Customs, Excise and Gold Tribunal - Bangalore
Zenith Control And Systems (P.) Ltd. vs Collector Of Central Excise on 8 November, 1994
Equivalent citations: 1995(57)ECR98(TRI.-BANGALORE)
ORDER S. Kalyanam, Vice-President 1. This is an application for waiver of pre-deposit of a duty of Rs. 1,20,163.89 and a further demand for Rs. 76,126.39 on grounds of erroneous availing of Modvat duty and a penalty of Rs. 25,000/-levied on the petitioner under the impugned order of the Collector of Central Excise, Bangalore dated 25.6.1991. The duty is levied for the period February 1988 to March 1989 by issue of a show cause notice dated 4.12.1990 by invoking the longer period of limitation in terms of the proviso to Section 11A of the Central Excises and Salt Act, 1944 by alleging wilful misdeclaration and contravention of Rules to evade payment of duty against the appellant. Shri Parameswaran, Ld. Counsel for the petitioner submitted that the appellant manufactured Computerised Attendance Recording System, Computerised Data Acquisition and Process Control System and Computer Peripherals and filed a classification list classifying the goods under Chapter Heading 84.71 of the Central Excise Tariff and the same was approved. The petitioners were clearing parts of the Computerised Attendance Recording System under G.P. 1 on payment of duty and by declaring the various items in the Excise documents. The goods were also duly accounted for in the R.G. 1 Register and were also specifically mentioned in the R.T. 12 Returns which were also duly assessed by the Department without any objection for the period in question. It is only subsequently with a view to revise the classification of the goods in terms of Heading 84.73 the Department issued a show cause notice dt. 4.12.1990. It was urged that there is absolutely no evidence on record to show that the appellant made any wilful. misdeclaration or guilty of suppression of facts with intent to evade payment of duty. It was urged that in the relevant gate passes and the R.T. 12 Returns all the items have been specifically stated and the R.T. 12 assessments have also been made. On 2.5.1989 the Supdt. of Central Excise required the petitioner to file a revised classification list. The Ld. Counsel, therefore, urged that the Department knew about the manufacture and clearance of the, goods in question as evidenced by the relevant gate passes and the R.T. 12 returns containing complete description of the goods. The Department assessed the R.T. 12 returns and had all the necessary information not only in the R.T. 12 returns but also the gate passes. More so, the Supdt. also by his communication dt. 2.5.1989 required the petitioner to file the revised classification list. Therefore, when the Department had the knowledge about all these facts, levy of duty by alleging suppression and invoking the longer period of limitation is not, prima facie, tenable in law. It was further urged in the impugned order the crux of the issue against the petitioner is one of contravention of Central Excise Rules and contravention sim-plicitor would not make for contravention with intent to evade payment of excise duty. The Ld. Counsel also referred to Chapter 84 Note 5(b) and contended that the unit is to be regarded as part of the complete system while it satisfies the conditions in Chapter Note 5(b)(i) and (ii) and therefore, prima facie, the classification of the goods under Chapter 84.71 is in order. He also submitted that even otherwise some of the items in question had been classified under subheading 84.71 by the Asstt. Collector. In any event, he urged that a bonafide misapprehension or misinterpretation of classification or mere contravention of Rules ipso facto would not attract the extended period of limitation under Section 11A proviso of the Act. It was, therefore, submitted that the petitioner would be entitled for waiver of pre-deposit of duty and penalty on grounds of limitation prima facie. 2. Heard Shri R. Subramaniam, Ld. D.R. 3. We have carefully considered the submissions made before us. The classification list filed by the petitioner classifying the goods under Heading 84.71 was accepted by the Department and even though the classification list does not contain the specific details of the various parts and items, they were cleared under G.P. 1 with complete description; the R.T. 22 returns also contained admittedly the description of the goods in question and the authorities namely the Supdt. of Central Excise while assessing the R.T. 22 returns evidently would have not only the details in the R.T. 12 returns and gate passes but also the classification list and in exervising a quasi-judicial power, has also assessed the R.T. 12 returns in favour of the assessee. If the description in the classification is different from the one in the gate passes or the R.T. 22 returns, the Supdt. could have placed the papers before the Asstt. Collector for initiating action for revision of classification. This