TaxTMI 
TaxTMI 
2002 (5) TMI 799
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....on lists were duly approved under Heading 8535.00 with eligibility of Notification No. 52/93 by the proper officer. The dispute in the appeal before us, originated on 1-3-94 with the issue of show cause notice No. 17/94, dated 1-3-1994 proposing a change the classification of Circuit Breakers under 85.37; duty was demanded on Circuit Breakers Indoor and Outdoor and Circuit Breaker with Control Panels under Heading 85.37 cleared during the period 1-3-1993 to 31-12-1993. This notice also alleged suppression of information to invoke the longer period of limitation under Section 11A(i) proviso. Two other show cause notices viz. dated 13-4-94 for the period 1-1-94 to 28-2-94 and dated 29-8-94 for the period 1-3-94 to 31-7-94 where clearance were made under Heading 8535,00 read with Notification No. 52/93 and 46/94 were issued on similar grounds. The Commissioner did not accept the plea of the appellants and confirmed the duty demand of Rs. 3,09, 62,619 as made out in these three show cause notices and imposed penalty of Rs. 75 Lacs, under Rule 173Q of the Central Excise Rules, after coming to the conclusion that provision of Rule 9(1) read with Rules 173B, 173E, 173G, 52A an....
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....ectrical circuits (for e.g. switches fuses, lighting arresters, voltage limiters, surge suppressors, plugs, junction boxes) for a voltage exceeding 1000 Volts. 85.36 Electrical apparatus for switching or protecting electrical circuits, or for making connections to or in electrical circuits (for e.g. switches, surge suppressors, plugs, sockets, lamp-holders, junction boxes) for a voltage not exceeding 1000 Volts. 85.37 8537.00 Boards, panels (including numerical control panels), consoles, desks, cabinets and other bases, equipped with two or more apparatus of Heading No. 85.35 or 85.36, for electrical control or the distribution of electricity including those incorporating instruments of apparatus of Chapter 90, other than switching apparatus of Heading No. 85.17. Circuit Breaker as defined in the Chambers' Science and Technology Dictionary is a device for opening electrical circuit under abnormal operating conditions e.g. excessive current, heat etc. A plain reading of the Headings would show that Headings 85.35 and 85.36 relate to individual and independent components such as switches, relays, fuses etc. which are meant for switching or protecting the electrica....
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....ous types, which does not give full description of the products manufactured. While they have sought classification of Circuits Breakers under Heading 85.35 and Control Panel separately under Heading 85.37, it is a fact that they failed to declare that the control mechanism is an integral part of the Circuit Breakers or that the entire assembly i.e. Circuit Breaker with integrated control devices or associated control devices are tested and cleared as a single unit. The classification list merely describes the goods as HT Circuit Breakers of various types as per Annexure-I which gives 5 categories. 1. Vaccume Circuit Breakers of various types. 2. SF 6 Circuit Breakers of various types. 3. Indoor and Outdoor Circuit Breakers of various types. 4. Pole mounted Auto Re-Closers of various types. 5. Sectionalisers of various types. Whereas, the purchase orders and invoices show that what is manufactured and cleared to their customers is a whole system consisting of breakers and control devices. I am unable to accept the assessee's claim that mere inclusion of all these in the purchase orders/invoices would not make it a single unit, in view of t....
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....ad us to conclude, since by definition and being an accessory, the 'panels' appear to be, not an integral part of the Circuit Breakers. Therefore, the 'entity' under classification viz Panel and Circuit Breakers cannot to be constituted to be an assembly of two or more devices of relays, volt meters, ammeters, switches etc. We, therefore, cannot find or persuade ourselves, to agree to arrive at a finding, that material exists to conclude, that the entity under classification, should be considered to be "Boards, panels etc. equipped with two or more apparatus of Headings 85.35/85.36, 90 etc. de hors the accessory. This is an essential requirement for arriving at classification under Heading 85.37. The lower authority should get expert opinion, on record, if necessary, to determine, what the entity and its essential parts would encompass and constitute; thereafter they should proceed to determine the classification under the appropriate Headings. One cannot first relying on the Purchase Orders/Invoices descriptions of "whole system" and not agreeing with the appellants submission that in itself will not make a single unit and relying on the statements, which have been found by ....
