1989 (3) TMI 131 - SC - Central Excise

Supreme Court affirms Tribunal on tariff classification, extended duty demand, and reduced penalty

The Supreme Court upheld the Tribunal's decision regarding the classification of goods under Tariff Item 52, the application of the extended period for ... Whether the products of the appellant in this case were end-fittings or nuts? Whether the goods were classifiable under Tariff Item 52 or Tariff Item 68 of the erstwhile First Schedule to the Act? Held that:- The Tribunal was right in holding that fittings were nuts classifiable under Tariff Item 52 of the Central Excise Tariff and in upholding the demand of the duty for a period beyond six months as contemplated by Section 11A of the Act. Appeal dismissed. Issues Involved:1. Classification of goods under Tariff Item 52 or Tariff Item 68.2. Suppression of facts and applicability of extended period for duty demand.3. Imposition of penalty.Issue-Wise Detailed Analysis:1. Classification of Goods:The primary issue was whether the appellant's products were classified as 'end-fittings' or 'nuts' under the Central Excise Tariff. The appellant argued that their products were integral parts of Diesel Engine Pipes and should be classified under Tariff Item 68. However, the Tribunal found that the goods were commercially known and sold as nuts. The Tribunal noted that the appellant purchased both threaded and unthreaded nuts, which were then threaded and sold, indicating their commercial identity as nuts. The Tribunal concluded that these goods were properly classifiable under Tariff Item 52, as they did not have any independent function apart from fastening and enabling the flow of oil under high pressure without leakage.2. Suppression of Facts and Applicability of Extended Period for Duty Demand:The second issue was whether the extended period for duty demand beyond six months was justified due to suppression of facts. According to Section 11A of the Act, the extended period applies in cases of fraud, collusion, wilful misstatement, or suppression of facts. The Tribunal found that the appellant had described the goods as 'end-fittings' instead of 'nuts,' which was misleading. The Tribunal noted that the appellant was both buying and selling these goods as nuts, and thus, there was no reason to describe them differently in the declaration to the Department. This conduct was deemed as suppression of facts, justifying the extended period for duty demand.3. Imposition of Penalty:The third issue involved the imposition of a penalty. The Tribunal upheld the penalty imposed by the Collector but reduced the amount from Rs. 1 lac to Rs. 50,000/-. The appellant contended that no penalty should be imposed. However, the Tribunal found that the appellant had deliberately suppressed facts or made a wrong statement, justifying the imposition of a penalty. The quantum of the penalty was within the Tribunal's discretion, and nothing was shown to indicate that the Tribunal's conclusion was incorrect.Conclusion:The Supreme Court upheld the Tribunal's order, affirming the classification of the goods under Tariff Item 52, the applicability of the extended period for duty demand due to suppression of facts, and the imposition of a reduced penalty. The appeal was dismissed.