AI Drafter 
TaxTMI 
TaxTMI 
1993 (11) TMI 139
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....ribing these goods in the classification list filed by them as "angles, shapes and sections of iron or non-alloy steel not further worked than cold-formed or cold-finished". In respect of this item, the further description given by the appellants in the classification list is "Guide-channel sections, angles/shapes Z Section, Sections for pollution control, equipments shutter lath sections". 4. The appellants are seeking the classification of this item under sub-heading 7210.20 upto 20-2-1988 and thereafter under sub-heading 7216.20 of the Central Excise Tariff Act, 1985. The Deptt. on the other hand are contending that its correct entry is under Chapter 8479.00 as Machines and mechanical appliances having individual functions, not specified or included elsewhere in this chapter attracting duty at 15% advalorem on the ground that the goods are "Angles shapes as sections of Iron - not further worked than cold formed or cold finished". The second item's description of the goods in the classification list is "Flat-rolled products of iron or non-alloy steel of width of 600 mm or more hot-rolled, not clad, plated or coated". In the full description column, the appellants have stated "....
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....pto 26-2-1988 and thereafter under Ch. 7216.20 and paid duty at specific rate (which is lower than the ad valorem rate) when supplied to M/s. EICHER Motors, M/s. TELCO, M/s. DCM TOYOTA and M/s. DTL Ancillaries. (iii) TIMS had collected certain amounts from their customers like M/s. Flakt India Ltd., Thermax, M/s. Andrew Yule & Co. Ltd. and M/s. GEC towards development and supply of implements and attachments, cost of tooling and designing of specified rollers, intended for use in the manufacture of collecting electrodes, but had not discharged the duty liability on such developing/designing/tooling charges. (iv) TIMS had raised debit notes/supplementary invoices for certain amount on the customers like M/s. Voltas Ltd., M/s. APHMEL and M/s. Andrew Yule & Co. Ltd., towards differential value between the original invoice value (raised immediately on supply of the goods) and the revised value later worked out consequent on the increase in the cost of raw-materials, as per cost escalation clause provided in the `order of acknowledgement' (known as `price variation claims' in the commercial circle) in support of collecting electrodes supplied to them, and realised the am....
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....tructures prepared for use in structures through their job workers and (vii) the facts of collection of packing charges separately from certain customers, for packing of collecting electrodes manufactured in their factory and supplied to them all the above with the intention to evade payment of duty in respect of S. Nos. 3, 4, and 7 above and at advalorem rate in respect of S. Nos. 1, 2, 5 and 6 above (higher than the specific rate of duty) payable thereon. (b)(i) TIMS had failed to file clasification list in respect of parts of motor vehicles manufactured and supplied to M/s. EICHER Motors; M/s. TELCO, M/s. DCM Toyota and M/s. DTL Ancillaries, (ii) in respect of manufacture and clearance of galvanised sections of steel (coated with zinc) and (iii) in respect of manufacture of parts of structures proposed for use in structures, all in contravention of the provisions of Rule 173B of the Central Excise Rules, 1944. (c) TIMS had failed to determine the correct duty payable on the collecting electrodes, parts of motor vehicles galvanised section of steel and parts of structures proposed for use in structures, manufactured in their factory and cleared ....
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....0 by debit in PLA (c) Rs. 35,00,000.00 Total : Rs. 47,92,659.15" The appellants seriously contested the show cause notice by filing a detailed reply dt. 6th May,1991. 6. The ld. Collector granted personal hearing to the appellants. However, he was not satisfied with the explanation or with the arguments advanced by the appellants and rejected the same and confirmed the order. 7. The appellants in this case have given the process of manufacture of their products and the classification of the same, before and after 1-3-1986 as follows : Steel strips in Coils, either hot rolled or cold rolled, are "1. fed through a rolling mill wherein work rolls are placed in position and the steel strip is passed through these work rolls, which impart the necessary shape or profile to the strip. The profile is determined by the arrangement of the rolls placed on the machine. By altering the arrangement of the rolls, the profile of the section can be varied according to the requirements and needs. The profiles are rolled in running length and cut to appropriate sizes. We have mills of different capacity and the largest mill can accommodate 1000mm width s....
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....of the manufacture of various excisable goods and got acquainted very well with the facts through a systematic approach and upon complete satisfaction approved the various classification lists. In fact, the CERA Audit, in the course of their inspection did raise objection which was communicated to the assessee but department after consideration being convinced about the approval has not altered the status quo. This being so, consequent to an inspection on 14-6-1990 and 15-6-1990 and thereafter on various dates between 27-06-1990 and 20-8-1990 the Department issued show cause notice in C. No.V/04/50/15/70 Cx. Adj. /8/71 dt. 5-2-1991 alleging the following : (a) the sections removed in unfabricated conditions are classifiable under Chapter 72 and not under Chapter 84. (b) the sections supplied to various automobile manufacturers for use as panels are classifiable under 8708 and not under 7216. (c) galvanisation of steel amounts to manufacture and hence classifiable under 7216.30 instead of existing classification under 7216.20. (d) "Z" Purlins are not classifiable under 7216 but are classifiable only under 7308.90 as structurals. (e) proposal to levy dut....
