Tribunal remands matter for re-examination, seeks technical opinions on classification issue and purchase invoices.

INN LINK SYSTEMS Versus COMMISSIONER OF C. EX., GOA

INN LINK SYSTEMS Versus COMMISSIONER OF C. EX., GOA - 2007 (218) E.L.T. 529 (Tri. - Mumbai) Issues Involved:
1. Classification of Guest Room Control Systems (GRCS) under the appropriate Chapter Heading of the Central Excise Tariff Act, 1985.
2. Determination of whether the appellants manufacture different types of GRCS or only one type.
3. Applicability of the extended period for demand due to alleged suppression of facts.

Detailed Analysis:

1. Classification of GRCS:
The primary issue revolves around whether the GRCS should be classified under Chapter Heading 8537 or 9032. The appellants argued that their products, including those with temperature control features, should fall under Chapter Heading 8537, which covers 'Boards, panels, consoles, desks, cabinets and other bases, equipped with two or more apparatus of Heading No. 85.35 or 85.36, for electric control or the distribution of electricity including those incorporating instruments or apparatus of Chapter 90.' They contended that even if their GRCS included temperature control devices (thermostats), they should still be classified under Heading 8537 because this heading allows for the inclusion of instruments from Chapter 90.

The department, however, argued that GRCS with temperature control features should be classified under Chapter Heading 9032, which pertains to 'Automatic regulating or controlling instruments and apparatus,' specifically mentioning thermostats for refrigerating and air-conditioning appliances. The department's stance is that the primary function of these GRCS is temperature control, which falls under Chapter 9032, and not merely the control or distribution of electricity.

The tribunal noted that while the appellants' GRCS might include components from Chapter 90, the classification under Heading 8537 is only applicable if these components are meant for electrical control or distribution. The tribunal decided to remand the matter to the original authority to obtain technical expert opinions on whether temperature control devices can be considered as meant for electrical control or distribution of electricity.

2. Determination of Types of GRCS:
The appellants claimed they manufacture four different types of GRCS, each with distinct functions. The Commissioner, however, concluded that the appellants manufacture only one type of GRCS with a thermostat, based on the manufacturing process and the lack of categorization in their records.

The tribunal found that the matter could have been easily verified through a factory visit and inquiries with the purchasing hotels. The tribunal directed the appellants to provide purchase invoices for components, including thermostats, and for the department to verify these claims through further inquiries. The tribunal emphasized that GRCS without temperature control devices should be classified under Heading 8537, and the demand should be re-quantified accordingly.

3. Applicability of the Extended Period for Demand:
The department invoked the extended period for demand, alleging suppression of facts by the appellants regarding the use of thermostats in their GRCS. The appellants argued that they had filed classification declarations and had not suppressed any facts.

The tribunal left this issue open for re-examination upon remand, considering the need for further factual verification regarding the types of GRCS manufactured and the components used.

Conclusion:
The tribunal set aside the Commissioner's order and remanded the matter for re-examination. The original authority is to obtain technical opinions on the classification issue and verify the types of GRCS manufactured by the appellants through further inquiries and examination of purchase invoices. The demand, if any, is to be re-quantified based on these findings. All issues, including the applicability of the extended period, remain open for reconsideration.