Hindusthan Malleables & Forging Ltd. vs Asstt. Collector Of Central Excise>1993(09)LCX0027

1993(09)LCX0027

BEFORE THE COLLECTOR OF CENTRAL EXCISE (APPEALS)

Shri B.N. Das

HINDUSTHAN MALLEABLES & FORGING LTD.

Versus

ASSTT. COLLR. OF C. EX.

Order-in-Appeal No. 651/JSR/93, dated 1-9-1993

Advocated By: Dr. Samir Chakraborty, Advocate and Shri S.C. Pachoree, Sales Manager, for the Appellants.

[Order]. - The appellant submitted classification list Nos. 45/90 and 64/91-92 for their various products of Iron and Steel effective from 20-3-1990 & 25-7-1991 respectively. The Assistant Collector approved the said Classification List effective from 20-3-1990 except the goods at Sl. No. 4 under Item 6 of the said Classification list i.e. “Other cast articles of Iron & Steel - of Iron (un-machined)”. The said product was approved and Rule 98 procedure of Central Excise Rules, 1944 was resorted to as further verification and investigations in the matter was required. The assessee (appellant) claimed the classification of the said products under sub-heading No. 7325.10 with exemption under Notification No. 275/88-C.E., dated 4-11-1988. The present Asstt. Collector, Central Excise, Dhanbad vide his Order-in-Original No. 120/93-C.E., dated 1-3-1993, approved the impugned product under Chapters 84, 85, 86 & 87 etc. and denied the eligibility of the exemption under Notification No. 275/88-C.E., dated 4-11-1988 and spoke out that the proper application of exemption benefit would be the Notification No. 223/88-C.E., dated 23-6-1988 as amended. Since the party indicated that they are carrying out surface treatment in form of annealing and surface coating by applying paint on the castings and both these operations are carried out with sophisticated machines and therefore, the castings after undergoing these two processes cannot be termed as ‘unmachined castings’. Therefore, the impugned products are not covered by the Notification No. 275/88-C.E., dated 4-11-1988 but suitably covered under the Notification No. 223/88-C.E., dated 23-6-1988. As such the impugned products at S1. No. 4 under Item 6 of Classification List No. 40/90 effective from 20-3-1990 were treated as eligible for availing the benefit of Notification No. 223/88-C.E., dated 23-6-1988 as amended and the appellant was directed to pay the duty accordingly.

2. Being aggrieved, the appellants have filed this appeal alongwith stay petition against the impugned Order-in-Original. The appellants have contended, inter alia, in the grounds of the appeal as well as in stay petition, that their claim for classification of the impugned goods under sub-heading No. 7325.10 and exemption of the same under Notification No. 275/88-C.E., dated 4-11-1988 should be considered. In their defence they cited the ratio of the decision taken by the CEGAT, New Delhi in the year 1986 in the case of the appellant and thereafter in March 1990 by the Collector (Appeals), C. Ex., Calcutta in which classification of the impugned product in the manner sought for by the appellant was accepted. The issue in question is not a new one and the department had along been aware of the same. The decisions of both Tribunal and Appellate Collector have been accepted by the department and appellant. The Order of the Collector (Appeals) shows that the said Collector specifically rejected the findings of the Assistant Collector that the said goods were classifiable under Chapters 84, 85, 86 & 87 of the schedule to the Tariff Act. This decision has been accepted by the department. Further it is evident from the Circular of the Board dated 1-8-1989, specifically clarifying that iron castings and cast articles of iron which are unmachined and are not subject to any machining other than fettling would be eligible for exemption under Notification No. 275/88-C.E., dated 4-11-1988.