has not been done. The Supdt. also has by a communication dt. 2.5.1989 required the party to file a revised classification list. These circumstances, prima facie, bear out and indicate knowledge on the part of the Department with reference to the goods the petitioner was manufacturing and clearing. It is settled law that a bona fide misreading or misapprehension of the correct Heading of classification would not be a ground for alleging suppression. Moreover, in the present case the goods which have been duly described in the G.Ps. and R.T. 12 returns have been cleared on payment of duty proving the bona fides of the petitioner prima facie. The adjudicating authority in para 11 of the impugned order has held that contravention of Central Excise Rules is also one of the requirements within the mischief of the proviso to Section 11A of the Act for invoking the longer period of limitation and this finding is not prima facie, tenable because the longer period of limitation can be invoked only when a person is guilty of wilful mis-statement or suppression of facts, or contravention of any of the provisions of the Act or of the rules with intent to evade payment of duty. (emphasis supplied) When there are two rival competing entries giving rise to a contentious issue, suppression cannot in law automatically be invoked on the ground that the view of the as-sessee in regard to classification is not correct. The Supdt. of Central Excise also, as alleged in para 11 of the impugned order, required the petitioner by his communication dt. 2.5.1989 to file a revised classification list making it abundantly clear that the Departmental authorities had knowledge and they were aware of the factual position with reference to the manufacture of the goods by the petitioner. Chapter 84 Note 5(b) reads as under: 84. Note 5(b):--Automatic Data processing machines may be in the form of systems consisting of a variable number of separately-housed units. A unit is to be regarded as being a part of the complete system if it meets all the following conditions: (1) It is connectable to the central processing unit either directly or through one or more other units; (2) It is specifically designed as part of such a system [it must, in particular, unless it is a power supply unit, be able to accept or deliver data in a form (code or signals) which can be used by the system]. Therefore, having regard to the above facts and circumstances, the evidence on record prima facie, we hold that the longer period of limitation in terms of the proviso to Section 11A of the Central Excises and Salt Act, 1944 is not applicable in the case of the petitioner and in this view on prima facie ground we grant waiver of pre-deposit of duty and penalty pending disposal of the appeal. 4. The appeal being a Special Bench matter the papers are transmitted to Central Registry, CEGAT, New Delhi for disposal. Sd/- (S. Kalyanam) Member (now) Vice-President V.P. Gulati, J.
5. I have given a careful thought to the order recorded by my learned Brother and I am, however, not in full agreement with him and I am, therefore, recording this separate order.
6. By this application the applicants have pleaded for dispensation of pre-deposit of duty of Rs. 1,20,163.89 and a further demand of Rs. 76,126.39 for erroneous availment of MODVAT credit in terms of the impugned order and also the penalty of Rs. 25,000 levied on them under the said order.
7. The thrust of the pleas of the learned Advocate for the applicants is that demand is hit by limitation as the same had been raised beyond six months and that in the facts of the present case inasmuch as the applicants had filed the classification list, RT-12 returns and accounted for the goods in the RG. 1 register the longer period of limitation of 5 years could not be invoked. The plea is that there was no wilful mis declaration or suppression on their part as would be evidenced by the description of the goods given by them in the Central Excise records. The applicants have filed along with the stay petition some of the RT-12 returns and later, after the matter was heard once, the classification lists were also filed by them which were approved from time to time. The learned Advocate also pleaded that on 2.5.1989 the applicants were asked by the Superintendent to file a revised classification list. He pleaded that the applicants have sought classification of the goods under Tariff Heading 8471.00 but the authorities have held that some of the goods manufactured by the applicants are in fact assessable under Tariff Heading 8473.00 chargeable to a rate higher by 5% than the level under Tariff Heading 8471. For proper appreciation the two Tariff Headings are reproduced below for convenience of reference:
8471.00 Automatic data processing machines and units thereof; magnetic or optical readers, machines for transcribing data on to data media in coded form and machines for processing such data, not elsewhere spe-
cified or included.
