Classification and SSI exemption principles: corrigendum upheld, school-use steel tables placed under Chapter 94, bought-out items excluded.

A corrigendum altering the show cause notice classification from Chapter 73 to Chapter 94 was treated as valid because it remained within the scope of the original demand. Steel tables supplied to the education department were held classifiable as Chapter 94 metal furniture, not Chapter 73 household articles, since they were for school use. The value of bought-out items was excluded from SSI exemption computation on the basis of purchase evidence and the absence of proved mutuality of interest or flow back. On these remaining grounds, the demand and penalty were unsustainable.

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Issues: (i) Whether the corrigendum to the show cause notice altering the classification of the goods was valid and could be acted upon; (ii) whether steel tables supplied to the education department were classifiable under Chapter 73 or Chapter 94 of the Central Excise Tariff; (iii) whether the value of bought-out items could be excluded for computing the SSI exemption limit.

Issue (i): Whether the corrigendum to the show cause notice altering the classification of the goods was valid and could be acted upon.

Analysis: The original notice proceeded on a classification under Chapter 73 and the corrigendum corrected the classification to Chapter 94. The corrected classification was treated as the basis for deciding the dispute. The corrigendum did not introduce a wholly new nature of demand beyond the scope of the notice and the plea that it operated only prospectively was not accepted.

Conclusion: The corrigendum was held valid and the objection to its maintainability failed.

Issue (ii): Whether steel tables supplied to the education department were classifiable under Chapter 73 or Chapter 94 of the Central Excise Tariff.

Analysis: Chapter 73 was found to cover household articles of iron or steel, whereas Chapter 94 covers furniture, including metal furniture used in offices. As the tables were supplied for use in schools, they were treated as metal furniture of the kind used in offices and not as household articles.

Conclusion: The goods were held classifiable under Chapter 94 and not under Chapter 73.

Issue (iii): Whether the value of bought-out items could be excluded for computing the SSI exemption limit.

Analysis: Evidence of purchases from other units and payments to suppliers was on record, and there was no accepted challenge to the finding that mutuality of interest or flow back was not established. In the absence of contrary evidence, the bought-out goods were excluded from the clearances attributable to the respondents' manufacture.

Conclusion: The exclusion of bought-out items for SSI computation was upheld.

Final Conclusion: The demand and penalty were not sustainable on the remaining grounds, and the Revenue appeal failed.

Ratio Decidendi: A corrigendum correcting the classification in a show cause notice can be validly relied upon where it remains within the scope of the original demand, and goods supplied as metal furniture for school use may be classified under Chapter 94 while bought-out items may be excluded from SSI computation when supported by evidence.

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