1990 (6) TMI 158 - AT - Central Excise

Tribunal decision on Air-fan/Blower classification, valuation, and penalties; Section 11-A time limit deemed inapplicable.

The Tribunal classified the Air-fan/Blower under Tariff Item 33(2) of the Central Excise Tariff, upheld the valuation, and set aside confiscation and ... Demand - Limitation Issues Involved:1. Classification of Air-fan/Blower under Tariff Item 33(2) of the Central Excise Tariff.2. Applicability of extended time under Section 11-A.3. Valuation of the Blower.4. Imposition of fine and penalties.5. Penalty on the Director of the appellant company.Issue-wise Detailed Analysis:1. Classification of Air-fan/Blower under Tariff Item 33(2):The primary issue is whether the Air-fan/Blower, an integral part of the burner manufactured by the appellant, is liable for excise duty under Tariff Item 33(2) of the erstwhile Central Excise Tariff. The appellants argued that the Air-fan/Blower is an integral part of the burner head/fan unit, not known to the trade or industry as a distinct product, and not sold as an electric or industrial fan. They cited previous decisions, including a Government of India order, which held that the Air-fan is not an electric fan or industrial fan.The Tribunal examined the nature and function of the blower, noting that it consists of parts such as an electric motor, impeller, and casing, and functions to deliver air for combustion of fuel in the oil burners. The Tribunal concluded that the blower is a distinct and identifiable product, classifiable under T.I. 33(2) CET, as it fits the description of an industrial fan designed for specific use in an industrial system.2. Applicability of Extended Time under Section 11-A:The appellants contended that the extended time invoked under Section 11-A was illegal, as they had filed classification lists and declarations that were approved by excise officials, and their activities were within the department's knowledge. The Tribunal found merit in this argument, noting that the appellants had filed classification lists mentioning boilers, burners, accessories, components, and spares, and had cleared a blower under T.I. 68 on payment of duty. The Tribunal held that there was no suppression of facts with intent to evade duty, and the demand should be restricted to the normal period of six months.3. Valuation of the Blower:The appellants disputed the valuation of Rs. 13,000 per blower adopted by the department, arguing that it was based on the actual value recovered under a delivery note and not consistent with the Chartered Accountant's certificate. The Tribunal upheld the Collector's valuation, finding it consistent with the provisions of the Act.4. Imposition of Fine and Penalties:The department had seized 16 blowers lying in the finishing room of the factory and imposed a fine of Rs. 25,000 and a penalty of Rs. 50,000. The Tribunal found that no wilful suppression was involved, and the blowers were only liable for payment of duty, not confiscation. Consequently, the confiscation and fine were set aside, and the penalty was not warranted.5. Penalty on the Director:The Collector had imposed a penalty of Rs. 1,000 on the Director of the appellant company without issuing a Show Cause Notice. The Tribunal found that since no specific mention of the Director was made in the Show Cause Notice, and given the findings in the main appeal, the penalty on the Director was set aside.Conclusion:The Tribunal concluded that the Air-fan/Blower is classifiable under T.I. 33(2) CET, but the extended period under Section 11-A was not applicable due to lack of suppression. The valuation adopted by the department was upheld, but the confiscation and penalties were set aside. The penalty on the Director was also set aside due to procedural lapses. The appeal was allowed to the extent specified but otherwise rejected.