8473.00 Parts and accessories (other than covers, carrying cases and the like) suitable for use solely or principally with machines of heading Nos.
84.69 to 84.72.
It is also necessary to advert to Chapter Notes for understanding the scope of Tariff Heading 8471 and also to the description given in the classification list and the R.T. 12 returns filed by the applicants. In Chapter Note 5, which is reproduced below for convenience of reference, the types of machines which would qualify for assessment under this heading are set out:
5. (a) For the purposes of heading No. 84.71, the expression 'automatic data processing machines' means:
(i) Digital machines, capable of (1) storing the processing programme or programmes and at least the data immediately necessary for the execution of the programme; (2) being freely programmed in accordance with the requirements of the user; (3) performing arithmetical computations specified by the user; and (4) executing, without human intervention, a processing programme which requires them to modify their execution, by logical decision during the processing run;
(ii) Analogue machines capable of simulating mathematical models and comprising at least: analogue elements, control elements and programming elements;
(iii) Hybrid machines consisting of either a digital machine with analogue elements or an analogue machine with digital elements.
(b) Automatic data processing machines may be in the form of systems consisting of a variable number of separately-housed units. A unit is to be regarded as being a part of the complete system if it meets all the following conditions:
(i) it is connectable to the central processing unit either directly or through one or more other units;
(ii) it is specifically designed as part of such a system [it must, in particular, unless it is a power supply unit, be able to accept or deliver data in a form (code or signals) which can be used by the system].
Such units presented separately are also to be classified in heading No. 84.71.
Heading No. 84.71 does not cover machines incorporating or working in conjunction with an automatic data processing machine and performing a specific function. Such machines are classified in the headings appropriate to their respective function or, failing that, in residual headings.
I observe that there is no plea from the applicants that the items in respect of which the additional duty has been demanded answered to anyone of the machines/items described in note 5 above and no plea against the assessment under tariff heading 8473.00 has been urged by the learned Advocate while pleading on the prima facie aspects of the case. I observe that the applicants are manufacturing sophisticated range of equipments like computers, computer peripherals and other ancillaries and allied equipments and the knowledge about the functional range of the same would be better known to them. The question to be considered is whether the applicants came up with the requisite information about the equipments manufactured by them and cleared by them at the time of filing the classification list. The applicants, as would be seen from the classification list, under the heading 'Full description of the goods' have given the broad heading of Chapter 84 and then described the Tariff heading 8471. After that they have stated as under:
Under this we manufacture the following:
i) Computerised Attendance Recording System.
ii) Computerised Data Acquisition and Process Control System.
iii) Computer peripherals.
and had indicated the Tariff heading for approval as 84.71. Therefore, from the description given what has to be read is that the ranges of equipments that they are manufacturing were the ones which have been amplified under Chapter Note 5. There is no plea from the applicants that in respect of any of the items in respect of which the duty has been demanded they answer to anyone of the descriptions given in Chapter Note 5. Now, whether an individual item which is cleared by the applicants would fall within the scope of this amplification would be known to the applicants. In the absence of any plea that there is any ambiguity about the ranges of machines covered under Chapter Note, it has to be held prima facie that the applicants declared only the goods covered by Chapter Note 5 above in the classification list, when in fact they, manufactured and cleared other goods also. It has to be noted that 84.71 does not talk about 'computer peripherals' but describes the types of machines which would be covered under this heading. The applicants have cleared items which have been described as Badge Racks, Coded Badge, Badge reader, Junction boxes, Badge reader stand, Badges, S-10 card, software, uncoded badges, electronic time punch clock, Driver interface etc. There is no plea taken, I find, by the applicants before the learned lower authority or before us that they were under the genuine impression that anyone of these items would fall within the ambit of the machines as set out under Chapter 84.71 read with Chapter Note 5. The applicants are manufacturers of sophisticated equipments as mentioned earlier and the scope of the items as manufactured by them was within their own knowledge and the declaration to the authorities given was only in respect of computer systems and the computer peripherals and the approval was obtained only for items figuring in Chapter Note 5 heading 84.71. The normal assumption of the authorities approving would be that the applicants are seeking approval for the machines which would be falling under Chapter Note 5(a). I therefore, hold that prima facie by filing the classification list the applicants have not come on record to make the authorities aware of the manufacture of these goods on which duty has been demanded and also their nature.
