AI Drafter 
TaxTMI 
TaxTMI 
1984 (8) TMI 329
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....respect of "Iron in any crude form-cast iron castings (semi-finished, proof machined or partially machined) for- (1)  *                *                  * (2)  *                *                  * (3) Cylinder liners proof machined to Part No. CC-F-3 (Rev.1). (4) Cylinder liners proof machined to Part No. 10123116 which is not identifiable part in that it is partially machined only and not ready for use." under the aforesaid notification No. 74/62 and it was duly approved by the Asstt. Collector in November, 1981; (Exhibit F in the Paper Book). (c) however, in consequence of an audit objection dated 3-7-1981 (to which the Appellant submitted a reply dated 6th August, 1981), a notice dated 17-8-1981 (Exhibit D in the Paper Book) was issued to the Appellant under Section 11A of the Act, alleging inter alia that- (i) cylinder liners manuf....
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....d the adjudication order except to the extent that the demands "which are issued for a period longer than six months from the date of issue of the show cause notice are not sustainable," inasmuch as a classification list can be revised only prospectively and any demand pursuant to a revised classification would be subject to the provisions of Section 11A of the Act and Rule 10 of the Central Excise Rules, 1944. 2. It was contended by Shri R.K. Habbu. Advocate for the Appellant before us, inter alia, that - (a) once the classification list was approved, the Asstt. Collector had no jurisdiction to go back on such approval since there is no such power that inheres and becomes vested, as it should, either expressly or by necessary implication, in the Asstt. Collector (reliance upon 1983 E.L.T. 34 - Indian Organic Chemicals Ltd. v. Union of India); (b) in any view, the first show cause notice dated 17-8-1981 must be deemed to have been dropped in the facts and circumstances of the case; (c) the castings manufactured by the Appellant cannot in any view be considered to be machine parts and assessed to duty under Item 68 of the First Schedule, because, after the supply of....
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....imited by the Appellate Collector necessarily takes us to six months prior to the first show cause notice dated 17-8-1981; (d) the purpose of the show cause notice is to indicate the amount of duty payable and, hence, if the notice indicates the difference between the duty demanded and the duty not paid, that would be sufficient compliance with the requirement of Sec. 11A of the Act. In case the amount is not specified, the Appellant could always enquire and ascertain the actual duty before giving a reply to the show cause notice. Mere failure to comply meticulously with the requirements of Sec. 11A does not render the show cause notice void (reliance on 1981 E.L.T. 642 - Hindustan Aluminium Corporation Ltd. v. Superintendent, Central Excise, Mirzapur and others. It was Rule 10 as it existed at the relevant time that was construed in the said decision. Rule 10 is now replaced by Sec. 11A and is ad idem.) 4. On 29-12-1983, when the matter was reopened and reheard - (a) Shri Habbu, the learned counsel for the Appellant invited our attention to certain additional evidence in the form of two letters dated 23-5-1983 and 29-9-1983, the first from the Senior Stores Officer (....
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....pproved as per Exhibit F dated 21-11-1931. It recites that - (a) the appellant had filed a classification list classifying cylinder liners under item 25 of the First Schedule and eligible for exemption under Notification No. 74/62; (b) such classification was approved on or about 20th of November 1981; (c) nevertheless, it appears that the cylinder liners in question are first classifiable under item No. 25 and further under item No. 68 at the appropriate rate of duty for the reasons annexed to the notice; (d) it is, hence, proposed to classify the said cylinder liners under item 68 pursuant to the powers conferred by sub rule (5) of Rule 173B of the Central Excise Rules, 1944 and to levy duty under it and also to demand the differential duty payable with effect from 1-3-1981 on the said items under the provisions of Sec. 11A of the Act, and invited the Appellant to show cause against the proposed action; (ii) the earlier show cause notice dated 17-8-1981 did not propose any such reclassification. It merely alleged removal of excisable goods with an intent to evade payment of duty and, accordingly, such duty as has been evaded was recoverable from the Appellant under....
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....ed duty; the reasons as to why the duty was evaded only during the aforesaid period and not right from 1976, when all along the Appellant had been consistently following the same practice. Not one word. Nor any explanation as to why the classification proposed by the Appellant was approved, on 20-11-1981, despite the earlier notice dated 17-8-1981, and the hearing pursuant to the said notice, by the same duo of officers involved right through. Is it, in the circumstances, unreasonable to conclude that the enquiry pursuant to the earlier notice dated 17-8-1981 was dropped with the approval accorded to the classification list on 20-11-1981 but resuscitated for obvious reasons on the issue of the subsequent show cause notice dated 16-1-1982? In any view of the matter, when there were no findings whatsoever on the issues that arise under the first show cause notice dated 17-8-1981, the composite adjudication order is of no effect in so far as the said notice is concerned; (ix) this is how, the Appellate Collector had also apparently understood, for he proceeds to deal with the matter as if the adjudication order concerned itself with the notice dated 16-1-1982 only and the earlier n....