3. The case was posted for personal hearing on 18-8-1993 when Dr. Samir Chakraborty, learned Advocate and Shri S.C. Pachoree, Sales Manager appeared before me ,on behalf of the appellant. Apart from reiterating the grounds of appeal and stay petition Dr. Chakraborty submitted that this is a case of classification of unmachined iron castings covered under Classification List No. 45/90 effective from 20-3-1990 and Classification List No. 64/91-92 effective from 25-7-1991. He took me through the position as regards classification of unmachined iron castings as it stood prior to introduction of the new Tariff and what has been the position thereafter. He stated that from day one till date his clients have not changed the process while manufacturing the unmachined iron castings. The same matter has already been dealt earlier by the Collector of Central Excise (Appeals) in his Order-in-Appeal No. 15-Pat/90 dated 2-3-1990 and the Tribunal, in so far as the reasonings given by them, though the Order pertains to old period, vide their Order No. 515/86-B1 dated 19-8-1986. The classifications considered were as per Board’s Circular issued on 18-2-1987 as well as on 1-8-1989. In their latest judgment in the case of M/s. International Steel Foundry Ltd. v. C.C.E. reported in 1993 (065) ELT 552, the Tribunal upheld that even after 1-3-1988 unmachined iron castings on which only proof machining is done is classifiable as iron castings under Chapter 73 and not as machine parts. In order to bring uniformity in assessment the Board issued directions under Section 37B of the Central Excises & Salt Act. About binding effect of these directions on subordinate officers the Gujarat High Court as well as the Calcutta High Court have given decisions, reported in 1989(05)LCX0018 Eq 1991 (051) ELT 0265 (Guj.) & 1991(06)LCX0047 Eq 1992 (057) ELT 0674 (Cal.). Although res judicata does not apply to tax matters, the assessees must know where they stand and department cannot go on revising classification every now and then if there is no change in the processes employed in the manufacture of goods over the years. In the instant case, the Asstt. Collector has just done that.

4. He has, therefore, prayed that since annealing and surface coating which are nothing but putting the castings in heat chamber and dipping the castings in paint respectively were done earlier also and no sophisticated machines are used in these two operations or these are being done now. Asstt. Collector has erred in passing the impugned Order which requires to be set aside.

5. I have considered the appellant’s prayer for waiving pre-deposit. There being a prima facie case I order its waiver.

6. As regards classification of the impugned goods, the Asstt. Collector has held that these cannot be called as unmachined iron castings, but cast and cast articles of iron identifiable as machine parts falling under Chapters 84, 85, 86, 87 as the case may be. But the question was already settled in this office Order (Appeal) No. 15/Pat/90 dated 2-3-1990. Hence I do not find any hold to go over it again in detail as there does not appear to be any change in the manufacturing process. I, however, find that Asstt. Collector in his Order at Page-4 has stated that the appellants were “Carrying out surface treatment in the form of annealing and surface coating by applying paint on the castings. Both these operations are carried out with the help of sophisticated machines. Therefore, the castings after undergoing these two processes cannot be termed as ”unmachined castings". But it may be recalled that these two processes were also done earlier and there is no evidence that the so-called sophisticated machines were installed subsequently. According to the assessee, annealing was always being done in a heat chamber and surface coating by dipping the castings manually in paint. Thus there has been no sophisticated machine for the two operations. That apart it has been clarified by the Central Board of Excise & Customs after full alignment of the Central Excise Tariff with HSN from 1-3-1988 that the six processes viz. (i) removal of surface defects, (ii) surface cleaning and removal of surface defects, (iii) chipping, filing or grinding to remove excess material, (iv) annealing and stress relieving, (v) proof machining and (vi) surface coating alone which do not alter the essential character of the castings would not be enough to merit classification of such castings as machinery parts under Chapters 84, 85, 86 or 87 etc. as the case may be. Hence the finding of the Asstt. Collector are not well found.

7. The Asstt. Collector has also held that the Order in Appeal No. 15/Pat/90 dated 2-3-1990 did not determine the question of eligibility of the appellant to exemption Notification No. 275/88-C.E. He, therefore, held that it was open for him to adjudicate it. As the appellants were admittedly carrying out all the processes mentioned in the proviso to Notification No. 223/88-C.E., they were eligible for this Notification. But he has erred in holding so when the appellants are qualified to avail benefit of Notification 275/88, as they are fulfilling the conditions attached thereto.

8. I see no reason to disallow 275/88-C.E. to the appellants and, accordingly, allow it. The Order of the Asstt. Collector is set aside and the appeal allowed.

Equivalent 1993 (068) ELT 0714 (Coll. Appl.)