TaxTMI 
TaxTMI 
2022 (8) TMI 873
X X X X Extracts X X X X
X X X X Extracts X X X X
.... penalty of Rs. 1 Lakh upon him by the order dated 21.03.2016 passed by the Commissioner 4. The appellant was engaged in the manufacture of various models of Colour Television Sets [CTVS ] and their parts and sub-assemblies in the factory at Greater Noida. The CTVS were being cleared on payment of excise duty by classifying the same under Heading 85.28 of the Central Excise Tariff. During the relevant period i.e. 01.12.1998 to 14.01.2004, the CTVS were also subject to Maximum Retail Price [MRP] based assessment in terms of section 4A of Central Excise Act, 1944 [the Excise Act] and accordingly duty was being discharged. The CTVS so cleared are not subject matter of dispute in the present appeals. 5. Apart from the CTVS, the appellant also manufactures various parts of CTVS and sub-assemblies of CTVS in the factory, which were being classified by the appellant under Heading 85.29 of the Tariff and central excise duty was paid. It needs to he noted that during the period in question, both the CTVS and the parts attracted the same rate of central excise duty. 6. During the period in question, the appellant cleared the sub-assemblies/parts of CTVS to the following manufacturers on p....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....2003 and 20.10.2004 for the subsequent periods from October 2002 to September 2003 and October 2003 to 14.01.2004 were also issued demanding differential duty. 10. Replies were filed by the appellant disputing the allegations made in the show cause notice. The Commissioner passed orders dated 28.10.2004 and 25.11.2004 confirming the duty demanded and imposed penalties. These orders were assailed before the Tribunal and by order dated 07.08.2013 the Tribunal remanded the matter to the adjudicating authority for a fresh decision within a period of three months, in the light of the judgment of the Supreme Court in Salora International Ltd. vs. Commissioner of C. Ex., New Delhi [2012 (284) E.L.T. 3 (S.C.)]. 11. On remand, the Commissioner passed the impugned order confirming the duty demands with interest and penalties. 12. Shri B.L. Narasimhan, learned counsel appearing for the appellant made the following submissions: (i) Interpretative Rules 2(a) of the Central Excise Tariff has no application to the facts of the present case for the reason that Interpretative Rules 2(a) can be applied if and only if all the components which form part of the assembly or complete or finished go....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the appellant. 13. Shri B.K. Jain, learned authorized representative appearing for the Department has, however, supported the impugned order and made the following submissions: (i) The appellant actually supplied complete TV sets in semi-knocked down condition for its assembly at original equipment manufacturer premises. On similar facts and circumstances, the Tribunal in M/s. Panasonic AVC Networks India Co. Ltd. vs. Commissioner of Central Excise, Noida-I [Excise Appeal No. 70167 of 2016 decided on 10.01.2020], rejected the appeal and classified the product under Tariff 85.28 as complete CTVS; (ii) Complete assemblies/sub-assemblies of CTVS are supplied to original equipment manufacturers which together contain the essential characteristics of a CTV. On application of Section Notes harmoniously, the assemblies/sub-assemblies would classify under Tariff 85.28 as CTVS; (iii) The Central Board of Excise and Customs has also examined the classification in the Circular dated 03.02.1994 issued by them; (iv) The judgment of the Supreme Court in Salora International would apply to the facts of the present case; (v) The quantification of demand made in the show cause notice is ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....retative Rules 2(a) of the Customs Tariff, which is identical with the only difference being that instead of "removed", the expression "presented" appears in the Customs Tariff. In regard to the applicability of rule 2(a) of the Customs Tariff to import of goods, it has been repeatedly held that until all the components of the complete article are presented together for assessment at the same point of time, rule 2(a) cannot be invoked to classify the parts as complete article. It has also been held that consignments removed/presented at different points of time from different factories cannot be clubbed together to classify the parts as complete article. 18. A Larger Bench of the Tribunal in Sony India examined rule 2(a) of the Customs Tariff and held that rule 2(a) has to be applied while considering the relevant Tariff Entry for each item and the observations are: "16. We thus come to the core dispute in this appeal whether the different parts imported under 94 Bs/E spread over the period from April, 1995 to January, 1997 can be combined together for the purpose of assessment by applying Rule 2(a), of the Interpretative Rules. Going by the language of Rule 2(a) the question wh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....me process after the import is made. In the reported decision in Vareli Weaves Pvt. Ltd. v. Union of India [1996 (83) E.L.T. 255 (S.C.)] the question was as to whether the countervailing duty was liable to be left on the imports made by the assessee at a stage they would reach subsequent to their import after undergoing a process. It was contended that such goods could be subjected to duty only in the State in which they were imported. It was held that the countervailing duty must be levied on goods in the State in which they are when they are imported. This was on the basis of Section 3 of the Customs Tariff Act. Though there is no reference to Rule 2(a), in our opinion, the same Rule should apply subject ofcourse to the applicability of the Rule. We have already held that the Rule is not applicable. Similar view was taken in Dunlop India and Madras Rubber Factory Ltd. v. UOI [1983 (13) E.L.T. 1566 (S.C.). 12. Shri Lakshmikumaran argues on the basis of a German Court decision on which the Tribunal also relied upon. According to the learned counsel in that decision Rule 2(a) was considered and the Court took the view that the article is to be considered to be imported in unassemb....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o the facts of the present case and the sub-assemblies are classifiable under Heading 85.29 only. Thus, in view of Rule 1, sub-assemblies and parts cleared by the appellant are to be classified under Heading 85.29 only. Once the goods are classifiable under a particular Heading by application of the Headings and relevant section and chapter notes, the classification cannot be altered by taking recourse to the Interpretative Rules. 23. In this connection, it would be pertain to refer to the observations made by the Supreme Court in Simplex Co. Ltd. and they are reproduced below: "11. The rules for the interpretation of the Schedule to the Central Excise Tariff Act, 1985 have been framed pursuant to the powers under Section 2 of that Act. According to Rule 1 titles of Sections and Chapters in the Schedule are provided for ease of reference only. But for legal purposes, classification "shall be determined according to the terms of the headings and any relevant section or Chapter Notes". If neither the heading nor the notes suffice to clarify the scope of a heading, then it must be construed according to the other following provisions contained in the Rules. Rule-l gives primacy to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....relevant Section and Chapter Notes. In this case, the relevant Section Note is Section Note 2 to Section XVI of the Tariff, as reproduced above. The same may be reproduced again here for the purpose of a closer examination: "2. Subject to Note 1 to this Section, Note 1 to Chapter 84 and to Note 1 to Chapter 85, parts of machines (not being parts of the articles of heading 84.84, 85.44, 85.45, 85.46 or 85.47) are to be classified according to the following rules : (a) parts which are goods included in any of the headings of Chapter 84 or 85 (other than headings 84.85 and 85.48) are in all cases to be classified in their respective headings; (b) ..................... 22. As can be seen from the above, the clear stipulation contained in Section Note 2 is to the effect that 'parts' of goods mentioned in the Chapters specified therein, shall in all cases be classified in their respective heading. In that light, the fundamental enquiry in this case must be that of whether the goods produced by the appellant may be said to be covered by the above Section Note. 23. In view of the above mentioned Section Note, the question that arises here is whether the goods produced by the appe....