2001(02)LCX0064
IN THE CEGAT, EASTERN BENCH, KOLKATA
Smt. Archana Wadhwa, Member (J) and Dr. S.N. Busi, Member (T)
COMMISSIONER OF CUSTOMS, CALCUTTA-II
Order No. A-185/KOL/2001, dated 20-2-2001 in Appeal No. ER-534/2000
Cases Quoted
Collector v. Chemphar Drugs & Liniments — 1989(02)LCX0024 Eq 1989 (040) ELT 0276 (S.C.) — Referred ...... [Para 5]
Commissioner v. B.H.P. Engineers — 2000(03)LCX0200 Eq 2000 (119) ELT 0599 (Tribunal) — Followed . [Paras 4, 10]
Commissioner v. Bata India Limited — 2000 (038) RLT 0875 (Tribunal) — Referred ........... [Para 6]
Commissioner v. Conveyor Equipment Pvt. Ltd. — 2000(11)LCX0345 Eq 2001 (127) ELT 0478 (Tribunal) — Followed [Paras 4, 10]
Cosmic Dye Chemical v. Collector — 1994(09)LCX0074 Eq 1995 (075) ELT 0721 (S.C.) — Referred .................... [Para 5]
Elgi Equipments Limited v. Commissioner — 1999 (030) RLT 0331 (Tribunal) — Referred . [Para 6]
Flat Products Equipment (I) Limited v. Commissioner — 1999(08)LCX0114 Eq 2000 (115) ELT 0629 (Tribunal) — Followed [Paras 4, 10]
Kores (India) Limited v. Collector — 2000 (039) RLT 0776 (Tribunal) — Referred ................ [Para 6]
Marcandy Prasad Radhakrishana Prasad Pvt. Ltd. v. Collector — 1998(03)LCX0248 Eq 1998 (102) ELT 0705 (Tribunal) — Referred [Para 6]
National Radio & Electronics Co. Ltd. v. Commissioner — 1999(11)LCX0136 Eq 2000 (115) ELT 0035 (S.C.) — Referred [Para 5]
Nervy Lock Company v. Commissioner — 2000(05)LCX0302 Eq 2000 (119) ELT 0579 (Tribunal) — Referred . [Para 6]
Padmini Products v. Collector — 1989(08)LCX0031 Eq 1989 (043) ELT 0195 (S.C.) — Referred .......................... [Para 5]
Pushpam Pharmaceuticals Co. v. Collector — 1995(03)LCX0088 Eq 1995 (078) ELT 0401 (S.C.) — Referred ..... [Para 5]
Space Age Engineering Project — 1995(04)LCX0153 Eq 1995 (078) ELT 0544 (Tribunal) ................................ [Paras 7, 9]
Vishwa Industrial Co. Pvt. Ltd. v. Commissioner — 1998(09)LCX0222 Eq 1999 (107) ELT 0774 (Tribunal) — Followed [Paras 4, 10]
Advocated By : Shri S.K. Bagaria, Advocate, for the Appellants.
Shri V.K. Chaturvedi, SDR, for the Respondents.
[Order per : Archana Wadhwa, Member (T)]. - The appellants were served with a show cause notice dated 6-3-1996 raising demand of duty of Rs. 11,62,500.00 in respect of the goods cleared by them during the period from 30-8-1993 to 28-1-1994 on the alleged ground that the same were not Material Handling Equipments classifiable under sub-heading 8428.00, but the same were parts of the Material Handling Equipments properly classifiable under heading 8431.00 attracting higher rate of duty. The notice proposed invocation of longer period of limitation and imposition of personal penalty upon the appellants.
2. Upon adjudication, the Commissioner of Central Excise, Calcutta confirmed the demand of duty as proposed in the show cause notice and also imposed the personal penalty of an equivalent amount under the provisions of Section 11AC of Central Excise Act, 1944.
3. Interest @24% was also confirmed on the amount outstanding under the provisions of Section 11AB of the Act. The said Order of the Commissioner is impugned before us.
