1998(04)LCX0160

 IN THE CEGAT, COURT NO. IV, NEW DELHI

Ms. Jyoti Balasundaram, Member (J) and Shri G.R. Sharma, Member (T)

MADHUSUDAN CERAMICS

Versus

COLLECTOR OF CENTRAL EXCISE, ALLAHABAD

Final Order No. E/375/98-D, dated 17-4-1998 in Appeal No. E/2468/90-D

Cases Quoted

Cosmic Dye Chemical v. Collector — 1994(09)LCX0074 Eq 1995 (075) ELT 0721 (S.C.) — Referred                      [Para 4]

Indrol Lubricants & Specialities Ltd. v. Collector — 1992(12)LCX0013 Eq 1994 (069) ELT 0325 (Tribunal)  — Referred [Para 4]

Advocated By :  Shri Uday Joshi, Advocate, for the Appellant.

Shri Satnam Singh, SDR, for the Respondent.

[Order per : G.R. Sharma, Member (T)]. - The issue for determination in this appeal is whether the goods described as Ceramic wares for laboratory (Laboratory Sinks), in their classification list effective from 1-3-1987 were classifiable under Chapter Heading 69.07 as claimed by the assessees or under Chapter Heading 69.08 as held by the Department.

2. The facts of the case briefly stated are that the appellants had been declaring the products before 1-3-1987 as Ceramic Sinks under Chapter Heading 69.08. In the Budget of 1987-88, the Government of India changed the rate of duty inasmuch as on the items classifiable under Chapter Heading 69.07, the rate of duty was fixed 30% ad valorem, whereas on the goods classifiable under Chapter Heading 69.08, the rate of duty was fixed as 40% ad valorem. When the Government of India changed the rate of duty in the Budget of 1987-88, the appellants filed the classification list claiming that their product was Ceramic Wares for Laboratory classifiable under Chapter Heading 69.07 attracting the rate of duty 30% ad valorem. They submitted that it was their mistake that they were classifying the goods under Chapter Heading 69.08.

3. Shri Uday Joshi, ld. Counsel appeared for the appellants and submitted that their product was apparently being used in the Laboratory as is evident from the statements on record. He submitted that the Ceramic Sinks have been classified as Laboratory Wares also by the ISI specification No. 2556 (Part-1979). He argued that the fact remains that Ceramic Sinks manufactured by them were being apparently used by the Laboratory and since the Laboratory Wares were classifiable under Chapter Heading 69.07, therefore, they have claimed the classification of the product under the aforesaid Chapter Heading.

4. The ld. Advocate also argued that the demand is hit by limitation, inasmuch as the department was aware that the assessees were manufacturing the product and describing it as Ceramic Sinks and classifying it under Chapter Heading 69.08. He submitted that there was nothing held back from the department, nor was there any mis-statement made and, therefore, the demand was partly hit by limitation, inasmuch as the show cause notice was issued on 29-3-1989 and the demand is pertaining to the period from 1-3-1987 to 6-11-1988. In support of his contention that the demand is time barred, ld. Counsel cited and relied upon the decision of the Apex Court in the case of Cosmic Dye Chemical [1994(09)LCX0074 Eq 1995 (075) ELT 0721 (S.C.)]. He also cited and relied upon the decision of this Tribunal in the case of Indrol Lubricants and Specialities Limited [1994 (069) ELT 325]. He also relied upon the cross-examination of the Superintendent of Central Excise, in support of his contention that the classification list was approved and that the department had noted about the classification of the goods. Concluding his arguments both on limitation as well as on classification of the goods covered under Chapter Heading 69.07 the counsel submitted that the case is in favour of the assessees.

5. Opposing the request for assessment of the product under Chapter Heading 69.07 as well as on limitation aspect, Shri Satnam Singh, ld. SDR submits that the description of the goods given in Chapter Heading 69.08 is clear, it covers Ceramic Sinks among other articles. He submits that the goods in question were being described as Ceramic Sinks, were being claimed for classification under this Chapter Heading before 1-3-1987. He submits that since there is a specific Chapter Heading for the goods in question namely, chapter Heading 69.08. It is well settled in law that if parentage can be found, it should not be consigned to orphanage. He submits that Chapter Heading 69.08 covers the goods having description Ceramic Sinks.

6. On the question of limitation, ld. SDR submits that the change in classification was sought by the assessees. There was a change on the higher side on account of Budgetary changes. He submits that this clearly shows that there was an intention to evade payment of duty by changing the classification of the products. He refers to the Circular issued by the assessees to their dealers and customers. He, therefore, submits that the intention to evade payment of duty is clear. He submits that the contravention of the Rules with intent to evade payment of duty makes longer period invoking for demand of duty legal, therefore, he submits that the demand is not hit by limitation and that longer period has rightly been invoked. In the instant case, the ld. SDR arguing both on merits as well as on limitation aspect, submits that the appellants do not have a case.

7. Heard the submissions of both sides. On the question of classification of the goods, we note that the goods were Ceramic Sinks. We find on perusal of the tariff description of the goods that Ceramic Sinks are specifically covered under Chapter Heading 69.08. The argument of the ld. Counsel for the appellants is that the Ceramic Sinks according to the ISI specification can be termed as Laboratory Wares and were actually Laboratory Wares, is not acceptable in view of the fact that the tariff entry needs to be interpreted correctly. The tariff entry covers specifically Ceramic Sinks. The question is whether they are used for laboratory or any other purpose, is not relevant for the present case. What is relevant is whether Ceramic Sinks are made of Ceramic and whether they are Sinks. Now the question arises for classification of the product. Whether there is a specific heading and the answer is in the affirmative, it is Chapter Heading 69.08. We have taken into account the facts that prior to 1-3-1987, the appellants were describing the goods as Ceramic Sinks and had classified the same under Chapter Heading 69.08. We note that this is well settled position in law that whenever there is specific heading for any goods, the specific heading is to be preferred and not the general heading. Looking to all these facts, we hold that Ceramic Sinks manufactured by the appellants are correctly classifiable under Chapter Heading 69.08. Further ISI specifications become relevant only where there is no other means to ascertain the correct description/nature of goods.

8. On the question of limitation, we find that before 1-3-1987, the product was claimed to be classified under Chapter Heading 69.08. It is only from 1-3-1987 the description of the product as also its tariff classification has been sought to be changed to 69.07 on the ground that it was a mistake on the part of the assessee, however, no evidence was led before us to prove that it was a mistake. Therefore, we are of the view that it was intentional and the intention is clear, inasmuch as the item if classifiable under Chapter Heading 69.08 carries the rate of duty of 40% ad valorem whereas if the item is classifiable under Chapter Heading 69.07 carries the rate of duty of 30% ad valorem. Coupled with this fact, we note that the circular issued by the assessee to its dealers and customers was only for manipulation. Even if the product was being used in the laboratory the end use of the product was not material for its classification. There has been contravention of Rules with the intention to evade payment of duty. We hold that the longer period of demand has rightly been invoked.

9. In the result, the appeal is rejected.

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Equivalent 1998 (102) ELT 711 (Tribunal)

Equivalent 1998 (027) RLT 0592