1998(10)LCX0019

IN THE CEGAT, SOUTH ZONAL BENCH, MADRAS

S/Shri S.L. Peeran, Member (J) and V.K. Ashtana, Member (T)

SIVANANDHA PIPE FITTINGS LTD.

Versus

COMMISSIONER OF C. EX., COIMBATORE

Order Nos. 1965 & 1966/98, dated 6-10-1998 in Appeal Nos. E/4338/89/B1 and E/4580/89-B/Md

Cases Quoted

Bharat Forge & Press Industries (P) Ltd. v. Commissioner — 1990(01)LCX0072 Eq 1990 (045) ELT 0525 (S.C.) — Relied on [Paras 1, 2, 7]

Indian Hume Pipes Co. Ltd. v. Commissioner — 1997(03)LCX0060 Eq 1997 (093) ELT 0369 (Tribunal) — Referred    [Para 5]

Kupling India v. Commissioner — 1991(01)LCX0066 Eq 1991 (053) ELT 0370 (Tribunal) — Relied on                      [Paras 2, 7]

Commissioner v. Wood Craft Products Ltd. — 1995(03)LCX0070 Eq 1995 (077) ELT 0023 (S.C.) — Referred              [Paras 2, 6]

Kumar Industries v. Commissioner — 1996(07)LCX0021 Eq 1996 (087) ELT 0172 (Mad.) — Distinguished                 [Para 7]

Asia Tee Enterprises v. Assistant Collector — 1990(07)LCX0044 Eq 1991 (052) ELT 0351 (Mad.) — Distinguished   [Para 7]

Advocated By : Shri T. Ramesh, Advocate, for the Appellant.

Shri V. Thyagaraj, SDR, for the Respondent.

[Order per : S.L. Peeran, Member (J)]. - These appeals arise from the Order-in-Appeal passed by the Collector of Central Excise (Appeals), Chennai holding that :

(a) Bends (also known as Elbows)

(b) Reducers

(c) Tees which are used as Buttwelding (BW) type fittings, out of bought out excise duty paid pipes are classifiable under tariff Heading 7305.00 of the Central Excise Tariff from 1-3-1986 to 29-2-1988.

The tariff heading at the relevant time was “Fittings for tubes and pipes (other than fittings for rain water pipes) of iron or steel, eg. couplings, elbows, sleeves). In the order-in-original the Assistant Collector had held that with the alignment of Central Excise Tariff headings with HSN headings effective from 1-3-1988, the heading for pipe fittings has been changed to Heading 73.07. He has held that the goods are known and marketed as pipe fittings and not as pipes. The appellants’ classification List No. 157/85-86 and No. 297/86-87 had been approved from 12-1-1988 and 13-1-1988. The Central Excise Officers visited the factory of the appellants and made a study of the dutiability of the goods manufactured and on 14-1-1986, a letter was issued from the office of the Asst. Collector to the appellants informing that the goods manufactured by them classifiable under Heading 73.05. The appellants by their reply 23-1-1988 stated that if the approved classification list is to be changed they should be required to show cause as to why the classification should not be changed by observing the principles of natural justice. However, in para 7 of their reply they stated that in the interest of expedition they are prepared to waive the requirement of the formal show cause notice and appear for a personal hearing in the matter. In the meanwhile they filed a fresh classification list on 27-1-1988 seeking classification of the pipe bends, reducers and tees which are used as Buttwelding under sub-heading 7305.00 indicating rate of duty at 15% vide classification list No. 279/87-88 which was duly approved by the AC endorsing effective from 27-1-1988, that is the date of filing of the classification list. Notwithstanding the approval of the classification list in view of the assessee’s letter, dated 23-1-1988, the order-in-original confirming the classification of the goods manufactured by the appellants company under Heading 73.05 was issued on 20-5-1988. On appeal the said order was set aside and remanded by the appellate authority on the ground of violation of principles of natural justice. Thereafter the Asstt. Collector after due hearing passed the order-in-original on 23-2-1989 which was confirmed in appeal by the Collector (Appeals). The appellants had taken the stand before the Asstt. Collector that the classification lists have to be approved only prospectively with effect from 1-3-1988. The Asstt. Collector had held that the excisable goods that were being manufactured by the appellants, i.e. bends, reducers, and tees were shown in column under ”other goods" which column is normally meant for listing non- excisable goods if any. Therefore, he held that the particulars furnished by the assessee were incorrect, incomplete and to some extent misleading to the officers. He has noted that it is on record that after the visit of the officers, to the factory of the appellants on 12-1-1988 and 13-1-1988 a notice was put to the manufacturer on 4-1-1988 informing them that the goods manufactured by them were correctly classifiable under Heading 73.05 and asked them to file a proper classification list. As a result they filed a fresh classification list on 27-1-1988 declaring the goods manufactured by them under Heading 73.05 attracting duty at 15% which was duly approved on 1-2-1988. Therefore, he held that classification list 279/87-88 had been set aside by the appellate authority as its approval was in terms of the classification list filed by the appellants themselves and it continues to be in force and it does not suffer from any infirmity and that they have cleared pipe fittings on payment of duty since 1/88. The AC observed that the classification list No. 279/87-88 was not filed by the manufacturer in compliance with order-in-original which was set aside and the approval of the classification list was prior to the passing of the order-in-original. He noted that classification list had been filed on change in the tariff heading with effect from 1-3-1988 by the appellants themselves and they have been paying duty without demur. Hence he confirmed the classification of the goods in terms of Classification List No. 279/87-88, dated 27-1-1988.