8. The next point that has to be considered is whether the applicants by virtue of their having filed R.T. 12 returns they could be said to have made the authorities aware of the range of the products manufactured by them. A perusal of some of the R.T. 12 returns, which have been filed by the applicants in the paper book, from February, 1988 shows that the applicants in R.T. 12 return for Feb. 1988 had merely reproduced the description of the goods as given in the classification list. In March 1988 return there is a separate mention of Badge Reader, Badge Reader Interface, Badges, Software, Badge Racks, Technical Services under the heading 'Computerised Attendance Recording System' and the classification of the same shown is 84.71. Likewise the same thing has been done in the R.T. 12 returns for May and July, 1988. It is seen that while assessing R.T. 12 returns for July, August, 1988 onwards and sometime from January, 1989 onwards there are endorsements by the Superintendent that in respect of Badges the duty should be paid through PLA and fresh classification list should be filed and it is shown that the case has been registered subject to filing of C.L. and approval by competent authority. It is thus seen that prima facie it is not because of any information furnished by the applicants that the duty has been demanded on the items but because of the officer's own discovery that in fact these Badges etc. were not eligible for the benefit under Tariff heading 84.71 that endorsement came to be made on the R.T. 12 returns for the months mentioned above and sometime from January, 1989 onwards. Merely because R.T.12 returns had been filed, gate passes were there and classification list had been filed it cannot be said prima facie that the authorities had been made aware of the fact of the manufacture of machines in question falling under Tariff heading 84.73. By giving the description of the goods as set out under this Tariff entry 84.71 in spite of the clear indication as to the range of goods which are covered under this entry under Chapter Note 5 of Chapter 84 and by maintaining the same description in the R.T. 12 returns and showing the goods in question under the main description of Chapter heading 84.71 despite the specific range of machines covered under this heading as per Chapter Note 5 thus conveying to the Departmental authorities that the range of goods they were manufacturing were as per Chapter Note 5 and also their related conduct in not coming forward to file the classification list when asked by the Departmental authorities to do so and also despite clear distinction between the range of goods covered by Tariff heading 84.71 and the range of goods covered by Tariff heading 84.73, prima facie the authorities had been led to believe that the items they were manufacturing were those of the categories mentioned in Chapter Note 5 of Chapter 84. The goods in question were declared under the heading 'Computerised Attendance Recording System'. Prima facie there is reason why the applicants should have done so when Chapter Note 5 referred to supra is so clear. What they had got approval in the classification list was for 'computer systems and computer peripherals' and which the authorities rightly prima facie assumed would be the ones mentioned under heading 84.71 read with Chapter Note 5(a). In view of this it has to be held that any knowledge if it is attributed to the authorities prima facie can only be attributed from January, 1989 and thereafter and if the departmental authorities did not raise demands or they did not resort to provisional assessment procedure or enforced recovery after that date, they themselves are to be blamed for that. It is seen that the demand upto the end of the year 1988 works out to Rs. 87,873.68 i.e. duty payable at 5% under Notification 175/86. No financial hardship has been pleaded.
