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TMI Blog2024 (7) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... s paid In this regard, I further find that the appellant has not disputed that the goods supplied/ sold to Railways were classifiable under CETSH 39181090 and as per S. No. 272A of the Notification No 12/2016-CE dated 01.03.2016, the exemption is available to goods classifiable under Chapter 8607 and not to that of Chapter 3918. Accordingly, the benefit of the concessional rate of duty under the said notification is not admissible and the demand of duty is sustainable. 6.1 The appellant has further contended that no penalty under Section 11AC of the Act is imposable, as there was no intent to evade the duty. The appellant in this regard has submitted copy of letter dated 21.04.2017, vide which he had informed the department about the classification of the impugned goods under CETSH 86079910 on the insistence of Railways and payment of Central Excise duty @ 6%. I find that the said letter of the appellant has been made RUD to the SCN issued. I further find that the SCN proposed penalty under Rule 27 of the Central Excise Rules, 2002 (CER) for alleged contravention of the provisions of the CER and proposed imposition of penalty under Section 11AC of the Act, though no allegations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bited Rs. 6,60,561/- under protest, against goods supplied to Railway under Tariff Head No. 86079910 under the head "Credit utilized for other payments' 2.3 Appellant informed the jurisdictional officers that, they were classifying the goods in question i.e. "PVC Flooring Covering" under Tariff Head No 39181090, but Indian Railways wanted them to classify the "PVC Flooring Covering" under Tariff Head No. 86079910. Accordingly they have modified the classification and have cleared the goods availing the exemption under Notification No. 12/2016-CE dated 01-03-2016 and paid Central Excise Duty @ 6% Ady. However they decided to pay the differential duty under protest at the time of payment of duty @ 6%. 2.4 A show cause notice dated 29.05.2017 was issued to the appellant asking them to show cause as to why: (i) Central Excise duty short paid i.e. 12.50% (-) 6%=6.50%, amounting to Rs. 6,60,561=00, should not be demanded from them under Section 11 A of the Central 'Excise Act,1944. Since the party has already debited Rs. 6,60,561=00 under the head "Credit utilized for other payments" "Under Protest" in their monthly ER-1 return for the month of March`2017, why the same should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon'ble Supreme Court in the case of Westinghouse Saxby Farmer Ltd [2021 (376) E.L.T. 14 (S.C.)] observing as follows: "24. As could be seen from the Orders of the Original Authority and the first Appellate Authority, the answer to question No.1 revolves around the description of goods found in Chapters 85 and 86, as well as the Notes in Section XVII and the General Rules for Interpretation of the First Schedule. We have already extracted the description of goods in Chapters 85 and 86. Therefore, let us now take note of the relevant Notes in Section XVII and the relevant Rule of the General Rules for Interpretation of the First Schedule. 25. Section 2 of the Central Excise Tariff Act, 1985 provides that the rates at which duties of excise shall be levied under the Central Excise Act, 1944 are specified in the First Schedule and the Second Schedule. The First Schedule contains a set of Rules known as "General Rules for the Interpretation of this Schedule". These Rules begin with a mandate that the "classification of goods in this Schedule shall be governed by the principles laid thereunder." 26. Rule 1 of these Rules makes it clear that "the titles of Sections, Chapters an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the heading which occurs last in numerical order among those which equally merit consideration." 29. Interestingly Rule 2(a) speaks about "Article", Rule 2(b) speaks about "material or substance" as well as "goods of a given material or substance" and Rule 3 speaks about "goods". 30. In the case on hand, the claim of the assessee was that the relays manufactured by them were part of the railway signalling equipment. But all the Authorities were of the unanimous view that this product is referable to goods of a specific description in Chapter sub-heading 8536.90 and that, therefore, General Rule 3(a) will apply. 31. But in invoking General Rule 3(a), the Authorities have omitted to take note of 2 things. They are : (i) that as laid down by this Court in Commissioner of Central Excise v. Simplex Mills Co. Ltd. [(2005) 3 SCC 51 = 2005 (181) E.L.T. 345 (S.C.)] the General Rules of Interpretation will come into play, as mandated in Rule 1 itself, only when no clear picture emerges from the terms of the Headings and the relevant section or chapter notes; and (ii) that in any case, Rule 3 of the General Rules can be invoked only when a particular goods is classifiable under two o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inery or equipment, for use otherwise than in or as Railway signalling equipment, those parts which are suitable for use solely or principally with an article in Chapter 86 cannot be taken to a different Chapter as the same would negate the very object of group classification. This is made clear by Note 3. 37. It is conceded by the Revenue that the relays manufactured by the appellant are used solely as part of the railway signalling/ traffic control equipment. Therefore, the invocation of Note 2(f) in Section XVII, overlooking the "sole or principal user test" indicated in Note 3, is not justified. 38. On the question as to what test would be appropriate in a given case, this court pointed out in A. Nagaraju Bros. v. State of A.P. [1994 Supp (3) SCC 122 = 1994 (72) E.L.T. 801 (S.C.)], as follows : ".....there is no one single universal test in these matters. The several decided cases drive home this truth quite eloquently. It is for this reason probably that the common parlance test or commercial usage test, as it is called, is treated as the more appropriate test, though not the only one. There may be cases, particularly in the case of new products, where this test may not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce in the structures. These are being manufactured by them on the drawings and specifications provided to them, by the railways, for their sole use in the railway coaches. These aluminium windows and doors, as not disputed by the counsel before us, are neither marketable in the market nor can be used in any structure. He has rather fairly conceded that these can be solely used in the railway coaches. That being so, it can be safely concluded that these are parts of the railway classifiable under Tariff Heading 86.07(sub-heading 8607.00) of the Tariff. The principle that specific tariff entry has to prevail over the general entry, is not attracted in this case. The view taken in the impugned order dated 15-06-1994 by the Collector (which is the subject matter of the appeal of the assessees) is legally correct and no fault can be found with the same. 11. In the light of the discussion made above, the view taken by the Collector(Appeals) in his order dated 30-05-1995(the subject matter of the appeal filed by the Revenue) classifying the products in question under sub-heading 7610.10 of the CETA cannot be subscribed being not legally sound. He had wrongly reversed the order in origin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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