2. Before the Collector (Appeals) it was contended that the revised classification list filed with their letter, dated 27-1-1988 classifying the goods under sub-heading 7305.00 of the tariff was under protest. The Collector (Appeals) noted that there is nothing on record to indicate that the appellants followed Rule 233B procedure or not without indicating the grounds of payment of duty under protest. The appellants had also contended that the revised classification list cannot be retrospectively effective without issue of show cause notice. Collector (Appeals) has noted that the point for determination is only whether or not it was correct for the lower authority to confirm the classification list of the goods under sub-heading 7305.00 from 27-1-1988 i.e. the date on which the appellants had filed the revised classification list classifying the goods on their own under sub-heading 7305.00. The Collector (Appeals) has held that the proper officer has accorded approval to the classification list on 1-2-1988 effective from 27-1-1988 itself. i.e. the date of filing of the same and by virtue of the provisions of Rule 173B of the Central Excise Rules, 1944 the classification list has already taken effect from 27-1-1988 only from the date of its submissions and the Asstt. Collector again in according approval to it on 1-2-1988 effective from 27-1-1988 would not alter the position.

3. We have heard Shri T. Ramesh, learned Counsel for the appellants and Shri V. Thyagaraj, learned SDR for the Revenue.

4. The learned Counsel stated that the appellants have filed application raising additional grounds with regard to the activity of bending pipes to make reducers and tees to contend that it would amount to manufacture as no new product comes into existence and the pipes out of which the said goods are manufactured continue to remain the same. In this regard he relied the judgment rendered by the Hon’ble Supreme Court in the case of Bharat Forge & Press Industries (P) Ltd. v. CCE reported in 1990(01)LCX0072 Eq 1990 (045) ELT 0525 (S.C.) wherein the Hon’ble Supreme Court held that the item would continue to fall under Tariff Heading 26AA(iv) i.e. pipes and tubes and not under Tariff Item 68.