9. I further find that as early as January, 1989 the Superintendent has made endorsement on R.T.12 return asking the applicants to file separate classification list and also to debit the duty under PLA. The applicants, however, continued to clear the goods against their old classification list and did not come forward to contest what had been endorsed on the R.T.12 returns till they were separately addressed in May, 1989. The applicants prima facie wanted to hold back facts with a view to pay lower rate of duty. Therefore, taking into account the totality of the circumstances of the case, I prima facie hold that the applicants had suppressed the facts from the Department and got the approval of classification list under Tariff heading 84.71 by holding back the information with a view to pay lower duty. While passing the above order I have borne in mind the rulings of the Hon'ble Supreme Court in the cases of Padmini Products v. CCE and Collector of Central Excise Hyderabad v. Chemphar Drugs and Liniments , wherein it has been held that question whether there has been any suppression with a view to evade payment of duty is there or not has to be viewed with reference to the facts of each case. In that view of the matter, as mentioned by me above, at least up to January, 1989 the goods which had been cleared prima facie had acquired the taint of suppression and duty in respect of that period asked to be paid is prima facie maintainable in law. As mentioned earlier, no financial hardship has been pleaded. In this view of the matter I order the applicants to make a pre-de-posit of a sum of Rs. 87,873.68 (Rs. Eighty-seven thousand eight hundred and seventy-three and paise sixty-eight) as worked out above, pending disposal of the appeal. The date before which the pre-deposit has to be made would be decided after the difference of opinion is resolved by the Third Member and final order emerges thereafter.
Sd/-
(V.P. Gulati) Member (T) Dated 23.3.1992 POINTS OF DIFFERENCE
10. Whether in the facts and circumstances of the case the longer period of limitation in terms of the proviso to Section 11A of the Central Excises & Salt Act, 1944 is not applicable in the case of the petitioner, since the goods which have been duly described in the G.Ps. and R.T. 12 returns have been cleared on payment of duty providing the bona fides of the petitioner; the finding of the adjudicating authority that contravention of Central Excise Rules is also one of the requirements within the mischief of the proviso to Section 11A of the Act for invoking the longer period of limitation is not prima facie tenable; that when are two rival competing entries giving rise to a contentious issue, suppression cannot in law automatically be invoked on the ground that the view of the assessee is not correct and that the Departmental authorities had knowledge and they were ware of the factual position with reference to the manufacture of the goods by the petitioner, and on prima facie ground waiver of pre-deposit of duty and penalty pending appeal has to be granted, as held by Member (Judicial) or the applicants have to make a pre-deposit of a sum of Rs. 87,873.68 being the demand up to the end of the year 1988 i.e. duty payable at 5% under Notification 175/86, since the applicants had suppressed the facts from the Department and got the approval of classification list under Tariff heading 84.71, despite clear distinction between the range of goods covered by Tariff heading 84.71 and the range of goods covered by Tariff heading 84.73, conveying to the Departmental authorities that the range of goods they were manufacturing were as per Chapter Note 5 and the authorities had been led to believe that the items they were manufacturing were those of the categories of Chapter Note 5 under Chapter 84 and the related conduct of the applicants in not coming forward to file the classification list when directed by the authorities to do so as early as January, 1989 and continuing to clear the goods against the old classification list by paying lower rate of duty and any knowledge if it is attributed to the authorities can only be from January, 1989 and the goods which had been cleared up to January, 1989 had acquired the taint of suppression and duty in respect of that period asked to be paid is maintainable in law in view of the decisions of the Hon'ble Supreme Court in the cases of Padmini Products and Chemphar Drugs and Liniments as merely because R.T. 12 returns had been filed, gate passes were there and classification list had been filed it cannot be said that the authorities had been made aware of the fact of manufacture of machines in question falling under Tariff heading 84.73, as held by Member (Technical).
