Customs, Excise and Gold Tribunal - Delhi
S.K. Enterprises And Sh. Krishan Mohan ... vs C.C.E. on 26 December, 2003
Equivalent citations: 2004(93)ECC436, 2004(175)ELT686(TRI-DEL)
ORDER V.K. Agrawal, J.
1. The issues, involved in these two appeals, are whether the goods manufactured by M/s. S.K. Enterprises, are liable to be classified under Heading 83.01 of the Schedule to the Central Excise Tariff Act as parts of locks as confirmed by the Commissioner (Appeals) or under different tariff headings, being parts of general use and whether the extended period of limitation is invokable for demanding Central Excise Duty.
2. Shri Y. Kumar, learned Advocate, submitted that the appellants, a proprietorship SSI unit, manufacture various items like pins, nuts, bolts, screws, washers, collars, etc. of iron and steel; that the Joint Commissioner, under the Order-in-Original No. 5/2000 dated 19.12.2000 confirmed the demand of duty and imposed penalty on the ground that they are manufacturing parts of locks, which are classifiable under Heading 83.01 and not under chapter 73 ; that the Commissioner (Appeals) also, under the impugned order, has rejected their appeal in the ground that Note 2 to Section XV excludes Chapters 72-76 and Chapters 78-81 from the purview of Chapter 82 or 83 ; that the Commissioner (Appeals) has also held that by classifying the impugned products under different Heading, they had malafide intention to evade payment of duty. The learned Advocate, further, submitted that they manufacture parts of general use, which are used as motor vehicle parts, lock parts, etc.; that the items like pins, nuts, bolts, screws, rivets, etc. are for use practically in industry for diverse application; that some of the buyers of the appellants have written letters to the effect that the products manufactured by them are used in motor vehicles and not as parts of locks. That this goes to show that the items manufactured by them are not industry - specific, but are of general purpose ; that according to Note 2(a) of Section XV of the Tariff "parts of general use" means specified articles falling under Chapter 73 of the Tariff which includes Heading 73.18; that Heading 73.18 applies to screws, bolts, nuts, revites, washers, etc.; that the Tribunal has held in the case of C.C.E. vs. Refair Industries, 1988 (103) ELT 43 (T) that bolts, nuts, screws, etc. used in electrical control panels cannot be classified as parts of electrical machinery under Chapter 85, but are correctly classifiable under Heading 7318.10; that in the past, when they had claimed classification of parts of sewing machines under Sub-heading 8452.90, the Department classified the screws under Heading 73.18 of the Tariff relying upon Note 2(a) of Section XV and Section 2(a) to Section XVI. The learned Advocate also relied upon Note 1 to chapter 83 which clearly mentions that parts of base metal are to be classified with the articles; that, however, articles of iron and steel of Heading Nos. 73.12, 73.15, 73.17, 73.18 & 73.20 or similar articles of other base metal are not to be taken as parts of the articles of Chapter 83; that, accordingly, nuts, bolts, rivets, etc. are classifiable under Chapter 73.18. Finally, the learned Advocate, submitted that the demand pertains to the period from 6.9.97 to 26.2.99 whereas a show cause notice has been issued on 24.4.2000, which is beyond normal period of limitation specified under Section 11AC (1) of the Central Excise Act; that the extended period is not invokable as they had filed Rule 173B declarations for their products and R.T. 12 Returns has also been filed clearly indicating the classification claimed by them; that, moreover, all the supplies of the impugned products were made to the original equipments manufactured (OEs), who were eligible for MODVAT Credit and there was not market sales; that as such there was no intent to evade payment of duty on their part. He relied upon the decision of the Supreme Court in the case of Densons Pultretaknik Vs. CCE, 2003-TAXINDIAONLINE-46-SC-CX, wherein it has been held that claming a particular classification is not wilful misstatement or suppression of facts justifying invokation of extended period of limitation.
3. countering the arguments, Shri D.N. Choudhary, learned S.D.R., submitted that the appellants had willfully mis-classified the impugned goods in their declaration; that as such there was intent to evade payment of duty and consequentially the larger period of limitation for issuing the show cause notice is available to the Department.
4. We have considered the submissions of both the sides. Both these appeals can be disposed of on the question of demand being time-barred and without going into the aspect of classification of the products. It has not been disputed by the Revenue that the appellants have classified their products under different Headings of the Tariff applicable to the various goods manufacture by them. It has also not been controverted by the Revenue that R.T. 12 Returns indicating the classification of these products were also filed by the appellants regularly. Once the appellants have declared the classification of the product as per their understanding, Department cannot attribute malafide intention without adducing the evidence to that effect. The appellants have classified these products under different Headings treating their product as goods of general use and relying upon Note 1 to Chapter 83 of the Tariff. The appellants have also relied upon the judgment of the Supreme Court in the case of Densons Pultretaknik (supra) wherein the Supreme Court has held that by merely claiming the product under a particular Heading, it cannot be said that there was any wilful misstatement or suppression of fact. once there is no wilful misstatement on the part of the appellants in classifying the products under a particular Heading/subject Heading of the Tariff, the show cause notice cannot be issued for demanding duty for the extended period of limitation. We, therefore, allow both the appeals on the aspect of time limit only without going into the merits of the matters.