Classification of conveyor components from separate factories upheld, with duty demand sustained despite prospectivity and limitation challenges.

Goods cleared from three separately registered factories of the same entity were treated as parts of a conveyor system, because the complete system did not come into existence in any one factory and the goods had to be assessed in the condition in which they were removed. The attempted reliance on cases involving CKD or SKD removals from the same premises was rejected on the factual distinction. The duty demand was also sustained, as the earlier prospective-classification ruling involved different facts and the show-cause notice was issued within the permissible period under section 11A.

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Issues: (i) Whether the goods cleared from three separately registered factories of the same corporate entity were liable to classification as parts of a conveyor system under Heading 84.31 or as conveyor system under Heading 84.28. (ii) Whether the duty demand was barred or otherwise unsustainable on the ground that the change in classification was prospective and the notice under section 11A was not validly issued.

Issue (i): Whether the goods cleared from three separately registered factories of the same corporate entity were liable to classification as parts of a conveyor system under Heading 84.31 or as conveyor system under Heading 84.28.

Analysis: The goods were cleared from three different premises, each operating under separate registration, and the complete conveyor system did not come into existence in any one factory. The authorities distinguished the decisions relied upon by the appellant because those cases involved removals from the same licensed premises in CKD or SKD condition. On the facts here, the individual clearances were of parts and not of a complete conveyor system at the factory stage. The principle that goods are to be assessed in the condition in which they are removed, and that a new excisable product must come into existence before it can be treated as such, supported classification of the clearances as parts.

Conclusion: The classification under Heading 84.31 as parts of conveyor system was upheld against the assessee.

Issue (ii): Whether the duty demand was barred or otherwise unsustainable on the ground that the change in classification was prospective and the notice under section 11A was not validly issued.

Analysis: The prior order treating one classification change as prospective had attained finality and related to a different assessee and a different divisional set-up, so it did not govern the present demand. The demand in the present matter was traced to a show-cause notice issued within the permissible period, and the record showed that the clearance period and the notice did not offend the limitation contemplated under section 11A. The appellant's plea of retrospective levy therefore failed on the facts found.

Conclusion: The demand was sustained and the challenge based on prospectivity and limitation was rejected.

Final Conclusion: The appeals failed, and the lower authorities' classification of the clearances as parts of conveyor system together with the consequential duty demand were maintained.

Ratio Decidendi: Where goods are removed from separately registered factories before the complete machine comes into existence at any one factory, the clearances are to be classified according to the condition in which they are removed, and a demand raised within the statutory period is not defeated merely because a different prospective classification was accepted in another case involving different facts.

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