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Issues: (i) Whether cable fittings for electrical machines made from duty-paid wires and cables were classifiable under Heading 85.44 or Heading 85.47 of the Central Excise Tariff Act, 1985. (ii) Whether differential duty for the past six months could be recovered when the earlier classification list had already been approved.
Issue (i): Whether cable fittings for electrical machines made from duty-paid wires and cables were classifiable under Heading 85.44 or Heading 85.47 of the Central Excise Tariff Act, 1985.
Analysis: The product was examined in the light of Note 6 to Section XVI of the Central Excise Tariff Act, 1985. Applying the earlier tribunal view on cables cut to length and fitted with terminal ends, the goods were treated as not being classifiable under Heading 85.47 once they were fitted and prepared for use as cable fittings.
Conclusion: The goods were held classifiable under Heading 85.44, not Heading 85.47, and this issue was decided against the assessee.
Issue (ii): Whether differential duty for the past six months could be recovered when the earlier classification list had already been approved.
Analysis: The classification list had been approved earlier and the demand was raised only after issuance of a show cause notice. In the light of the principle that duty levied on the basis of an approved classification list is not a short levy until the approval is questioned, recovery of differential duty for the period prior to the notice was not sustainable.
Conclusion: The demand for differential duty for the past six months was set aside, and this issue was decided in favour of the assessee.
Final Conclusion: The classification was altered to Heading 85.44, but the demand for past differential duty was quashed because it could not be recovered on the basis of the earlier approved classification list.
Ratio Decidendi: Goods fitted with terminal ends are classifiable according to their completed and prepared form, and differential excise duty cannot be recovered for the period prior to challenge of an approved classification list as a short levy.
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