2001(06)LCX0026

IN THE CEGAT, COURT NO. II, NEW DELHI

S/Shri P.S. Bajaj, Member (J) and K.K. Bhatia, Member (T)

MASTER MINDS

Versus

COMMISSIONER OF CENTRAL EXCISE, NAGPUR

Final Order No. 303/2001-B, dated 7-6-2001 in Appeal No. E/154/94-B

Collector v. Bright Brothers Ltd. — 1990(10)LCX0045 Eq 1991 (052) ELT 0385 (Tribunal) — Followed ............... [Para 8]

Collector v. Bright Brothers Ltd. — 2000 (116) ELT A67 — Followed ............................. [Para 8]

Commissioner v. Sifa Sanpra Systems Pvt. Ltd. — 1999(01)LCX0116 Eq 2000 (119) ELT 0375 (Tribunal) — Followed [Para 7]

REPRESENTED BY :        Shri K.K. Anand, Advocate, for the Appellants.

Shri Ashok Mehta, SDR, for the Respondent.

[Order per : K.K. Bhatia, Member (T)]. - The appellants manufacture Time Recording Terminal (TRT for short). The Central Excise officers visited their premises on 9-11-1993 and found that they were not registered with the Central Excise Department for the manufacture of these goods. On scrutiny of their record, it was found that during the period 1992-93 and 1993-94 they had manufactured and sold 24 numbers of TRT units. The item TRT works as a time recorder for recording the attendance of personnel in offices/industries etc. It can note late comings, early going and absentee. The TRT reads the unique code punched on a plastic card issued to each of the employees, when inserted into it and also records the time at which the card is inserted. These two informations are clubbed and can be communicated to a computer for further processing. The TRT also has a capacity to store this data for a period of about 24 hrs. The machine thus processes data in coded form appearing on each different plastic card specially designed for working with TRT. On further enquiry, it was learnt that the mode of installation of the TRT to a computer works through cables and TRT could not be used for programming and thus did not perform any independent functions without attaching to a computer.

2. The appellants were issued a show cause notice, dated 7-6-1994 in which it is alleged that TRT falls under sub-heading No. 8471.00 of the Schedule of the Central Excise Tariff Act, 1985 attracting the central excise duty at the rate of 15% ad valorem without benefit of any exemption. It is contended that Chapter Note 5(b) of Chapter 84 of Central Excise Tariff Act, 1985 provided as under :-

“Automatic data processing machines may be in the form of system consisting of a variable no. of separately housed units. A unit is to be regarded as being a part of the complete system if it meets all the following conditions”.

3. It is stated in the notice that TRT machines satisfy the above condition and, therefore, they are appropriately classifiable under sub-heading 8471.00. Accordingly, the appellants are called upon to show cause why the duty of Rs. 1,01,438/- in respect of 24 number of machines valued at Rs. 6,76,250/- manufactured and cleared during the years 1992-93 and 1993-94 should not be realised from them under Rule 9(2) read with proviso to Section 11A of the Central Excise Act, 1944 and why a penalty should not be imposed on them under Rule 173Q of the Central Excise Rules, 1944.

4. On considering the reply of the noticee/party, the Commissioner of Central Excise, Nagpur vide order, dated 1/8-11-1994 confirmed the demand of the aforesaid amount on the party apart from imposing penalty of Rs. 10,000/- on them.

5. This appeal is against the above order of the Collector. We have heard Shri K.K. Anand, Advocate for the Appellants and Shri Ashok Mehta, SDR for the Respondents. We have considered the submissions made by both the sides. The Departmental authorities wish to classify the impugned item under sub-heading 8471.00 as against the claim of the party for placing it under sub-heading 8473.00. The rival entries are appended below :-

6. The Department has however relied on the provisions of Chapter Note 5(b) of Chapter 84, the extracts of which are also given above in para 2.

7. The learned Counsel of the appellants submits that facts of the present case are fully covered by the decision of the CEGAT in CCE, Mumbai v. Sifa Sanpra Systems Pvt. Ltd. - 1999(01)LCX0116 Eq 2000 (119) ELT 0375 (Tribunal). In that case two competing entries were under sub-headings 8471.00 and 91.06. Tariff entry 8471.00 is already extracted above and entry 91.06 relates to, “Time of day recording apparatus and apparatus for measuring, recording or otherwise indicating intervals of time, with clock or watch movement or with synchronous motor (for example Time Registers, Time Recorders)”. On considering the submissions made by both the sides, the Tribunal in the cited decision held as follows :

“7. A lot of emphasis was placed by the Revenue on this note to show that the item was not hit by the exclusion clause 5(b). We note that the product in dispute does not process data, but only records certain data which is not further analysed, but can be retrieved for preparing reports. It does not have a system for producing reports on the basis of this data. After such reports are entered, it has to be connected with a personal computer. Tariff description under Heading 91.06 is more appropriate in the instant case. We note that this fact has been gone into in detail in the appeal order passed by the Collector (Appeals)”.

8. As it could be seen from above observations, the Tribunal in the cited case ruled out the classification of time register/time recorder under sub-heading No. 8417.00 and held that the same was more appropriately classifiable under sub-heading 91.06. The facts being identical, we agree with the findings of the Tribunal in the cited case that the impugned machines cannot be classified under sub-heading No. 8417.00. However, none of the contesting sides pleaded its classification under Heading 91.06. It is, therefore, not open to us to follow the above decision of the Tribunal and classify this item under sub-heading 91.06. It is well settled law that recovery of duty under Tariff heading different from that which was proposed in the show cause notice is not permissible by vide CEGAT decision in CCE v. Bright Brothers Ltd., 1990(10)LCX0045 Eq 1991 (052) ELT 0385 (T). This order of the Tribunal has been upheld by the Supreme Court as seen from 2000 (116) ELT A67. In this view of the matter, we rule out the classification of the machines under sub-heading 8471.00 and allow the appeal by setting aside the order of the Collector with consequential relief, if any.

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Equivalent 2001 (131) ELT 621 (Tri. - Del.)

Equivalent 2001 (045) RLT 0755