1989 (6) TMI 144 - AT - Central Excise

Appeal partially allowed, reassessment directed for goods classification. Time limit enforced.

The Tribunal partially allowed the appeal, setting aside the lower authority's order for reassessment of goods and directing reassessment based on whether ... Classification Issues Involved:1. Classification of goods under the appropriate Tariff Heading.2. Validity of the demand for differential duty.3. Applicability of the principle of res judicata in quasi-judicial proceedings.4. Allegation of suppression of facts by the appellants.5. Applicability of exemption under Notification No. 160/86.6. Limitation period for raising the demand.Detailed Analysis:1. Classification of Goods:The primary issue was whether the goods manufactured by the appellants, such as R.F. inductors, chokes, peaking coils, and various transformers, should be classified under Tariff Heading 8529.00 or 8504.00 CET. The appellants argued for classification under 8529.00, while the Revenue contended for 8504.00.The Assistant Collector found that there was no distinction between electrical transformers and electronic transformers. He stated that transformers, as understood technically, transform electrical energy from one circuit to another at the same frequency, usually with changed voltage and current values. He concluded that the goods manufactured by the appellants fell under Tariff Heading 8504.00, which covers all transformers and inductors.The appellants' argument that their coils function differently from electrical transformers and inductors was rejected. The Assistant Collector relied on technical literature to support his conclusion that the goods were indeed transformers or inductors as per the description under Tariff Heading 8504.00.2. Validity of the Demand for Differential Duty:The Assistant Collector confirmed the duty demand of Rs. 2,78,713.25 for the period from December 1986 to May 1987, based on the reclassification of the goods under Tariff Heading 8504.00. This was upheld by the Collector of Central Excise (Appeals), Bombay.3. Applicability of the Principle of Res Judicata:The appellants argued that since the classification list was previously approved, no demand could be raised. The Assistant Collector rejected this argument, stating that the principles of res judicata do not apply to quasi-judicial proceedings. He found that the appellants had not disclosed the correct classification, leading to a suppression of facts.4. Allegation of Suppression of Facts:The Assistant Collector concluded that the appellants had suppressed vital information by not disclosing the correct classification of their products. This was cited as a reason for raising the demand retrospectively.5. Applicability of Exemption under Notification No. 160/86:The appellants argued that even if their goods were classified under Tariff Heading 8504.00, they should be eligible for the exemption under Notification No. 160/86, which allows for a reduced duty rate of 15% for inductors. The Assistant Collector did not grant this exemption.6. Limitation Period for Raising the Demand:The Tribunal observed that the appellants had declared their goods by the names under which they were marketed, including terms like IF transformers. Despite this, the lower authority initially chose to assess the goods under 8529.00. The Tribunal found that there was no misstatement or suppression of facts by the appellants, and thus, the longer time period for raising the demand could not be invoked.The Tribunal cited the Supreme Court's judgment in Chemphar India v. C.C.E., which requires something positive other than mere inaction or failure on the part of the manufacturer to justify extending the limitation period beyond six months.Conclusion:The Tribunal partially allowed the appeal, setting aside the order of the lower authority for reassessment of the goods. It directed that the goods be reassessed based on whether they are transformers or inductors. The Tribunal also held that the longer time period for raising the demand could not be invoked, limiting the demand to a period of six months. The appeal was thus partially allowed by remand.