Sd/- Sd/- (S. Kalyanam) (V.P. Gulati) Member (now) Vice-President Dated 23.3.1992 Member (T) Harish Chander, President
11. I have pursued the orcler written by both the learned brothers, Shri Section Kalyanam, Member (Judicial) and Shri V.P. Gulati, Member (Technical). Since both the learned brothers have narrated the facts, I need not reproduce the same. On a difference of opinion between the learned brothers, the following points of differences have been referred to me:
Whether in the facts and circumstances of the case the longer period of limitation in terms of the proviso to Section 11A of the Central Excises and Salt Act, 1944 is not applicable in the case of the petitioner, since the goods which have been duly described in the G.P.s and R.T. 12 returns have been cleared on payment of duty providing the bona fides of the petitioner; the finding of the adjudicating authority that contravention of Central Excise Rules is also one of the requirements within the mischief of the proviso to Section 11A of the Act for invoking the longer period of limitation is not prima facie tenable; that when there are two rival competing entries giving rise to a contentious issue, suppression cannot in law automatically be invoked on the ground that the view of the assessee is not correct and that the Departmental authorities had knowledge and they were aware of the factual position with reference to the manufacture of the goods by the petitioner, and on prima facie ground waiver of pre-deposit of duty and penalty pending appeal has to be granted, as held by Member (Judicial) or the applicants have to make a pre-deposit of a sum of Rs. 87,873.68 being the demand up to the end of the year 1988 i.e., duty payable at 5% under Notification 175/86, since the applicants had suppressed the facts from the Department and got the approval of classification list under Tariff heading 84.71, despite clear distinction between the range of goods covered by Tariff heading 84.71 and the range of goods covered by Tariff heading 84.73, conveying to the Departmental authorities that the range of goods they were manufacturing were as per Chapter Note 5 and the authorities had been led to believe that the items they were manufacturing were those of the categories of Chapter Note 5 under Chapter 84 and the related conduct of the applicants in not coming forward to file the classification list when directed by the authorities to do so as early as January, 1989 and continuing to clear the goods against the old classification list by paying lower rate of duty and any knowledge if it is attributed to the authorities can only be from January, 1989 and the goods which had been cleared upto January, 1989 had acquired the taint of suppression and duty in respect of that period asked to be paid is maintainable in law in view of the decisions of the Hon'ble Supreme Court in the cases of Padmini Products and Chemphar Drugs and Liniments as merely because R.T. 12 returns had been filed, gate passes were there and classification list had been filed it cannot be said that the authorities had been made aware of the fact of manufacture of machines in question falling under Tariff heading 84.73, as held by Member (Technical).
12. Shri K. Parameswaran, the learned Advocate appeared on behalf of the appellants. He relied on the order passed by Member (Judicial) and laid special emphasis on paras 3 and 4 of the said order. He pleaded that the period involved is February 1988 to March 1989 and the Show Cause Notice was issued on 4.12.1990. The Classification list was first filed on 1.4.1987 and again on 1.3.1988. These Classification lists were duly approved. R.T. 12 returns were also assessed and Gate passes were also duly looked into. The learned Counsel pleaded that the appellants manufactures Computerised Attendance Recording System, Computerised Data Acquisition and Process Control System and Computer Peripherals and filed a classification list classifing the goods under Chapter Heading 84.71 and cleared the goods under Chapter heading 84.71, whereas the Computer parts would merit classification under 84.73 according to the Revenue. Shri Parameswaran, the learned Counsel fairly pleaded that the Computer parts are rightly classifiable under heading 84.73, but the bona fide of the appellants should not be doubted. The appellants had filed the classification list bona fidely and in the R.T. 12 returns full details of the parts were mentioned. He pleaded that it is a bona fide mistake and as such the extended period of limitation cannot be invoked. In support of his argument he cited the following decisions:
i) Padmini Products v. Collector of Central Excise
ii) Collector of Central Excise v. Chemphar Drugs & Liniments
iii) Collector of Central Excise v. Kosan Metal Products Ltd.
Shri Parameswaran, the learned Counsel pleaded that the learned Member (Technical) has upheld the invoking of extended period of limitation and has ordered pre-deposit of a sum of Rs. 87,873.68. The learned Counsel referred to Rule 57(i) of the Central Excise Rules and argued that the adjudicating authority is not to proceed mechanically, he should have duly looked into the same and thereafter passed the order. In the present matter the extended period of limitation cannot be invoked.
13. Shri Subramanian, the learned Junior Departmental Representative who has pleaded on behalf of the Respondent pleaded that the items which are being manufactured by the appellants are well within the knowledge of the assessee and while filing the classification list they should have taken the due care in classifying the goods under the proper heading and primarily it is the duty of the manufacturers to file the classification list properly, if the goods are excisable. In the present case the main computer viz. computerised attendance recording system and computerised data acquisition and process control system are excisable under heading 84.71 and the parts are classifiable under 84.73. This fact should have been mentioned by the appellants in the classification list filed as well as in the R.T. 12 returns. As such it cannot be treated as bona fide act. He relied on the order passed by the Member (Technical) and pleaded that the same should be accepted.
