1993(07)LCX0027

IN THE CEGAT, SOUTH REGIONAL BENCH, MADRAS

S/Shri S. Kalyanam, Member (J) and V.P. Gulati, Member (T)

Third Member on Reference : Shri Harish Chander, President

FUJI ELECTRONICS (P) LTD.

Versus

COLLECTOR OF CENTRAL EXCISE, MADURAI

Order No. 260/93, dated 13-7-1993 and 8-11-1994 in Appeal No. E/SB/Stay/3350/93 in E/SB/5321/93/MAS

Cases Quoted

Anup Engineering Ltd. v. UOI — 1978 (2) E.L.T (J 533)                                                                [Paras 2, 4, 10, 11]

Impex International v. Collector — 1985 (004) ECC 60                                                                                       [Para 12]

Assistant Collector v. Dunlop (India) Ltd. — 1985 (019) ELT 22                                                                [Para 13]

U.P. Lamination v. UOI — 1985 (20) E.L.T 243 (All.)                                                                                      [Para 14]

Advocated By : Shri Venkataraman, Advocate, for the Appellant.

 Shri. J.M. Jeyaseelan, D.R., for the Respondent.

[Order per : S. Kalyanam, Member (J)]. - This is an application for waiver of pre-deposit of a sum of Rs. 67,308/- in terms of the impugned order of the Collector of Central Excise (Appeals), Trichy, dated 18-2-1993.

2. Shri Venkataraman, the learned Counsel for the petitioner submitted that the petitioners are manufacturers of T.V. signal boosters classifiable under 85.29 of the Central Excise Tariff Act, 1985. The Asstt. Collector of Central Excise by his order dated 9-10-1992 reclassified the goods under 85.43 of the CET, resulting in the impugned order demanding differential duty on grounds of changed classification. It was submitted that the Collectorate at Coimbatore has chosen to classify identical goods under 85.29 after due consideration in the case of M/s. UMS Radio Factory and therefore, the adjudicating authority in the present case should have also adopted the same classification. It was urged that in respect of identical goods there cannot be two divergent opinions between two neighbouring Collectorates, viz. Collectorate at Coimbatore taking a view on the question of classification in favour of the assessee while the Madurai Collectorate taking a contrary view in favour of the revenue. It was submitted that since there are two divergent opinions among two neighbouring Collectorates and inasmuch as a manufacturer manufacturing identical goods at Coimbatore is already enjoying the benefit of having his goods classified under 85.29, on prima facie ground the same benefit should be extended to the petitioner as well. It was submitted that the view adopted by the Madurai Collectorate would prejudicially affect the rights and interests of the petitioner and the petitioner would suffer irreparable loss and injury on grounds of discriminatory treatment meted out to two manufacturers similarly and equally placed. Balance of convenience also in the above factual background is in favour of the petitioner for the grant of waiver of pre-deposit of duty. The learned Counsel further placed reliance on the Division Bench ruling of the Gujarat High Court in the case of M/s. Anup Engineering Ltd v. Union of India, reported in 1978 (002) ELT (J 533).

3. The learned D.R. urged that merely because there is difference of view between two Collectorates it does not mean that the view taken by the adjudicating authority in the impugned order against the petitioner is erroneous.