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....s and adequate knowledge of facts by the department. They state that the goods in question have not attained the status of an identifiable part, they ought not to have been classified as part of pollution control equipments under sub-heading 8549.00 and as parts of Motor Vehicles under sub-heading 8708.00 respectively. It is their further contention that the classification list for plain section under Chapter 72 and for fabricated collecting electrodes under Chapter 84 has been separately filed and approved by the department. They state that difference between the plain and fabricated section is due to the use of weldments and on line punching. Therefore, they deny the allegation that they have cleared the goods of Chapter 84 as under 72. They state that the Collector has wrongly proceeded to come to the conclusion that the plain cold rolled formed sections would come under Chapter 84 on the basis of three purchase orders without any reasonable basis. They further state that the clearances for APHMEL had been made in three parts as bottom ted poles, top ted poles and modules. Clearances were effected under the same purchase order and duty paid under Chapter 84 for bottom and top te....
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....on and in this event of the matter, larger period is not admissible. They pleaded that packing is not done in all cases but done in cases, where there is a request from the purchaser and hence its cost ought not to have been included to arrive at the assessable value. Likewise, they plead that the inclusion of tooling charges also is not proper. The ld. Collector not having considered the affidavits filed on their behalf is also a ground raised by them. 11. We have heard Sh. N. Venkataraman, ld. advocate for the appellant and Sh. Siddharth Kak Ld. JCDR for the Revenue. Ld. advocate elaborating the grounds of appeal as detailed above pleaded for allowing the appeal both on merits and on time-bar. The ld. advocate pointed out to the statement of Sh. Balakrishna to show that what is being done by assessee on the steel section does not make it an identifiable part. He also pointed out to the letter dt. 10-12-1990 issued by D.C.M. Toyota Ltd. in support of their plea. Besides referring to the designs and drawings to show that the goods continue to remain as plain section and cold roll section. He pleaded that these sections have alternate uses and in this context referred to ....
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....ion as roof cladding, side cladding, trenching sheets and so on. A large supply of these formed panels was made use of by Indian Army for building storage sheds, helicopter sheds etc. These panels have been used as floor support for an administrative building put up in (T 1 Diamond Chain Ltd, Ambattur)." In support of the above statement, photographs and diagrams were exhibited and shown to us. The ld. advocate drawing support from these materials argued that the item in reference, therefore, does not, become a part of motor vehicle but continues to be a cold rolled panel sections. He further referred to such classification being adopted by competing units and also referred to their gate passes. The ld. advocate pointed out that ld. Collector did not rebut to these materials produced before him. He drew his support from the note 1(n) of Chapter 72 and also the explanatory notes appearing at page 1001 of HSN. He further submitted that section note 3 of section XVII is not applicable and hence classification under Chapter 86, has to be ruled out. In this context, the ld. advocate relied on the ruling of the Tribunal, rendered in the case of Shivaji Works Ltd. v. Collector of Centr....
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....s his further plea that the department was fully justified in relying on the note 1(g) of Section XV of the Central Excise Tariff, 1985. The item did not have a part number and therefore, note 1(g) was fully applicable in the facts and circumstances of the case. Ld. JDCR argued that the mental association of the item and the manner it is traded and understood in commerce is an important aspect for the classification of the product. The item is being understood and traded as a MV part and not as a panel and therefore, the classification adopted by the department is fully justifiable. In support of this principle, he relied on the ruling rendered in the cased of Telco v. Collector of Customs as reported in 1990 (50) E.L.T. 571 para 11 and 12 and that of the ruling rendered in the case of Central Railway v. Collector of Customs, Bombay as reported in 1984 (16) E.L.T. 510. He reiterated the findings of the ld. Collector as regards the item "collecting Electrode" and 'Z purlin'. On time bar also, the ld. JDCR relied on the findings of ld. Collector and cited the decision rendered by Madras High Court in the case of Limenaph Chemical v. Union of India as reported in 1993 (68) E.L.T. 77 p....