14. I have heard both the sides and have gone through the facts and circumstances of the case. The facts are not disputed. Classification lists filed on 1st April '87 and 1st March '88 were approved on 12.1.1988 and 6.12.1988 respectively and the original approved classification list was duly seen by the learned JDR and the genuineness of the same had not been doubted. Similarly R.T. 12 returns were also duly seen by the learned JDR. The Tribunal in the case of Filtronics Ltd. v. Collector of Central Excise has held as under:
25. The question that falls for consideration in the appeal is whether the term transformers should be given a restricted meaning as pleaded by the appellants or it should be given a more comprehensive meaning as stated by the revenue. We observe that both sides have placed reliance on technical literature to explain the scope of the term 'transformer' as it is understood in the electronic and electrical fields. The learned Director of the appellants has fairly brought on record the term as used in the electronic and electrical field but his plea is that the terms though are of broad import, the term transformer is understood by those in the trade only covering those which are used in the electric supply lines. He pleaded that the items manufactured by the appellants were used in the electronic circuitry of Radio and TV sets. He, however, did not place any evidence before us in support of his this plea and his stress is only on the scope of the item as set out in the J & P transformer book referred to in para 10. We observe that in that book the transformers of a limited range used in the power lines alone appear to have been covered and it cannot be said that the full range of transformers are dealt with in that book. On the contrary we find that in the book 'Electronic Communication' referred to in para 13, the term transformer has been described as one of the common components or parts used in electricity, electronics and Radio and that a transformer may be used to step up or step down voltages, to change low voltage high current AC to high voltage low current AC or vice versa or to change the impedence or a circuit and that a transformer consists of a primary wire and a secondary wire. Further, we find in the Encyclopaedia of Electronics and Computers by Sybil P. Parker, Me Graw Hill Book Company the term transformer as set out in para 22 covers both power line transformers and Audio and Video frequency transformers. We also find that the Indian Standards, 1982 in the formulation of which the learned Director of the appellant's Company had a hand describes intermeadiar frequency transformers as consisting of two or more windings. The preponderance of the authorities cited before us shows that the transformer is either for changing the voltage or the current strengths in the power transmission lines and can be also for bringing about changes in frequency and selection of the same for wireless transmission and reception of both audio and video. We observe that tariff entry 8404.00 is comprehensive and covers all types of electrical transformers and inductors. Inductors as has been seen from the glossary of terms of ISI set out in para 19 is an electromagnetic device consisting of conductor bound in a cylindrical or spiral form. It is thus seen that the item does cover coils which are required to produce a desired result so far as the impedence is concerned and it will not, therefore, be out of place to read the scope of the term transformer to be covering also those which are for the purpose of bringing more changes in the frequency or changes in the impedence for selecting a particular frequency for feeding into the electronic circuits. There is no doubt that the electromagnetic field by which the desired changes in the frequency are brought about by the two sets of coils namely primary and secondary are by virtue of flow of the electric current in these coils. These, therefore, can be taken to be the answer to the description of the electrical transformer. In the fact of the facts on record it has, therefore, to be held that the term transformer covers both the line transformers in the power lines and also those used in the transmission and reception of electromagnetic waves. The term transformer being a technical nomenclature, its meaning has necessarily to be understood in the sense in which those who are in this technical field. We, therefore, hold that all those coils manufactured by the appellants which have a primary and a secondary are covered by the term electrical transformer assessable under tariff heading 8504.00. So far as the single coils are concerned, the learned Director of the company informed during the hearing that these are having inductance to answer impedance in the circuits for bringing about necessary frequence changes with the signals traversing through the circuits. We, however, find that no factual analysis in this regard have been done as to which of the coils answer to the description of transformers and which of the coils manufactured by the appellants answer to the description of inductance. The appellants have pleaded that so far as the inductance are concerned the benefit of the Notfn. 160/86 will be available to them for assessment of the same at 15% adv. We in the circumstances by holding the classification of the goods as above direct that the lower authority should reassess the goods manufactured based on whether these are transformers or inductances.