5. On the other hand the learned SDR contended that the situation in the new tariff is different in view of the specific Heading 73.05 which was later amended to 73.07 after aligning with the HSN. He in this regard submitted that the issue is no longer res integra as this Bench has already taken the view that MS pipes and bends used specifically for providing a joint between pipes laid in a straight line is akin to use of pipe fittings and MS pipe bends reducers and the same are classifiable under Heading 73.07 of the CET after introduction of HSN and this view has been taken in the case of Indian Hume Pipes Co. Ltd. v. CCE reported in 1997 (093) ELT 369. He further pointed out that in the case of Kupling India v. CCE reported in 1991 (053) ELT 370 the Tribunal has taken a view that pipe fittings viz. sockets were classifiable as pipes and tubes under erstwhile Tariff Heading 26AA(iv) prior to 1-8-1989 and under Item 25(15) from 1-8-1983 to 28-2-1986 and sub-heading 7305.00 effective from 1-3-1986. He also submitted in this judgment (Kupling India) the Tribunal has also noted the judgment of Bharat Forge & Press Industries v. CCE while reclassifying the item under Heading 7305.00 and he submitted that in view of these judgments, there is no merit in the appeal. He further submitted that HSN notes has got persuasive value as held by the Hon’ble Supreme Court in the case of CCE v. Wood Craft Products Ltd. reported in 1995(03)LCX0070 Eq 1995 (077) ELT 0023 (S.C.). He further submitted that there is no infirmity in the order of the AC that the classification is effective from its date.

6. The learned Counsels submitted that the HSN at the relevant time was not aligned and hence the ratio of the judgment in the case of Wood Craft Products is not applicable for the period in question.

7. On consideration of the submissions made by both the sides we are of the considered opinion that the Tribunal in the case of Kupling India v. CCE has referred to the judgment in the case of Bharat Forge & Press Industries rendered by the Supreme Court for fixing the classification of the impugned item under TI 26AA(iv) till 1986 and has also clearly opined that the decision of the Supreme Court was with regard to the classification only under the contesting Tariff 26AA(iv) in preference to TI 68 and therefore, after introduction of the new tariff the item is required to be properly classified under Heading 73.05 and held that demand of duty is correct for the period effective from that date i.e. 1-3-1986. Therefore, we notice that the contention of the appellants that the items in question are not goods at all in terms of the judgment of the Supreme Court is not correct as the ratio has been clearly applied with regard to the impugned goods correctly by the Tribunal in the case of Kupling India v. CCE and the Tribunal has clearly observed that the issue before the Hon’ble Supreme Court was only pertaining to the contesting entries in the old tariff between TI 26AA(iv) and TI 68 and after the change in tariff, the item would be classifiable from 1-3-1986 under Tariff Heading 7305. We further note from the judgment in the case of Indian Hume Pipes (supra) the Tribunal has clearly held that MS pipes, bends etc. would be classifiable under Heading 7307 after introduction of HSN. The Tribunal has clearly noted in the order about the definition of the item, pipe and pipe fittings as defined in Mc Graw Hill Dictionary of Scientific terms II Edition, the Tribunal also noted the definition of the term Pipe and Pipe fittings as set out in the Websters Collegeate Dictionary and taken the other submissions to hold that the item in question would be classifiable after change of alignment of the Tariff to HSN under Tariff Heading 7307. In view of these judgments we notice that the issue is clearly settled in favour of the Revenue. We further note that the findings arrived at by the original authority that the classification is effective from the date of classification is correct and there is no infirmity in the said order. The citations referred to by the learned Counsel with regard to Kumar Industries v. CCE reported in 1996 (087) ELT 172 and that of Asia Tee Enterprises reported in 1991 (052) ELT 351 are clearly distinguishable as in both these judgments, the ratio laid down was short levy of demand cannot be raised on RT 12 without issue of show cause notice and duty is not recoverable till classification is finalised. The situation is different in the present case as the impugned order raises only the question regarding classification and not pertaining to demand. Appellants have been paying duty after filing classification list under Heading 73.05. Therefore, pleas on any of the aspect pertaining to demand of duty had not been made before the lower authority. In this view of the matter, there is no merit in the appeals and the same are therefore rejected.

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Equivalent 1999 (106) ELT 114 (Tribunal)