Tummala Electronics Pvt. Ltd. vs Commissioner of Central Excise & Customs, Bangalore>2001(05)LCX0166

2001(05)LCX0166

IN THE CEGAT, SOUTH ZONAL BENCH, BANGALORE

S/Shri G.A. Brahma Deva, Member (J) and S.S. Sekhon, Member (T)

TUMMALA ELECTRONICS (P) LTD.

Versus

COMMR. OF C. EX. & CUS., BANGALORE

Final Order No. 943/2001, dated 22-5-2001 in Appeal No. E/2801/98

Advocated By : S/Shri T.K. Rao, M.D. and Ramesh, Admn. Manager, for the Appellant.

Smt. Radha Arun, SDR, for the Respondent.

[Order per : S.S. Sekhon, Member (T)]. - The appellants have filed this appeal against the order of the lower authority reclassifying the entities being manufactured by them as per Indian Railway Standard Specifications for use as Train Traffic Control Equipment, by finding the entity to be ‘Communication equipment’ capable of establishing communication with the other Stations, these hand sets provided as the main equipment guide the classification under Heading 85.17. Since they are used in relation to Telephonic & Telegraphic Equipment and the HSN notes do not cover such equipment under 85.30.

2. The Commissioner (Appeals) found.....

“4. I have carefully examined the facts of the case, detailed findings of Assistant Commissioner in the adjudication order. Tariff heading, sub-heading involved and the grounds put forth by the appellants in their appeal petition and pleas advanced during personal hearing held on 10-6-1998. The main question to be decided is with regard to the classification of goods manufactured by the assessee as stated in Para-1 above, whether they fall under 8530.00 or 8517.00. In this regard I have also carefully examined the Section Notes (2) & (3) of Section XVI applicable to goods falling under Chapters 84 & 85 and the explanatory notes under HSN in respect of goods classifiable under CSH 8517.00 (paras 1363 & 1380).

5. From the careful examination of the above notes, it would reveal that the present case of classification is covered fully and clearly under note 2(a) of Sec XVI. In that note that parts which are goods included in any of the heading or sub-heading of Chapter 84 or chapter 85 are in all cases to be classified in their respective headings. Therefore it is clear that any goods which are specifically included, covered and specified in any of the heading/sub-heading of Chapter 84 or 85 would be classified rightly under the said chapter heading/sub-heading, respectively.

6. From the plain reading of the above chapter heading, Section notes and the technical write up and brochures provided and also the specifications of Indian Railways standards for 4 wire/2 wire Train Traffic Control Equipment with dual tune multi-frequency (DTMF) signalling control way station unit, DTMF control room equipment, DTMF way station equipment, selective calling equipment are only communication equipments capable of establishing communication with other stations through the handset provided. The DTMF control equipment meets the requirement of train traffic control systems. The findings of the Assistant Commissioner in this context is correct, proper and legal and based on the factual findings. As such the reasoning adopted by the Assistant Commissioner to classify the said goods on the plea that sub-heading 8517.00 of HSN includes telephonic apparatus as well as telegraphic apparatus. The chapter notes at page 1363 of HSN provides for classification of special apparatus in the form of system used in telephoning and telegraphy or of an electrical frequency by impulse representing speech messages or other data.”

And confined the classification under 85.17.

3. We have heard both sides and considered the submissions and find :

(a) Headings 85.17 & 85.30 read as -

“85.17 8517.00 Electrical apparatus for line telephony or line telegraphy, including such apparatus for carrier-current line systems.

85.30 8530.00 Electrical signalling, safety or traffic control equipment for railways, tramways, roads, inland water-ways, parking facilities, port installations or airfields (other than those of heading No. 86.08).”

(b) The entity in question is manufactured as per “Indian Railway Standard Specification” applicable. The specifications apply to and cover the requirement for ‘Train Traffic Control Equipment’ with voice frequency signalling and can be used in Omni-bus speech circuit sections. From the specifications, we find that no doubt that it can covey ‘Voice Frequency’ but the use is for ‘Train Traffic Control Systems’ and the item is akin to products falling under 85.30 and not under 85.17.

(c) The entity is understood by the buyers i.e. Indian Railway as “Train Traffic Control System” and meets the requirement of the standards for that. The manufacturer also supply the same to Railways. The product would therefore appear to qualify to be marketable, as an entity classifiable under 85.30 and not 85.17 as Telephonic or Telegraphic, system though it may include principles of Telephony.

(d) However, from the Orders of the lower authority, we do not find any material to find that they have considered the marketability aspect, nor do the impugned orders indicate whether the entity has ever been marketed as ‘Telephone or and Telegraph’ equipment to buyers other than Railways or the Railways Marketability is an essential requirement to determine the classification when the entity cannot be classified clearly as per Statutory Rules of Interpretation. Order which do not consider the same, are required to be set aside for de novo consideration.

(e) We also find, from the Order of the lower authority that the ‘Rules for the Interpretation of the Schedule’ for classification have not been considered by the lower authority. In case of a conflict, the rule of akin & later the better i.e. rule 4 or rule 3(b) of classification has to be applied and ruled out. The Order therefore has to be remanded back to determine why these rules are not applicable.

4. In view of our findings, we would set aside the Order and remand the matter back to the Original authority for redetermining the classification after hearing the appellants. We clarify that all other issues are kept open in the remand proceeding. Appeal allowed as remand for de novo adjudication.

Equivalent 2001 (133) ELT 177 (Tri. - Bang.)