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....s parts of M.V. for this item also. Therefore, it has become necessitiated to record our specific findings on this issue, although we make it clear that no arguments have been advanced on this charge is concerned. It is also seen that there is no specific grounds taken in the memo of appeal in respect of the enormous evidence produced by the department, as well as on the admissions made by the witnesses examined by the preventive staff at the time of investigation. It has to be noted that the appellant on their own have debited duty of Rs. 47,92,659.15 in RG 23A part II and PLA on 25-7-1990, 9-8-1990 and 10-8-1990. (ii) Let us now examine the evidence of the department in support of this charge. The ld. Collector has examined the purchase orders placed by the customers for the supply of Collecting Electrodes, and the acknowledgements or orders and invoices issued by M/s. T.I.M.S. The ld. Collector has found that in all these documents the item is referred as `Collecting Electrodes Sections/Plates' only except in the connected GP 1's the item supplied to M/s. Flakt India, A.PH.M.E.L. & M/s. Andrew Yule are described as `CR Sections' falling under Chapter 72. The ld. Collecto....
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....chequers, tears, buttons, lozenges) and those which have been perforate, corrugated or polished, if they, thereby assume the character of articles or products of other headings. The ld. Collector has referred to note 1(f) of Section XV, which excludes articles of Section XVI (machinery, mechanical appliances and electrical goods) from the Section XV (i.e. chapter 72 & 83). Therefore, the ld. Collector has concluded that, accordingly, machineries and parts thereof irrespective of the constituent material and process of manufacture automatically get covered under chapter 84 or 85 as the case may be, as they assume the characteristics of articles or products of other heading. The ld. Collector has also relied on Rule 2(a) of interpretative rules to come to the conclusion that the goods are classifiable under chapter 84. We have carefully considered these findings and we do not find any infirmity in this order and hence we confirm these findings. (iii) We have also independently examined the other materials on record and we find that these materials clinch the issue. These materials are now referred herein below: (a) The purchase order No. P76 - 310.009 dt. 5-4-1990 of ....
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....PHMEL. He also admitted that for M/s. Flakt three types of profiles of Collecting Electrodes viz. 400, 500 and 750 were manufactured by them; that depending upon customer's requirement, 400 profiles were manufactured both with or without weldment or with or without any fabrication; that for 500 profile, after rolling while cutting on line both punching & window cutting had been done that for 750 profile also the same operations were carried out, besides notching which was done on line. (c) This statement was corroborated by Shri J.S. Sivaraman, Manager (Commercial). He admitted that Collecting Electrodes were supplied to customers like M/s. Voltas, Andrew Yule & Co. Ltd., APHMEL, BHEL, Flakt, L&T, GEC and Thermax. He admitted and agreed that regarding Collecting Electrodes supplied to M/s. Flakt, wherever post rolling operations (punchings) were made off the line excise duty on advalorem would be paid; on the Modules supplied to M/s. APHMEL with notching and that he also agreed to discharge duty liability on packing charges where duty was payable on advalorem basis. (d) Shri M. Sankaran, Technical Service Manager also admitted that "Technically speaking, they supply....
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....were intended for Pollution control purposes. In their letter, they have admitted placing orders for `supply of such goods or equipments intended for installation/erection of pollution control/plant/systems at customers site'. Shri R. Rajamani, Sr. Supdt. has also admitted about the further operations done on the formed sections i.e. Collecting Electrodes, supplied to M/s. Flakt India Ltd. (ii) Shri Sankaran T.S. Manager admitted in his statement dt. 6-7-1990 that two types of collecting electrodes were manufactured and supplied to M/s. Andrew Yule & Co. Ltd. He finally admitted that technically they supplied collecting Electrodes to M/s. Andrew Yule & Co. Ltd. (iii) The minutes of the meeting held between M/s. Andrew Yule & Co. Ltd. and TIMS on 8-9-1988 and other correspondence also supports the dept's plea. They have specifically placed orders for `complete manufacture and supply of collecting electrodes flat types, furnishing the details of the connected drawing numbers. (g) The examination of evidence placed in respect of M/s. APHMEL also confirms the department's charge. Shri K. Neelakantan, Sales Officer in his statement dt 20-8-1990 has confirmed supp....
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.... not as mere cold rolled sections. Although, the process of manufacture may be same but they are clearly distinguishable, as these parts cannot be used for other purposes of roofings as contended by ld. Advocate. The design for a roofing is different than that of this item in question. The technical literature is also not helpful to the appellants, especially in the face of clear admission of several persons, whose statements have been recorded and in the face of the records resumed by the department. Therefore, the various pleas urged by the ld. Advocate deserve to be rejected. There is clear admission of the witnesses examined by the department that they had not disclosed about the use of these items to the department and that they had misdeclared. Hence, in the light of the appellants' own admission and confessions, the larger period is clearly attracted and the confirmation of duty for larger period is clearly justified. In this context the ruling of the Hon'ble Supreme Court in the case of Collector of Central Excise v. Jay Engineering Works Ltd., Calcutta as reported in 1989 (39) E.L.T. 169 (S.C.) is clearly attracted. The ruling of the Hon'ble Madras High Court as in the cas....