1997(07)LCX0189

IN THE CEGAT, COURT NO. II, NEW DELHI

Ms. Jyoti Balasundaram, Member (J) and Shri S.K. Dhar, Member (T)

JAISWAL CHEMICALS PVT. LTD.

Versus

COLLECTOR OF CENTRAL EXCISE, INDORE

Final Order No. E/1148/97-B1, dated 25-7-1997 in Appeal No. E/A-1657/89-B1

Cases Quoted

Bakshi Steels Ltd. v. Collector — 1994(03)LCX0112 Eq 1994 (071) ELT 1013 (Tribunal) — Relied on                   [Para 3]

Nagpur Alloy Castings Ltd. v. Collector

— Final Order No. E/95-B1, dated 29-12-1994 — Relied on      [Para 3]

Nagpur Engg. Co. Ltd. v. Collector — 1992(10)LCX0071 Eq 1993 (063) ELT 0699 (Tribunal) — Relied on      [Paras 3, 5]

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

Shri M. Jayaraman, DR, for the Respondent.

[Order per : Jyoti Balasundaram, Member (J)]. - The appellants are aggrieved by the order passed by the Collector of Central Excise, Nagpur classifying Anti-creep bearing plates and Brake-blocks/brake-shoes manufactured by the respondents herein under Chapter sub-headings 7302.90 and 8607.00 respectively, confirming a duty demand of Rs. 10,49,630.70 p on these goods manufactured and cleared from the period from 12-3-1986 to 21-12-1987 and imposing a penalty of Rs. 20,000/-.

2. The appellants claim for classification under sub-headings 7307.10 and 7303.10 as castings iron and steel with benefit of exemption under Notification 208/83-C.E., dated 1-8-1983 has been denied by the Revenue.

3. Before us, the appellants who are represented by their Counsel Shri T. Vishwanathan, submit that the issue of classification of these goods is no longer res-integra as it has been settled by the Tribunal in the case of Nagpur Engg. Company Ltd. v. Collector of Central Excise [1993 (063) ELT 699] wherein anti-creep bearing plates have been held to fall for classification under sub-heading 7302.90 and Brake-blocks under sub-heading 8607.00. This decision has been followed in the case of Bakshi Steels Ltd. v. Collector of Central Excise, Jaipur reported in 1994(03)LCX0112 Eq 1994 (071) ELT 1013 wherein the dispute was regarding classification of iron inserts used in railway sleepers wherein the Tribunal has accepted the contention of the Revenue that they are covered by Tariff Heading 7302.90 as ‘other materials for fixing rails’, since the iron inserts have a specific use for fixing rails. These decisions have been subsequently followed in the case of Nagpur Alloy Castings Ltd. (Final Order No. E/95-B1, dated 29-12-1994). The learned Counsel therefore, submits that he is accepting the department’s classification of the goods under sub-heading 7302.90 and 8607.00 respectively of the Schedule to the Central Excise Tariff Act, 1985. He however, confines his argument to the limitation aspect. He submits that since the show cause notice was issued on 7-7-1988 covering the period from March, 1986 to December, 1987, the show cause notice has been issued beyond the normal period of limitation and the extended period of limitation is not attracted in the present case because the appellants were under the bona fide belief that the disputed goods were classifiable under Chapter 73, in view of the long standing practice of benefit of Notification 208/83 extended even subsequent to 1-3-1986 when castings fell under Heading 73.07. He submitted that in the cases cited (supra), the Revenue has accepted the assessee’s claim of bona fide belief and held that the extended period of limitation is not available to the department. He therefore, pleads that since the entire period covered in the appeal is beyond the normal period of limitation, the duty demand may be set aside, as barred by limitation, and the penalty also requires to be set aside in the absence of any suppression of entire supply of disputed goods to Railways, with intent to evade payment of duty.

4. It is the submission of the learned DR Shri M. Jayaraman that the declaration filed by the assessees, that the Central Excise officers did not initially mention that the articles were exclusively to be supplied to Railway and ready to use as parts but not as castings, which information was vital for the purpose of arriving at the correct classification because classification under Heading 7302 depends upon whether the goods are railway tramway construction material while sub-heading 8607 covers parts of Railway or tramway locomotives or rolling stock. The appellants deliberately mis-declared the goods as castings with a view to claim exemption under Notification 208/83. He draws our attention to the finding in the impugned order that the appellants had not also declared that the disputed items had already acquired essential character or parts falling under Chapter Heading 7302 and 8607 and therefore, it has been rightly held that incomplete information and suppression of the most important fact that the disputed goods were either Railway construction material of iron and steel or parts of Railway amounts to suppression of material information with intention to evade payment of duty. The learned DR submits that the extended period has rightly been invoked in the present case and penalty is also justified for the same reason.

5. We have considered the submissions of both the sides. Since the appellants have accepted the classification of the goods under Chapter 7302.00 and 8607.00 respectively, we are recording our finding only on the applicability of extended period of limitation. We find considerable force in the appellants’ submission that they were under a bona fide belief that bearing plates and brake-blocks were classifiable as iron castings under Heading 7307 even with change in tariff with effect from 1-3-1987, in view of the long standing practice of classification of castings under T.I. 25 and availability of Notification 208/83 even after 1-3-1986 when castings fell under Heading 7807. This is the view that has been expressed in paragraphs 10 to 12 of the order in the case of Nagpur Engg. Company Ltd. (supra). In that case also, the appellants had declared that they were manufacturing bearing plates and brake-blocks as iron castings without disclosing that the goods were to be supplied entirely to Ministry of Railways. The finding in the Nagpur Engg. Company case has been followed in the case of Bakshi Steels (supra) as seen from paragraphs 5 to 7 of that order. Similar view has also been taken in the Nagpur Alloys case (supra). Following the ratio of these orders, which the learned DR has not been able to distinguish either on facts or in law, we hold that the entire demand is barred by limitation and accordingly set aside the demand of duty.

6. In view of our finding that non-declaration of entire supply of bearing plates and brake-blocks to Railways, does not amount to suppression with intent to evade payment of duty, the penalty is also not justified and accordingly, we set aside the impugned order, relating to duty and penalty and allow the appeal.

Equivalent 1997 (94) ELT 558 (Tribunal)