Static converter classification upheld for battery eliminator; exemption denied, marketability confirmed, and penalty reduced.

A battery eliminator was treated as a static converter because it converted alternating current into direct current and reduced voltage, so classification under Tariff Heading 85.04 was upheld and exemption under Notification No. 175/86 was denied. The argument that it was merely a transistor-set part under a different heading was rejected. Marketability was also established because the goods had in fact been sold to another concern, defeating the non-marketable plea. Duty liability and denial of exemption were maintained, but the penalty was reduced having regard to the assessee's small-scale status.

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Issues: (i) Whether the battery eliminator was correctly classified under Tariff Heading 85.04 as a static converter, thereby denying the assessee the benefit of Notification No. 175/86; (ii) Whether the goods were non-marketable and whether the penalty required reduction.

Issue (i): Whether the battery eliminator was correctly classified under Tariff Heading 85.04 as a static converter, thereby denying the assessee the benefit of Notification No. 175/86.

Analysis: The product performed the function of a static converter by converting alternating current into direct current and reducing voltage, and was specifically covered by Tariff Heading 85.04. The contention that it was merely a part of a transistor set falling under Tariff Heading 85.29 was rejected. Since both items were classifiable under the same heading, the exemption available up to the prescribed monetary limit could not be separately claimed for each item.

Conclusion: The classification under Tariff Heading 85.04 was upheld and the denial of the benefit of Notification No. 175/86 was confirmed, against the assessee.

Issue (ii): Whether the goods were non-marketable and whether the penalty required reduction.

Analysis: Marketability was not accepted as a defence because the goods had in fact been sold to another concern, which established that they were marketable. While the demand of duty was maintained, the Tribunal took into account that the assessee was a small-scale manufacturer for the limited purpose of penalty.

Conclusion: The plea of non-marketability was rejected against the assessee, and the penalty was reduced.

Final Conclusion: The duty demand and denial of exemption were sustained, but the penalty was reduced in quantum.

Ratio Decidendi: A battery eliminator performing the function of a static converter is classifiable under the tariff entry specifically covering static converters, and actual sale of the goods is sufficient to establish marketability; penalty may be reduced on equitable considerations without disturbing the duty liability.

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