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....bsp; We have considered the order under Section 37B of the Central Excise Act, 1944 issued vide C.B.E.C. Circular F. No. 32/8/94-CX., dated 14-7-1994. This order determining the classification of the impugned goods, if applicable, would be for & for the issues open, as on 14-7-1994 and not be applicable retrospectively in operation, as held in HM Bags Manufacturing Co., 1997 (94) E.L.T. 3 (S.C.). If the department wants to rely upon this order, they have to give an opportunity to the appellants to contest the same and can apply the same only to issues open on or after 14-7-1994. (e) The appellants have submitted that the clearances were made after due approval of the Classification Lists. The adjudicator has determined, that there were suppression of facts, with intent to evade. We have considered the submission. The Classification Lists, as filed and approved, are required to declare, in Column as presented in the proforma, which reads as follows - Full description of each item of the goods produced, manufactured or warehoused including specification (e.g. size number of counts, horse power sort No. etc.) as the case may ....
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....hes (230V) the on-off mechanism can be operated by the hand but when we have to operate a circuit breaker for a 33KV we need to have certain mechanical contrivances to make or break the electrical circuit. Such mechanical contrivances, would include hand operated levers, springs or even motorized springs. These mechanical contrivances which are necessary to make or break the circuits in the circuit breakers of higher are considered part and parcel of the same and the whole equipments is nothing but a large scale size of the smallest switch used in houses. (iv) A switch used in the house hold, say for operating an air-conditioner, water heater or slightly heavier electrical appliances, would have certain protective fuses to protect the equipment from electrical surges. These switches are known as Miniature Circuit Breakers (MCB) which are also classifiable under 85.35. (v) The circuit breakers (both indoor and outdoor) are correctly classifiable under Heading 85.35. The relevant HSN notes also supports this submission. Infact Heading 85.35 is meant for circuit breakers of 1000V and above whereas 85.36 will cover circuit breakers less t....
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....l certainly satisfy the criteria under 85.37. The appellants are paying excise duty on the control panels under Heading 85.37 whenever they are cleared separately. The Control panel which is cleared along with the circuit breaker consists of relays, ammeters, volt meters, kilo watt meters, fuses, terminal blocks, etc. They are dedicated to relevant circuit breakers. In other words, the control panel is dedicated to the relevant circuit breaker. This control panel does the following functions namely; (i) provides information about the system parameters like current voltage, amperage, flow of energy. (ii) the relays in the control panel help in giving command to the circuit breaker to open or close the electrical circuit according to the set parameters in the control panel including breaking of the circuits during faults. (iii) to control the circuit breakers by manual or automatic controls. (ix) The question now is the classification of a combination of the control panels with the circuit breakers. It is alleged in the show cause notice that in respect of outdoor circuit....
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....ol panel per se is classifiable under 85.37 but a combination of the control panel with the circuit breaker will be classifiable under Heading 85.35 since the control panel acts as an accessory or an adjunct to the main purpose machine, namely circuit breaker. Undoubtedly the combination of the control panel and the circuit breaker is intended to contribute together to the only function of circuit breaking or making which is specifically covered under Heading 85.35. Like in the case of a regulator and the fan the control panel-cum-circuit breaker does the function of circuit breaking only and thus the combination is classifiable under Heading 85.35. (x) The control panels are not always supplied along with the circuit breakers. The buyer has the option of procuring the control panel from other sources. Infact, assembling of the control panel is a low technology activity which the appellant will be reluctant to undertake unless the buyer orders the circuit breaker along with the control panel. The appellants are obliging the buyer in supplying the control panels along with the circuit breakers so that the buyers are rid of the problem of sourcing the contr....
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.... classified. The proper classification of the alleged circuit breaker system has got to be under 85.35 since the combination contributes to the well defined function of circuit breaking under Heading 85.35. The control panel is merely an adjunct to the circuit breaker and does the auxiliary function and not the main function. The example of the regulator and the fan is more apt in this scenario (xiv) The appellants are exporting the circuit breakers with or without control panel to number of countries like UK, Venezuel, Bangladesh, Myanmar, Vietnam, Argentina, Newzealand, etc. The customs offices of these countries have always assessed the circuit breakers with or without the combination of the control panel under 85.35. Even the Letters of Credit from these foreign buyers always quote the classification of the circuit breakers with or without control panels under Heading 85.35. For the aforesaid reasons and the reasons stated in the reply to the show cause notice and the grounds taken in the appeal memorandum the order-in-original deserves to be set aside." Since we are setting aside the order by restricting the demands to a period of six months a....
