Machined forged steel parts may fall under a separate tariff entry; limitation is measured from provisional assessment and open periods.

Forged steel products that are further machined, polished, drilled or otherwise processed may lose their character as mere forgings and acquire a distinct identity as machine parts; on that reasoning, they are classifiable under Tariff Item 68 in addition to duty at the forging stage. The note also states that limitation for duty recovery may be computed by reference to provisional assessments and periods during which classification remained open, so an absence of an earlier effective show cause notice does not necessarily bar recovery for the covered periods. The demand was treated as recoverable for the specified periods.

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Issues: (i) Whether the disputed forged steel products, after machining, polishing and drilling, were classifiable under Tariff Item 68 in addition to duty at the forging stage. (ii) Whether the demand of duty for the relevant periods was barred by limitation.

Issue (i): Whether the disputed forged steel products, after machining, polishing and drilling, were classifiable under Tariff Item 68 in addition to duty at the forging stage.

Analysis: The goods were not treated as remaining merely in forged form. The record showed that after forging they underwent further processes such as machining, tooling, polishing and drilling, by which they acquired the identity of machine parts with a different name, character and use. The classification of the goods was treated as having been settled on the facts of the case, and the subsequent processing was held to amount to transformation into identifiable machine parts.

Conclusion: The goods were correctly classifiable under Tariff Item 68 in addition to duty at the forging stage, against the assessee.

Issue (ii): Whether the demand of duty for the relevant periods was barred by limitation.

Analysis: The earlier assessments were treated as provisional for the relevant periods before finalisation of classification, and the period during which the Government of India order and the High Court stay kept the classification issue open was excluded. The absence of an earlier effective show cause notice did not bar recovery for the periods covered by provisional clearances, and the later demand was held to be within time for the periods identified in the final order.

Conclusion: The demand for the periods 1-3-1975 to 25-11-1975 and 2-8-1980 to 26-7-1985 was not time-barred, against the assessee.

Final Conclusion: The appeal failed on both classification and limitation, and the department's demand was sustained for the periods held recoverable.

Ratio Decidendi: Forged goods which undergo further machining or similar processing so as to emerge as identifiable machine parts with a distinct name, character or use are classifiable under the tariff entry for such machine parts, and where clearances are provisional or the matter remains open during the relevant period, limitation is computed accordingly.

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