been filing classification list classifying the product under Heading 8535.00 and the same was approved by the department. However, the department issued show cause notice No. 17/94 dated 1-3-94 (File No. V/8/15/20/93-CX-Adj.) demanding duty for the period from 1-3-93 to 31-12-93 for Rs 1,51,95,375/- seeking classification of the product under tariff Heading 8537.00 as circuit breaker panels. The department also issued another show cause notice bearing No. 221/94, dated 13-4-94 for the period from 1-1-94 to 28-2-94 involving an amount of Rs 8,91,680/- alleging that the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order recorded by learned Member (T), is squarely applicable to the facts of the present case. In that case learned Member (J) was also in the Bench. He, therefore, argued that the extended period of time for demanding differential duty is not applicable in the absence of suppression of fact or misstatement of fact with intent to evade payment of duty. The learned Counsel also invited my attention to the judgement rendered by CEGAT, West Regional Bench, in the case of Bombay Drums Manufacturing Co. v. CCE, Mumai-I reported in 2000 (124) E.L.T. 908 (T). While delivering the above judgement, the Bench referred to the judgment in the case of Muzzaffarnagar Steel (supra). He also invited my attention to the judgment of the Tribunal presided over by Justice K. Sreedharan, Ex-President, in the case of Fricks India Ltd. v. CCE, Delhi, 2000 (119) E.L.T. 676 in which it has been held that if goods are cleared pursuant to approval of the classification or price list it is not open to the department to justify demand of differential duty by invoking the longer period of limitation. He also invited my attention to para 3(g) of the order recorded by learned Member (T) at page 15 that since ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both the sides and gone through the orders recorded by learned Member (T) and Member (J). I find that learned Member (T) Shri S.S. Sekhon has thoroughly analysed the whole issue and has recorded a very detailed order supported by various judgements as cited by him under para 3. I have also perused the various classification lists and it is observed that in the classification list the assessee has clearly described the goods as HT circuit breakers. Further the matter was taken to the Central Board by the Indian Electrical and Electronic Manufacturers Association who had represented that there is no uniformity in the classification of circuit breakers above 1000 volts for the purpose of levy of Central Excise duty under Schedule to Tariff Act, 1985 (henceforth referred to as Tariff). The association had furnished a list of such HV and MV circuit breakers manufactured in India and it was pointed out by the Association that the Central Excise Officers in different Commissionerate have been classifying such circuit breakers under Headings 8535 and 8537 of the Tariff. In order to ensure uniformity in classification of this product, the Board examined the classification of circuit breake ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f duty in the absence of deliberate suppression or misstatement of facts with intent to evade payment of duty. The Tribunal judgment in the case of Muzzaffarnagar Steel was also followed by the West Regional Bench of the Tribunal in the case of Bombay Drums Manufacturing Co. v. CCE reported in 2000 (124) E.L.T. 908. Further in the case of Fricks India Ltd. v. CCE reported in 2000 (119) E.L.T. 676, the Bench presided over by Justice K. Sreedharan, Ex-President has held that if the goods are cleared pursuant to approval of the classification list it is not open to the department to justify demand of duty invoking the longer period of limitation in terms of Section 11A. 19. In view of the above discussion, I agree with the view taken by learned Member (T) Shri S.S. Sekhon that the appeal is required to be remanded for re-determination of the classification issue and the demand of duty has to be restricted to six months period only. 20. The file may now be placed before the original Bench for passing final order. Sd/- (Jeet Ram Kait) Member (T) MAJORITY ORDER In terms of majority order, the appeal is allowed by remand for re-determination of classification issue and th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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