4. Shri S.K. Bagaria, learned Advocate, appearing for the appellants submits that they were placed with a Purchase Order by M/s. Tata Refractories Limited, Orissa for supply of Mill House equipments. As per the said contract, the goods placed in the Order were Belt Conveyor, Screw Conveyor, Belt Bucket Elevator, Chain Bucket Elevator, Feeder, switching switches and electro-pneumatic gate. All these goods are mentioned in Annexure-A to the Billing Schedule which gave the details of the equipments to be manufactured and cleared from the appellants' factory. He submits that inasmuch as it is impossible and impracticable to clear the Conveyors and Material Handling Equipments from the appellants’ factory in a fully finished form, the same were cleared in knocked-down condition after payment of duty under sub-heading 8428.00 and as per the approved price list. He submits that the Commissioner has not doubted the fact that parts cleared from the appellants’ factory would constitute a complete Material Handling Equipment in a CKD condition, but has held that since there was a separate heading for the parts, the same would be properly classifiable under heading 8431.00. He also submits that if the interpretation adopted by the adjudicating authority is accepted, then in all the cases, the complete equipments cleared in CKD conditions would merit classification under heading 8431.00 making the tariff entry 8428.00 as redundant, inasmuch as the Conveyors or huge Material Handling Equipments can never be cleared from any assessee’s factory in a fully manufactured condition. As such, he submits that the observations made by the Commissioner that even if all the parts cleared from the factory may collectively constitute a machine, the classification can only be done as parts. He draws our attention to the earlier decisions of the Tribunal in the case of Vishwa Industrial Co. Pvt. Ltd. v. C.C.Ex., Calcutta-II reported in 1999 (107) ELT 774 and in the case of C. C. Ex. v. B.H.P. Engineers reported in 2000(03)LCX0200 Eq 2000 (119) ELT 0599 (Tribunal) = 2000 (040) RLT 791. Attention has also been drawn to other two decisions of the Tribunal in the case of C. C. Ex. v. Conveyor Equipments Pvt. Ltd. reported in 2001 (127) ELT 478 and in the case of Flat Products Equipments(I) Limited v. C. C. Ex. reported in 1999(08)LCX0114 Eq 2000 (115) ELT 0629 (Tribunal) = 1999 (035) RLT 993, where in an identical situation, the Tribunal has held the goods to be properly classified under heading 8428.00.
5. Shri S.K. Bagaria, learned Advocate for the appellants also assails the impugned Order on the ground of limitation. He submits that the period involved in the present appeal is from August, 1993 to January, 1994, whereas the show cause notice was issued on 6-3-1996 i.e. clearly beyond the normal period of limitation of six months from the relevant date. He also submits that all the facts were before the Revenue inasmuch as the price lists were filed on 29-7-1993 in respect of the goods covered by the said contract along with the copy of the contract papers. The appellants are engaged in the manufacture of Conveyors and Material Handling Equipments for the last about two decades and the same have been classified as Material Handling Equipments for all these years. The goods were being cleared under the cover of gate passes and delivery challans giving cross-reference to the connected price list. The goods were being described in the said document as clearance of part-material/consignment of Material Handling Equipments. (emphasis provided). These documents were being filed with the RT-12 returns. As such, there was no suppression or mis-statement with an intent to evade payment of duty. The Commissioner’s reasoning for invoking the longer period of limitation is that the appellants did not inform the Department about the clearance of the Conveyors in CKD condition. He also submits that from the challans and gate passes, it was apparent that the goods were being cleared in CKD condition and this cannot be justifiably made the basis for invoking the longer period of limitation. In any case, Conveyors, by their nature, can never be cleared in a fully assembled condition and they have always to be cleared in CKD condition or SKD condition. In support of his above submission, he placed reliance upon the following decisions :-
(i) 1999(11)LCX0136 Eq 2000 (115) ELT 0035 (S.C.) - National Radio & Electronics Co. Ltd. v. CCE
(ii) 1995(03)LCX0088 Eq 1995 (078) ELT 0401 (S.C.) - Pushpam Pharmaceuticals Co. v. CCE
(iii) 1994(09)LCX0074 Eq 1995 (075) ELT 0721 (S.C.) - Cosmic Dye Chemical v. CCE
(iv) 1989(08)LCX0031 Eq 1989 (043) ELT 0195 (S.C.) - Padmini Products v. CCE
(v) 1989(02)LCX0024 Eq 1989 (040) ELT 0276 (S.C.) - CCE v. Chemphar Drugs & Liniments
6. Shri Bagaria, learned Advocate, also submits that the imposition of mandatory penalty upon the appellants under the provisions of Section 11AC and the demand of interest under Section 11AB, are illegal and without jurisdiction, inasmuch as the period involved is prior to 28-9-1996 when the said decisions came into effect. He also submits that Sections 11AC and 11AB cannot be pressed into service for the demand relatable to the period prior to 28-9-1996. He also refers to the following decisions :-
(i) 1998(03)LCX0248 Eq 1998 (102) ELT 0705 (Tribunal) - Marcandy Prasad Radhakrishna Prasad Pvt. Ltd. v. C.C.E.