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.... and provisions have not been considered. (iii) Without going critically into each of the aforesaid conditions that are laid down as sine qua non for review in the context of the provisions in Rule 173B, it would appear sufficient for our present purpose to observe that none of them is fulfilled in the instant case. On the contrary, the discussion in para (5A) supra of the proceedings relating to the show cause notices is enough indication of the arbitrary or capricious exercise of the power of review in this case, if at all it were assumed to inhere in the adjudication officer to a limited extent. One can hardly describe the action otherwise in the light of the sequence of events-the show cause notice for payment of differential duty on 17-8-1981, the conclusion of the adjudication on 23-10-1981, the approval of a classification list entirely negating the adjudication, and the issue of a second notice to show cause on 16-1-1982 in despite of it. (C) (i) The foregoing, by itself, is sufficient to dispose of this Appeal and it is unnecessary to go into the other issues. Since, however, the issue as to whether the goods in question can be considered to be machined parts and ass....
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....his Tribunal, it was held, inter alia, that- (a) Item No. 25 has to be read "Iron cast in any crude form including pig iron, scrap iron, molten iron or iron cast in any other shape or size"; (b) once it is so read, it becomes clear that "crude iron" qualifies mainly pig iron, scrap iron and molten iron to a lesser extent and does not qualify iron cast in any other shape or size; (c) the castings fall under Item 25 till they lose their identity as castings and assumed a new name, character and use; (d) discrimination and subjective selection is inevitable; (e) various citations (not, however, referred to) show that if the goods were manufactured in India, they were liable to duty under Item 25; (f) in an addendum, one of the learned Members relied upon the ratio of the Supreme Court in 1980 E.L.T. 343 (SC) (Dy. Commissioner, Sales Tax, Ernakulam v. P.I.I. Food Packers) and observed that, even though the casting had undergone a degree of processing, it must still be regarded as retaining its original identity and accordingly it is assessable under Item 25; (iv) in terms of the ratio of the larger Bench of this Tribunal, therefore, it is not the extent of crudenes....
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....re cleared from the assessees' factory; (e) accordingly they ceased to be castings before clearance and became liable for duty once again under Item 68 of the First Schedule. 6. In the premises, the Appeal succeeds on the issue of the competence of the adjudicating authority to have purported to review a classification list approved earlier. [Per : K.L. Rekhi, Member] : 7. I agree with Brother Murthy that considering the way entry 25 of the Tariff is worded, viz., "25. Iron in any crude form - including pig iron, scrap iron, molten iron or iron cast in any other shape or size" the word "crude" ought to be taken as qualifying the entire entry. This was also the unanimous view of the appellants as well as the Department in M/s. TELCO's appeals before the Larger Bench [Appeals No. CD(SB) (T) A. No. 45 and 50-55/75-B]. However, the Larger Bench has ruled otherwise saying that the word "or" occurring after the words "molten iron" in the entry is disjunctive and that the word "crude" does not qualify the words "iron cast in any other shape or size". Therefore, whatever may be my personal views in the matter, I consider that as a part of the three-Member Bench ....
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....ron cast in any other shape or size". They had become a different article falling under Item 68 of the Tariff. The appellants have stated that some further processes still remained to be performed on them at the customers' end. I find that these further processes were nothing more than fitment operations of a peripheral nature. The fully machined cylinder liners, in the condition in which they were cleared from the appellants' factory, were almost finished machinery components, even if not fully finished. The important thing is that at this stage they had ceased to conform to the description "iron cast in any other shape or size" in entry 25. I, therefore, hold that fully machined cylinder liners were liable to assessment at two stages-under Item 25 at the stage of casting and under Item 68 at the time of their clearance after detailed machining etc. Patna High Court judgment in the case of M/s Tata Yodogawa (1983 E.L.T. 17) cited by the appellants is not applicable here because that judgment related to a case of classification of steel castings under entry 26AA (v) and the two entries-25 and 26AA(v) are worded differently. 9. As regards the appellants' argument that the As....
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....uthority can depart from a finding arrived at in an earlier year only for cogent reasons. There should be either fresh facts or a change of law or at least a suggestion that while arriving at the conclusion of the earlier year certain material facts or provisions had not been considered and that if they had been considered a different view might have been taken. But for no reason at all there can be no departure from the view taken in an earlier year. This rule is based both on the principle that there should be a finality to litigation even in Income-tax matters as well on principles of natural justice." Applying the above rule to the present appellants' case, I find that the goods were declared by them in the classification list effective from 1-3-81 as under :- "(4) Cylinder liners proof machined to Part No. 10123116 which is not identifiable part in that it is partially machined only and not ready for use." However, on physical verification of the goods and their manufacturing processes, the Asstt. Collector found, and so have I after seeing the photographs and the contract documents, that they were 'fully machined cylinder liners". In other words, the description of t....
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....eriod of six months for which the demand for duty can validly be enforced against the appellants would be the period of six months preceding each of the two show cause notices as the two notices covered two different classification lists in force during two different periods. Approval given by the Asstt. Collector in November, 1981 to the subsequent classification list which was operative for a later period cannot mean that the first show cause notice given in respect of an earlier classification list, in force prior to March, 1981 stood dropped. The Asstt. Collector did not pass any order withdrawing the first show cause notice but actually adjudicated upon it, together with the later show cause notice, in her combined Order-in-Original. 11. To sum up, I order that - (1) proof machined castings of cylinder liners were classifiable under I tern 25 of the Tariff, (2) fully machined cylinder liners were liable to a two-stage levy - first under Item 25 and later under Item 68, and (3) the demand for duty should be revised accordingly and, in so far as the past period (prior to the issue of the show cause notices) is concerned, it should cover only a period of six mont....