1998 (5) TMI 162 - AT - Central Excise

Tribunal rules in favor of truck crane classification, sets aside penalty due to time-barred demand notice.

The Tribunal classified the truck cranes under Heading 84.26, subject to a 15% duty rate, rejecting the Department's argument for a higher duty rate under ... Classification Issues Involved:1. Classification of truck cranes (Aeneas, Ledea, Endurana).2. Applicable rate of Central Excise duty.3. Interpretation of relevant tariff headings (84.26 vs. 87.05).4. Applicability of the benefit under Notification No. 162/86.5. Limitation period for issuing the demand notice.6. Imposition of penalty.Detailed Analysis:1. Classification of Truck Cranes:The primary issue is the classification of the truck cranes manufactured by the appellants. The appellants classified the goods under sub-heading 8426.00 (15% duty), while the Department argued for classification under sub-heading 8705.00 (25% duty). The appellants contended that their truck cranes, after significant modifications, should be classified under 84.26 as they are not merely crane lorries but fully integrated machines.2. Applicable Rate of Central Excise Duty:The Department argued that the truck cranes should attract a higher duty rate of 25% under 8705.00, as they are special-purpose motor vehicles. The appellants, however, paid a duty of 15% under 8426.00, arguing that their cranes are not simple crane lorries but specialized lifting machines.3. Interpretation of Relevant Tariff Headings:The appellants referred to the Explanatory Notes of the Harmonized System of Nomenclature (HSN) to argue that their truck cranes fall under Heading 84.26. They emphasized that their cranes undergo significant modifications, transforming the chassis into a unique under-carriage frame, which is distinct from a motor vehicle chassis. The Department's stance was that minor changes to the chassis do not alter the classification as special-purpose motor vehicles under 87.05.4. Applicability of the Benefit under Notification No. 162/86:In an alternative argument, the appellants claimed that even if classified under 87.05, they should benefit from Notification No. 162/86, which grants exemptions to special-purpose motor vehicles. However, this point became redundant as the classification was ultimately decided under 84.26.5. Limitation Period for Issuing the Demand Notice:The appellants argued that the demand notice issued on 24-4-1991 for the period from May 1986 to May 1989 was time-barred. They had filed classification lists which were approved by the proper authority. The Tribunal agreed, noting that the classification lists contained full descriptions and the proper officer had the responsibility to verify them before approval. Thus, the demand was barred by limitation.6. Imposition of Penalty:Given the Tribunal's decision on classification and the time-barred nature of the demand, the imposition of a penalty was deemed unjustified and was set aside.Conclusion:The Tribunal concluded that the truck cranes should be classified under Heading 84.26, attracting a duty of 15%. The demand notice was also held to be time-barred, and the penalty imposed on the appellants was set aside. The appeal was allowed with consequential reliefs to the appellants.