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....isc. and Stay order noted above and matter requires to be remanded for de novo consideration. 8. Ld. SDR pointed out that the order has been passed in terms of Board's circular and explanatory notes to HSN. He also pointed out that statements had been recorded from S/Shri V. Srivathsan, Manager (Accounts), K. Ramachandran, Financial Controller, A.C. Subramaniam, Manager (Accounts), Atul Shah, Senior General Manager, V. Subramaniam, Senior General Manager, K.V. Ranganath, Chief Manager (Marketing) who had clearly admitted the following: - "(a) that the full description was not given in the classification list i.e., they have not mentioned whether the breakers consist of control devices or not. (b) there are differences between the description in the classification list in respect of HT Circuit Breakers and in the clearance documents/purchase orders. (c) that the management was aware that some of the competitors were discharging duty on such breakers at 20% and by paying only 5%, they would have a competitive advantage." 9. Ld. SDR also pointed out that in view of specific and full description not having been given in the classification list an....
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....OR The matter has to be remanded entirely on all points for de novo consideration, in view of impugned order not a speaking order as held by Member (Judicial) Shri S.L. Peeran in his order." Sd/- (S.S. Sekhon) Member (T) Sd/- (S.L. Peeran) Member (J) 11. [Order per : Jeet Ram Kait, Member (T)]. - This matter has been referred to me as Third Member for resolving the difference of opinion between learned Member (Judicial) Shri S.L. Peeran and learned Member (Technical) Shri S.S. Sekhon. The point of difference is as under : Whether the appeal is required to be remanded for re-determination of the classification in the light of the Member (Technical) Shri S.S. Sekhon's order, and remand to be restricted only for six months as held by him. OR The matter has to be remanded entirely on all points for de novo consideration in view of the impugned order not a speaking order as held by Member (Judicial) Shri S.L. Peeran in his order. 12. The facts of the case in detail are recorded in the order recorded by learned Member (T) and I am not repeating the same here. 13. The matter was heard by me on 8-5-2002 and Shri J. Sankararama....
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....ed under Section 37B of the Central Excise Act, 1944 re-classifying the goods, is effective from 14-7-94 or from a subsequent date of its publication. He further argued that demand of duty cannot be raised for the period prior to the publication of the said order of the Board. He also relied upon the judgment in the case of RC Polysacks Pvt. Ltd. reported in 2000 (117) E.L.T. 790 (T) in which it has been held that order issued under Section 37B read with Section 11A of the Act ibid is not effective from the date of its issue but only from the date of issue of trade notice by the concerned Commissionerate. While delivering the above judgment the Tribunal had followed the Hon'ble Apex Court judgment in the case of HM Bags Manufacturing Co. (supra). The learned Counsel also invited my attention to para 3(e) on page 7 of the order recorded by learned Member (T) and argued that there was no question of any suppression of facts and therefore the learned Member (T) Shri S.S. Sekhon has rightly arrived at the conclusion that the provisions as contained in proviso to Section 11A(1) of the C.E. Act, 1944 in the case of show cause notice issued on 1-3-94 to invoke the longer period of limitat....
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....ysed and discussed the aspect of time bar and on the applicability of prospective nature of the Board's order which has been issued under Section 37B of the C.E. Act, 1944. Learned Member (T) has set aside the order of imposition of penalty on merits as the appellants have not suppressed any material from the department and the order of the learned Member (T) being legal and proper, the same should be concurred with. 16. Shri G.S. Menon, learned SDR submitted that the point of dispute is about classification of the product in question and both the Members have agreed for remand of the matter for determining the classification of the product in question. He invited my attention to para 3(c) page 6 of the order recorded by learned Member (T) wherein he has held that the matter be referred to expert and then determine the classification of the product. He also invited my attention to para 3(d) of the order recorded by Member (T) wherein he has discussed about the Section 37B order issued by the Central Board. He also took me to para 3 (e) and (g) of the order of learned Member (T). He also took me to para 6 of the order recorded by Member (J) at page 18 and he submitted that s....
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....) in para 3(d) at page 7 and in view of the judgment in the case of HM Bags Manufacturing Co. reported in 1997 (94) E.L.T. 3 (S.C.) the order issued by the Board under Section 37B will be applicable from the date of its publication. Therefore, no demand of duty can be raised for a period prior to the date of publication of such order. Learned Member (T) has also relied upon the judgment of the Tribunal in the case of RN Polyasacks reported in 2000 (117) E.L.T. 790 in which it has been held that the Section 37B order issued by the Central Board will be applicable from the date of issue of the trade notice by the concerned Commissionerate and not from the date of issue of the order by the Board. While rendering the above judgment the Tribunal had followed the judgment of the Hon'ble Apex Court in the case of HM Bags Manufacturing Co. (supra). 18. I am also in agreement with the finding recorded by learned Member (T) in para 3(e) at page 7 that as there was no suppression of facts the proviso to Section 11A(1) cannot be invoked for demand of duty. I also agree with the view taken by learned Member (T) Shri S.S. Sekhon that the demands have to be restricted to six months only f....