1988 (8) TMI 195 - AT - Central Excise

Disputed industrial items not classified as 'steel furniture' under tax law; excise duty and penalties overturned

TATA ENGINEERING & LOCOMOTIVE CO. LTD. Versus COLLECTOR OF CENTRAL EXCISE

The Tribunal concluded that the disputed items, such as steel cabinets and tables, were not classified as 'steel furniture' under Item No. 40 of the ... Steel furniture - Criteria for article to be termed as furniture Issues Involved:1. Classification of goods as 'steel furniture' under Item No. 40 of the Central Excises and Salt Act, 1944 (CET).2. Applicability of excise duty and penalties on the disputed goods.Detailed Analysis:1. Classification of Goods as 'Steel Furniture' under Item No. 40 CET:The central issue in the judgment was whether various items such as steel cabinets, steel tables, steel benches, steel racks, tool holders, and work benches manufactured by the appellants should be classified as 'steel furniture' under Item No. 40 of the CET. The appellants contended that these items were not conventional steel furniture but were shop floor equipment made of thick gauge metal, designed for specific industrial use, and lacked aesthetic or decorative value. They argued that these items did not conform to standard specifications and were not available in the market as furniture.The Collector of Central Excise, however, held that these items fell under Item No. 40 CET and imposed excise duty and penalties. The Tribunal examined the characteristics of the disputed items, noting that they were meant for industrial use, often fixed to the shop floor, and manufactured to specific designs. The Tribunal referred to the Bombay High Court's judgment in Elpro International Ltd. and the Supreme Court's approval of that judgment, which provided a detailed discussion on what constitutes furniture for the purpose of Item No. 40 CET. The judgment emphasized that furniture is typically understood as movable articles of convenience or decoration used in dwellings, offices, or public buildings.The Tribunal concluded that the disputed items did not qualify as 'steel furniture' under Item No. 40 CET because they were not designed for use or decoration in homes, offices, or public buildings. They were specifically designed for industrial use, made of thicker metal, and were heavier and costlier than conventional furniture. The Tribunal found that the Department had not provided evidence to show that these items were known as furniture in trade and commercial parlance.2. Applicability of Excise Duty and Penalties:Given the Tribunal's conclusion that the disputed items did not fall under the classification of 'steel furniture' under Item No. 40 CET, the imposition of excise duty and penalties by the Collector was deemed inappropriate. The Tribunal set aside the impugned orders and allowed the appeals, providing consequential relief to the appellants.Separate Judgments Delivered:Appeal No. E/744/82-D:The Tribunal allowed the appeal, holding that the disputed items did not qualify as 'steel furniture' under Item No. 40 CET and set aside the impugned order.Appeal No. E/1276/82-D:This appeal involved similar goods and issues as in Appeal No. E/744/82-D. For the same considerations, the Tribunal allowed the appeal and set aside the impugned order.Appeal No. E/1559/82-D:This appeal also involved the classification of goods like racks, cabinets, and tool holders. The Tribunal, for the same reasons as in Appeal No. E/744/82-D, held that the goods were not 'steel furniture' under Item No. 40 CET and allowed the appeal, setting aside the impugned order.Conclusion:The Tribunal's detailed analysis and reference to relevant judgments established that the disputed items, being specifically designed for industrial use and lacking the characteristics of conventional furniture, did not fall under the classification of 'steel furniture' under Item No. 40 CET. Consequently, the excise duty and penalties imposed were set aside, and the appeals were allowed.