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TMI Blog2003 (12) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... ods for the first time while claiming the exemption. It is true that subsequent to the amendment Notification dated 14-2-1988, the respondent had reapplied for reclassification under Tariff Heading 84.30. But this will not detract from the initial claim of the respondent that its goods were properly classifiable under Heading 87.05 nor does it explain why the respondent did not describe the goods fully in its application for approval of its classification list for the relevant period. The Tribunal has reduced the quantum of penalty on the view taken by it and which has been found by us to be erroneous. Thus we do not propose to enhance the quantum of penalty as fixed by the Tribunal. The appeals are accordingly allowed to the extent stated above. - 7229-7236 of 1996 - - - Dated:- 16-12-2003 - Ruma Pal and P. Venkatarama Reddi, JJ. [Order]. - A question was raised before the Tribunal whether Water well drilling rigs mounted on motor vehicle Chassis fall under the Tariff Heading 84.30 of the Central Excise Tariff Act, as claimed by the respondent assessee, or under Tariff Heading 87.05 as upheld by the Adjudicating Authority. The Tribunal upheld the respondent's contenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 84.30. The appellant issued a show cause notice subsequent thereto in which it was stated, inter alia, that the goods had been wrongly classified by the respondent for the period in question under Heading 84.30, that the goods were properly classifiable under Tariff Heading 87.05 and that the appellant had deliberately suppressed the true facts and made a misstatement of fact within the meaning of Sec. 11A of the Central Excises and Salt Act, 1944 (as it was then entitled) justifying the invocation of the extended period of limitation. 5.The respondent filed a reply to the show cause notice claiming that the goods had been properly classified under Tariff Heading 84.30 and that in any event there had been no suppression or misstatement within the meaning of Section 11A of the Act and as such the claim was time-barred. 6.The Adjudicating Authority considered the two tariff entries as well as the relevant explanatory note of the HSN together with the evidence in the form of statements of the employees of the respondent relating to the nature of the goods manufactured and came to the conclusion that the case made out in the show cause notice was proved and that there had been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Tribunal, after noting the submissions of both the parties, came to the conclusion that the Harmonised System Nomenclature/(HSN) explanatory notes had been misconstrued by the Adjudicating Authority. On the factual aspect it was held that the process of manufacture of the goods in question had been mentioned in the respondents' answer to the show cause notice had not been rebutted by the Revenue. It was noted that, as pleaded, the manufacture included a specific power take off device as a result of which the motor vehicle chassis on which the drilling rig was mounted was so integrated that the Chassis could not be separately used as a motor vehicle. Therefore it was held that the goods were correctly classifiable under Chapter 34 Tariff Heading 84.30 and not under Tariff Heading 87.05. In the circumstances it was held that the question of limitation was really academic. In any event it was found that there was no wilful misstatement or suppression of fact as found by the Adjudicating Authority since the assessee had made available gate passes, price list, contract, invoices which had not been rebutted by the appellant. However, the Tribunal went on to hold that as far as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itself was confused whether the goods manufactured by the appellant should be classified under Tariff Heading 84.30 or 87.05. Our attention has been drawn to the exemption notification which was issued immediately after the initial exemption notification in which the benefit of exemption was extended to mobile rigs mounted on vehicles classifiable under 84.30 or 87.05. As soon as the position was clarified the respondent filed an appropriate classification list claiming that the goods should be classified under Tariff Heading 84.30 as had been done prior to the issuance of the exemption notification. It is also submitted that in any event having regard to the confusion in the mind of the Department itself, it could not be said that the respondent had suppressed any fact or made any wilful misstatement for the purpose of invoking the extended period of limitation of Sec. 11A of the Act. 11.The Tariff Headings in question, namely, 84.30 and 87.05 read respectively as under : "84.30 : Other moving grading, levelling, scraping, excavating, tamping, compacting, extracting or boring machinery, for earth minerals or ores; pile-drivers and pile-extractors; snow ploughs and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 84.30) further includes self-propelled wheeled machines in which the chassis and the working machine are specially designed for each other and form an integral mechanical unit. In this case, the machine is not simply mounted on an automobile chassis like the machines described in the first paragraph above, but is completely integrated with a chassis that cannot be used for other purposes and may incorporate the essential automobile features referred to above." 13.In other words, the exception (B) to Heading 84.30 as noted is itself subject to further exceptions, namely, (i) self-propelled machines where the propelling and controlling elements are located in the cab of the machine which is mounted on the wheeled chassis; (ii) self-propelled wheeled machines in which the chassis and the working machine and specially designed for each other; and form an integral mechanical unit. In such cases, there must not be a "simple" mounting but a "complete integration" such that the chassis cannot be used for any other purpose and the machine may incorporate "the essential automobile features" of propelling or control. By carving out these further exceptions to the exception detailed under B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material point of time under Heading 84.30. The Section Notes relied on read : "Unless the context otherwise requires, composite machines consisting of two or more machines fitted together to form a whole and other machines adapted for the purpose of performing two or more complementary or alternative functions are to be classified as if consisting only of that component or as being that machine which performs the principal function." "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." 17.The Section Notes have been further expounded under different parts. Part VI : Multifunctional machines and composite machines and Part VIII : Mobile machinery have been separately detailed. Part VI pertains inter alia to "composite machines consisting of two or more machines or appliances of different kinds, fitted together to form a whole, c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion. Those decisions are distinguishable since in this case there was no question of the assessee failing to comply with the requirement of the Rule by reason of any alleged misinterpretation of the Rule. Had the assessee given a full description of the excisable goods but claimed classification under a wrong Tariff heading, the principle enunciated by this Court and as relied upon by the respondent may have been applied but that has not happened here. 19.Apart from this we cannot ignore the fact that the respondent had, consequent upon the issuance of the exemption notification of 1-3-1988, itself classified the goods under Tariff Heading 87.05 and given a full description of the goods for the first time while claiming the exemption. It is true that subsequent to the amendment Notification dated 14-2-1988, the respondent had reapplied for reclassification under Tariff Heading 84.30. But this will not detract from the initial claim of the respondent that its goods were properly classifiable under Heading 87.05 nor does it explain why the respondent did not describe the goods fully in its application for approval of its classification list for the relevant period. 20.The Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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