Customs, Excise and Gold Tribunal - Calcutta
Collector Of C. Ex. vs Johnston Pumps India Ltd. on 30 January, 2002
Equivalent citations: 2002ECR207(TRI.KOLKATA), 2003(162)ELT484(TRI-KOLKATA)
ORDER S.S. Sekhon, Member (T)
1. The respondents herein are manufacturers of power driven pumps and in course of the manufacture of power driven pumps, they manufacture and assemble 'bowl assembly', which consists of rating impellers and stationary bowls having guide and 'column assembly', which connects the 'bowl assembly' and the 'head assembly' and conducts water from 'bowl assembly' to 'head assembly' comprising of column pipe, shaft and closing tube and 'shaft assembly' in the case of oil lubricated pumps and column pipe and 'shaft assembly' only in the case of water lubricated pumps. The 'bowl assembly' and 'column asembly' constitutes a typical vertical turbine pump along with the third item viz 'head assembly', consisting of the base from which the column, shaft assembly and the 'bowl assembly' are suspended, which discharges the water into the delivering pipe systems.
2. From March 1972 to August 1973, Central Excise duty was collected from the respondents, under Item No. 30A of the erstwhile Central Excise Tariff in respect of clearances of 'bowl assembly' simpliciter. Subsequently, the department considered the said 'bowl assembly' the part not covered under Item No. 30A. Consequently refund order in respect of duty paid and collected from the respondents on 'bowl assembly' simpliciter under Tariff Item No. 30A was passed on 30-3-1974. However, on 18-9-75, the Assistant Collector revised his views and issued a letter stating that such entities would also be covered by item No. 30A and a classification list and price list were required to be submitted. Notices were thereafter issued on 10-10-1977 for recovery of the erroneous refund granted on and by order dated 30-03-1974. This demand was confirmed on 23-2-1979. The Collector (Appeals) vide his order dated 16-7-1981 allowed the appeal as filed by the respondents against this confirmation order dated 2-2-1979. On 8-7-1982, a show cause notice under Section 36(2) of the Central Excise Salt Act, 1944 was issued alleging that the order passed by the Appellate Collector was not legal, proper or correct. A reply was filed to this notice. A writ petition dated 8-7-82 was filed by the respondents before the Hon'ble Calcutta High Court, challenging the legality/validity of the notice dated 8-7-1982. An interim order was passed by the Hon'ble High Court, that the proceedings will continue but no final order will be passed till the disposal of the Rule. This appeal thereafter has come before us for final decision.
3. The Commissioner (Appeals), order impugned reads as follows :-
"I have carefully gone through the case records, the submission made in the appeal and those urged at the time of personal hearing on 7-7-81.
The case of the appellants as explained by Mr. B.C. Das, Accounts Manager of the appellants is that Bowl Assembly of Power Driven Pump is not liable to excise duty under Item 30A of the C.E.T. if it is cleared by itself and not with the complete power driven pump. This was accepted by the Central Excise Department and intimated to them by the Assistant Collector of Central Excise, Calcuta-VII Divn. In his letter dated 21-1-74 and in the letter dated 14-3-74 of the Superintendent of Central Excise, Assessment Unit No. 2. Their refund claim in respect of duty paid on Bowl Assembly of the power driven pump even if it is cleared by itself will attract duty under Item 30A of the C. Ex. and therefore, demanded re-payment of the refund already granted to the appellants. They never accepted that Bowl Assembly is dutiable under Item 30A of the C. Ex. but they have been paying duty under protest. Bowl assembly by itself is not a pump. The I.S.I Specification clearly shows that the pumps meant for deep tube well manufactured by the appellants consist of three different parts (1) Despatch Head Assembly (2) Column Assembly & (3) Bowl Assembly. Mr. Das also argued that if the Bowl Assembly itself is treated as a pump, the other parts of the pump when cleared separately should not be charged to duty.