4. We have carefully considered the submissions made before us. The admitted facts remain that the Collectorate at Coimbatore has been classifying the goods for similar manufacturers of TV boosters under Chapter 85.29 cited supra and to a specific query from the Bench the learned D.R. submitted that this view taken by the Coimbatore Collectorate was not challenged in appeal before the proper appellate authority. In such a situation it is inconceivable as to how the neighbouring Collectorate, viz. Madurai Collectorate excercising co-ordinate jurisdiction in similar matter can take a contrary view to the detriment of the assessee. Prima facie such divergent views in respect of similarly placed manufacturers by two neighbouring Collectorates are apt to result in prejudice to one of the similarly placed assessees. While the manufacturers of TV boosters at Coimbatore would avail the benefit of classification in his favour, his counterpart in the neighbouring Madurai Collectorate will suffer detriment by being called upon to pay a higher duty on the basis of a different classification. In fiscal administration such patent contradiction in assessment cannot be allowed to co-exist placing one manufacturer at an advantage and his counterpart in the neighbouring area at a definite disadvantage. This will be in violation of the spirit of the concept of equality enshrined in the Article 14 of the Constitution of India and if allowed to continue would be an impermissible Constitutional anathema. The Division Bench of the Gujarat High Court in the case of M/s. Anup Engineering Ltd., cited supra has observed as under :

“Before we leave these matters, we want to point out the extreme hardship which would be caused to the industrialists in a place like Gujarat where one view is taken which would go to the detriment of the job working factories in Gujarat and an opposite view that will be taken in places like Maharashtra and Haryana. If there is any difficulty which the excise authorities in any particular State feel about any particular notification or a provision of law as regards interpretation, it would be advisable to have the same interpretation all over India and to seek directions from the Central Board so that the same interpretation, whether right or wrong, is supplied all over the country and situation like the present one where the job working factories in Haryana and Maharashtra are at an advantage as compared to similar factories in the State of Gujarat, may be avoided.”

Therefore, in the facts and circumstances stated above and following the ratio of the Division Bench of the Gujarat High Court we hold that the petitioner cannot be discriminated against in the matter of classification and therefore, on a prima facie view we hold that the petitioner is entitled to the grant of waiver of pre-deposit of duty, and also stay of recovery of the duty, pending appeal and we order accordingly. We make it clear that this is only a prima facie view for a limited purpose of stay application and the issue will have to be finally decided on merits when the appeal is taken up for disposal.

5. [Order per : V.P. Gulati, Member (T)]. - I have given a careful thought to the order recorded by learned Brother Member (Judicial) but I am not able to agree with him that prima facie the petitioner is entitled to the grant of waiver of pre-deposit of duty.

6. I observe that so far as the classification of the goods is concerned prima facie Tariff Heading 85.43 is more appropriate for the classification of the goods in question viz. T.V. boosters. Tariff Heading 85.29 under which the applicants have sought for the classification of the goods and Tariff Heading 85.43 under which the classification has been upheld by the learned lower appellate authority, for convenience of reference, are reproduced below :

No evidence as such has been brought on record to show that T.V. boosters are parts of the item falling under Tarrif Heading 85.25 to 85.28 for these to be covered by the Heading 8529.00. The item in question appears to perform a specific function of boosting the signal and prima facie more appropriately covered by Heading 8543. At best the T.V. booster can be considered as an accessory to the T.V. and not a part thereof. No parts catalogue has been brought on record to show that the item answers to the description of parts of T.V. Prima facie, therefore, there is no infirmity in the order of the learned lower authority. The only point that has to be considered is whether in view of the classification being done in a neighbouring Collectorate, the applicants would be put to any hardship. It is not the case of the applicants that all over India these goods have been assessed by the Central Excise authorities under Tarrif Heading 85.29 as has been done in the neighbouring Collectorate. Nothing has also been brought on record to show how their business has suffered because of the classification of the goods as done by the authorities. As it is the goods stand classified under Tariff Heading 85.43 and any future clearances by the applicants will have to be under that heading. In a case where prima facie a totally wrong classification has been done by one authority, the same cannot be taken to be a cause for giving a relief to another party. With respect, therefore, I observe that in the facts of this case the ratio of the judgment of the Hon’ble High Court is distinguishable. I, therefore, hold that no prima facie case has been made out for hardship and for that reason I order that the applicants should pre-deposit the entire duty demanded. Since I differ from the view taken by learned Member (Judicial), the date before which the pre-deposit should be made will be decided after the order by the third Member.