Department’s Appeal against the decision was dismissed by the Hon’ble Supreme Court as briefly reported in 1999 (107) ELT A-121.
(ii) 2000 (038) RLT 875 - CCE v. Bata India Limited
(iii) 1999 (030) RLT 331 - Elgi Equipments Limited v. CCE
(iv) 2000 (039) RLT 776 - Kores (India) Limited v. CCE.
(v) 2000(05)LCX0302 Eq 2000 (119) ELT 0579 (Tribunal) - Nervy Lock Company v. CCE.
7. Shri V.K. Chaturvedi, learned SDR for the Revenue reiterates the reasoning of the authorities below. He submits that the appellants having cleared the parts and not the complete machine or Material Handling Equipment, were liable to pay duty on the goods as parts under sub-heading 8431.00. In this connection, he draws our attention to the Tribunal's decision in the case of Space Age Engineering Project reported in 1995 (078) ELT 544, wherein it was observed that the Conveyor Parts manufactured at the assessee’s factory and removed to site of erection cannot be called collection of parts of the conveyor system. As such, he submits that by applying the ratio of the said decision, no fault can be found with the impugned Order.
8. As regards the limitation, Shri Chaturvedi, learned SDR for the Revenue submits that the returns filed by the appellants are still pending assessment and as such, the question of limitation does not arise.
9. In his rejoinder, Shri Bagaria, learned Advocate submits that the facts in the case of Space Age Engineering Project Pvt. Ltd. referred to by the learned SDR, are totally different and have no application to the facts of the present case. The assessee in that case was clearing only Idlers, Pulleys and Structurals from their factory. All other parts/components of Conveyors were bought-out items directly sent to the sites of the customers without bringing the same to the assessee’s factory. This factual position was also admitted by the learned Counsel appearing for the assessee in that case, as recorded in para 2 of this Order. It was, in these circumstances, that the Tribunal held that the goods having been cleared from the assessee’s factory were only parts and not complete Conveyors. As against this in the present case, the appellants had cleared from its factory the entire Conveyors and Material Handling Equipments including all their parts and components under CKD condition. The bought-out items were first brought to the appellants’ factory and were cleared along with their own manufactured goods. As such, he submits that the reliance by the learned SDR on the said decision of the Tribunal, is not appropriate.
10. After giving our careful consideration to the submissions of both sides, we find that the issue before us is whether the Material Handling Equipments cleared in CKD condition have to be assessed to duty as Material Handling Equipments or as parts. The reasoning of the Commissioner in his impugned Order is that even if all the parts cleared from the appellants’ factory may collectively constitute a machine, the classifications are still to be done as parts because there is a specific separate heading for parts. We do not find any merits in the above reasoning of the adjudicating authority. If that be so, as rightly contended by the learned Advocate, the entry under heading 84.28 would become redundant inasmuch as the Conveyors and Material Handling Equipments can never be cleared in a fully manufactured condition and for their very nature, they have to be cleared in SKD or CKD condition. The Tribunal in the case of Vishwa Industries Co. Pvt. Ltd. v. C.C.Ex., Calcutta-II (referred supra) has held that where the Conveyors are cleared in SKD or CKD condition, they have to be assessed as Conveyors falling under sub-heading 84.28 and not as parts under heading 84.31. Similarly, in the case of CCE v. B.H.P. Engineers (referred supra), the clearance of various parts of the Conveyor System under different gate passes in part-shipments was held to be clearance of Conveyors in unassembled condition over a period of time under different gate passes. While arriving at the above conclusion, the Tribunal took note of the Explanatory Notes as given in the Harmonized Commodity Description and Coding System, that the machines may be transported in unassembled condition for convenience of transportation and in that case, the classification has to be done as machine and not as parts. To the same effect, there are decisions of the Tribunal in the cases of CCE v. Conveyor Equipments Pvt. Ltd. and Flat Products Equipments (I) Limited v. CCE which are relied upon by the appellants. We do not see any reason to take a different view than what has been held in the above-referred cases. Accordingly, following the ratio of the same, we set aside the confirmed demand of duty and interest, and imposition of personal penalty upon the appellants, and allow the appeal with consequential reliefs to the appellants. As the appeal has been allowed on merits, the plea of limitation is not being considered by us.
_______ Equivalent 2001 (131) ELT 0578 (Tri. - Kolkata) Equivalent 2001 (046) RLT 0344