Reading of the Central Excise Tariff clearly shows that duty is to be levied under Item 30A on power driven pump for liquids whether or not fitted with measuring devices. The tariff does not authorise levy of excise duty on a part of a power driven pump. Therefore, the Bowl Assembly cleared by itself by the appellants are not liable to excise duty under Item 30A because, by itself, the Bowl Assembly does not constitute a power driven pump.
On this ground I allow the appeal and set aside the order of the Assistant Collector."
4. We find that the notice under Section 36(2) has been issued by tentatively holding the view that "the orders of the Appellate Collector are not legal, proper and correct, because it is observed that the function of a pump is to build up pressure and to convert mechanical energy into kinetic energy of the liquid and since it is only the Bowl Assembly which performs that function, it is to be considered as a power driven pump by itself falling under Item 30A of the said Schedule. This contention seems to find support in the decision of the Division Bench of Gujarat High Court in the case of Jyoti Ltd., Baroda v. Union of India and Anr. (As reported in 1979 (4) E.L.T. (J 546).
5. We have heard both sides and considered the submissions. We find :-
(a) In an Appeal No. E/SB-489/1982, filed by the respondent herein, arising out of Order-in-Original No. 175(68)82-COLLR-45(82), vide Order No. M-1213-1214/A-1226/2001 [2002 (149) E.L.T. 415 (T)], we had held that the entities as herein were classifiable under Tariff Item No. 68 and not under Tariff Item 30A. Since, we find that the department had itself proposed to determine duty in such articles under Tariff Item 68, supplied assembled or otherwise, alongwith power driven pumps falling under other Tariff Item No. 30A. We find that all kinds of machinery, complete or incomplete and in forms of components would fall under Tariff Item 68. In the case of Arlaps Limited - 1981 (8) E.L.T. 684 (Bom.) while examining the durability of tariff key products, the court came to a conclusion that if an article does not come into existence until it is fully erected, installed and tested and such articles become a part of immovable property and duty could not be determined on such items. However, components used in the manufacture of such erected articles would be liable to appropriate rate of excise duty at the time of clearance from the respective factory. Following the same, we find no case of cause to recover the duty under tariff item No. 30A. Even though Tariff Item 68 was introduced w.e.f 1-3-75, the very fact remains, that tariff item was so worded. The expression "not elsewhere specified" means "a total omission or specification of goods in any of the items preceding item 68. Darshan Hosiery Works v. Union of India, 1980 (6) E.L.T. 390, 394 (Guj.); Garware Nylon Ltd. v. Union of India, 1980 (6) E.L.T, 249 (Bom.) for the purpose of imposition of duty or for the purpose of granting exemption from duty. Gopal Hosiery v. ACCE, 1989 (41) E.L.T. 35-42 (Cal.), therefore, it is only those goods which get excluded from the description of goods from the other tariff item in whatever manner, such goods shall be deemed to be goods not specified in that item and thus becoming goods not specified elsewhere for the purposes of Item 68, as held in Hico Products Ltd. v. CCE, 1994 (71) E.L.T. 339 (S.C.). When we find that when Revenue views and holds, the entities to be classifiable under tariff item 68, no classification under Tariff Item 30A earlier could be resorted to when we follow the above decisions since there is no change in Tariff Item 30A brought on record before us after the introduction of Tariff Item 68.
(b) We also find, that in the facts of this case, duty was collected and thereafter considered and refunded only on 30-3-1974. The view of the Assistant Collector changed only on 18-9-75, to hold that such goods would be covered under Item 30A. Thereafter a notice came to be issued for recovery of erroneous refund only on 10-10-1977. This notice was clearly barred by limitation provided under Section 11A. Since, we find that the larger period of the proviso to the Section 11A and ingredients to invoke the same to be non-existing in this case to justify the Erroneous Refund Recovery Demands. The notice dated 10-10-77 is barred by limitation. Therefore, the entire proceedings initiated by this notice dated 10-10-1977 are barred and are required to be struck down.
6. In view of our findings, the notices and the consequent proceedings of recovery or erroneous refund are struck down being barred by limitation and Revenue's appeal is dismissed in consequence.