POINT OF DIFFERENCE

Whether in the facts and circumstances of the case the petitioner is entitled to the grant of waiver of pre-deposit of duty and also stay of recovery of the duty pending appeal, as held by Member (Judicial) for the reasons recorded by him,

or

no prima facie case has been made out for hardship and for that reason the applicants should pre-deposit the entire duty as held by Member (Technical) for the reasons recorded by him.

7. [Order per : Harish Chander, President]. - I have perused the order written by the learned brothers Shri S. Kalyanam, Member (Judicial) and Shri V.P. Gulati, Member (Technical). The following point of reference has been referred to me :-

“Whether in the facts and circumstances of the case the petitioner is entitled to the grant of pre-deposit of duty and also stay of recovery of the duty pending appeal, as held by Member (Judicial) for the reasons recorded by him,

or

no prima facie case has been made out for hardship and for that reason the applicants should pre-deposit the entire duty as held by Member (Technical) for the reasons recorded by him."

8. Shri T.V. Balasubramanian, the learned Counsel for the petitioner was present. He pleaded that the petitioners are the manufacturer of TV boosters and seek classification under Heading 85.29 whereas the Revenue reclassified the goods under Heading 85.43. He argued that the booster has not got any individual function. It is to be used with the TV set which falls under Heading 85.28 and as such the correct classification would be under Heading 85.29. He pleaded that the amount involved is Rs. 67,308. The learned Counsel further pleaded that the appellant has to pay duty on a higher rate whereas the other petitioners in the field are paying duty on a lower rate and as a result of which the appellant is out of business and the sales came to a standstill as far as boosters are concerned. He argued that the appellant is out of business in the light of the order passed by Member (Judicial) and pleaded for the stay. He further argued that the other petitioner namely UMS Radio Factory have claimed under Heading 85.29 on a lower rate of duty and at the same time confirmed by the Collector (Appeals) order on which Revenue had filed an appeal, which is still pending. He argued that this appeal may also be heard alongwith that appeal.

9. Shri R. Subramanian, the learned DR present on behalf of the respondent stated that reference given is not relevent in Revenue proceedings. The duty is to be paid on the basis of the tariff prevalent at the time of the clearance of the goods. He pleaded that he is agreeable to the order passed by Member (Technical).

10. I have heard both the sides and I have gone through the facts and circumstances of the case. Both the learned Brothers have narrated the facts of the case. Member (Judicial) has not looked into the prima facie merits of the case and has only allowed on the basis of the judgment of the Hon’ble Gujarat High Court in the case of Anup Engineering. For the proper appreciation of the position, Heading 85.28 is reproduced below :-

85.28

8528.00

Television receivers (including video monitors and video projectors), whether or not combined, in the same housing, with radio-broadcast receivers or sound or video recording or reproducing apparatus.

Headings 85.28 and 85.29 have to be read together as 85.29 will only apply if the TV booster can be treated as a suitable part used solely or principally with the TV set whereas Member (Technical) has taken a view that it falls under Heading 85.43 which is electrical machines and apparatus having individual functions not specifically included elsewhere in this Chapter. The issue whether it falls under heading of the other heading is contentious and arguable.

11. Hon’ble Gujarat High Court in the case of M/s. Anup Engineering Ltd. had held as under :-

“Before we leave these matters, we want to point out the extreme hardship which would be caused to the industrialists in a place like Gujarat where one view is taken which would go to the detriment of the job working factories in Gujarat and an opposite view that will be taken in places like Maharashtra and Haryana. If there is any difficulty which the excise authorities in any particular State feel about any particular notification or a provision of law as interpretation, it would be advisable to have the same interpretation all over India and to seek directions from the Central Board so that the same interpretation, whether right or wrong, is supplied all over the country and situation like the present one where the job working factories in Haryana and Maharashtra are at an advantage as compared to similar factories in the State of Gujarat, may be avoided.”

12. Hon’ble Calcutta High Court in the case of M/s. Impex International v. Collector of Customs, Calcutta & Others reported in 1985 (004) ECC 60 had held as under :-

“Section 111(d) of the Customs Act enables confiscation provided the import is contrary to any prohibition imposed by or under this Act or under any law for the time being in force. Calcutta Customs have cleared and released several consignments of tetracycline hydrochloride during the last five years against the REP licences issued against export by the registered exporters, contract having been registered prior to 27th September, 1977. They released the said consignments as they were of the view that the licence permitted the import of the item in question. They considered the implication of such licences and also obtained clarification of the Chief Controller of Imports and Exports. If, on the same facts, they purport to take a different view or different stand or if there is any doubt whether the licence is covered for import of the goods in question or not, it cannot be said that the import of such goods was in contravention of the provision of Section 111(d) of the Customs Act, 1962, or is liable to confiscation. In the case of the petitioner, earlier several consignments of this item were released more than once. Several consignments have been released in other cases. The importer can certainly rely on the stand taken by the customs authorities in releasing various consignments of the identical item in several cases and can reasonably believe that such item is permitted for import. If that be the position, then it cannot be said that the goods are imported or attempted to be imported or are brought within the Indian customs waters for the purpose of being imported contrary to any provision imposed by or under Customs Act, 1962, or any other law for the time being in force. Neither the customs authorities nor the Chief Controller of Imports and Exports made any public notification that such an item cannot be imported by REP licence endorsed under 1977-78 Policy. An importer is entitled to know where his right and obligation stand under the licence. It involves international trade and before the importer can enter into a contract or open a letter of credit he must know the exact position regarding the import of the particular item. If the policy interpretation and the stand of the department changed with the change in the incumbent in the post of Collector of Customs there will be utter chaos and confusion. What is permitted to be imported by one Collector on an iterpretation of the licence and the relevant rules and notification is not permitted by the successor-in-office on an another interpretation on the same set of facts. This will create an atmosphere of uncertainty and insecurity to the REP licence holder or the transferees thereof.

13. Hon’ble Supreme Court in the case of Asstt. Collector of Central Excise, W.B. v. Dunlop India Ltd. reported in 1985 (019) ELT 22 had held as under :-

“Even assuming that the company had established a prima facie case but it was not sufficient justification for granting the interim orders as was done by the High Court. There was question of balance of convenience in favour of the Government and not the respondent company. Very often some courts act as if furnishing a bank guarantee would meet the ends of justice. No Government business and for that matter no business of any kind can be run on mere bank guarantee. Liquid cash is necessary for the running of a Government as indeed any enterprise. Where matters of public revenue are concerned, it is of utmost importance to realise that interim orders ought not to be granted merely because a prima facie case has been shown. More is required. The balance of convenience must be clearly in favour of the making of an interim order and there should not be slightest indication of a likelihood of prejudice to the public interest. In the instant case, these considerations have not been borne in mind by the High Court and interim order of this magnitude has been granted for the mere asking. Therefore, the appeal is allowed with the costs.”

14. Hon’ble Allahabad High Court in the case of M/s. UP Lamination v. UOI & Others reported in 1985(03)LCX0019 Eq 1985 (020) ELT 0243 (All.) [Paras 5 and 6] had held as under :-

*    *    *    *    *    *    *    *    *

15. In the matter before me, the sales of TV booster have come to nil and virtually the appellant is out of business. In view of this observation, I agree with the view expressed by Member (Judicial). Taking in view the aspect of balance of convenience, I agree with the conclusion of the learned brother Member (Judicial). Registry is directed to place the matter before the Regular Bench for passing appropriate orders in accordance with law.

FINAL ORDER

16. In view of the majority decision, waiver of pre-deposit of duty pending appeal is granted and recovery of the same is also stayed pending appeal.

Equivalent 1995 (77) ELT 567 (Tribunal)