26. As to the question of limitation we observe that the appellants have a good case inasmuch as we find that they declared the goods by the name in which they are marketing them and the term IF transformer also figures thereunder. In spite of the fact that they have declared the goods so the lower authority initially chose to assess the goods under 8529.00. Obviously there was some lack of understanding on the scope of the tariff entries in the mind of the competent authority who approved the classification list and the appellants also believed bona fidely that their goods were assessable under tariff heading 8529.00. We observe in this background that it cannot be held that there was any mis-statement or any suppression of facts on the part of the appellants. In this context the Hon'bie SC in the case of Chemphar India v. CCE have observed as under:
In order to make the demand for duty sustainable beyond a period of six months and up to a period of 5 years in view of the proviso to Sub-section 11A of the Act, it has to be established that the duty of excise has not been levied or paid or short-levied or short-paid or erroneously refunded by reasons of either fraud or collusion or wilful misstatement or suppression of facts or contravention of any provision of the Act or Rules made thereunder, with intent to evade payment of duty. Something positive other than mere inaction or failure on the part of the manufacturer or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise, is required before it is saddled with any liability, before the period of six months.
In view of the above and following with respect the ratio of the Hon'bie Supreme Court's judgment we hold that the longer time period cannot be invoked beyond six months for raising that demand.
27. We, therefore, partially allow the appeal of the appellants in the above terms and set aside the order of the lower authority for reassessment of the goods in terms of what we have held above. The appeal is thus partially allowed by remand.
The Tribunal had followed the decision of the Supreme Court in the case of Collector of Central Excise v. Chemphar Drugs & Liniments . In the present matter the show cause notice is dated 4th Dec, 1990 and the demand is for the period Feb. '88 to March '89. Thus the total period involved is beyond six months from the date of the issue of the show cause notice. The Supreme Court in the case of Collector of Central Excise v. Chemphar Drugs & Liniments had held as under:
7. The respondent filed an appeal before the Tribunal. The Tribunal considered the matter and noted that the appellant's case was that the demand for duty for the period beyond six months was time barred; and the respondent's case was that the demand for the period beyond 6 months from the receipt of show cause notice, was time barred inasmuch as there was no suppression or misstatement of facts by the appellant with a view to evade payment of duty. In support of its claim the respondent produced classification list approved by the authorities during the period 1978-79, and also produced extracts from the survey register showing that the officers had been visiting its factory from time to time and also taking note of the previous goods manufactured by the respondent. The plea of the revenue was that there was suppression and/or mis-declaration and/or wrong information furnished in the declaration itself. The Tribunal noted the facts as follows:
We observe it is not denied by the Revenue that the appellants had been submitted their classification lists from time to time showing the various products manufactured by them including those falling under I4E and 68 also these containing alcohol. The officers who visited the factory as seen from the survey register at the factory also took note of the various products being manufactured by the appellants. It cannot be said that the appellants had held back any information in regard to the range and the nature of the goods manufactured by them. The appellants have maintained that the value of the exempted goods under T.I. 68 and also value of medicines containing alcohol, according to their interpretation, were not required to be included for the purpose of reckoning of the total excisable goods cleared by them. There is nothing on record to show that the appellants non-bona fidely held back information about the total value of the goods cleared by them with a view to evade payment of duty. Their explanation that it was only on the basis of their interpretation that the value of the exempted goods were not required to be included that they did not include the value of the exempted goods which they manufactured at the relevant time and falling under T.I. 68 is acceptable in the facts of that case. The Departmental authorities were in full knowledge of the facts about manufacture of all the goods manufactured by them when the declaration was filed by the appellants. That they did not include the value of the product other than these falling under T.I. 14-E manufactured by the appellants has to be taken to be within the knowledge of the authorities. They could have taken corrective action in time. We, therefore, find there was no warrant in invoking longer time limit beyond six months available for raising the demand. So far as the demand for the period within six months reckoned from the date of receipt of the show cause notice is concerned, we observe that the appellants case is that value of the goods under T.I. 68 was not required to be included but the Revenue's plea is that only value of the specified goods under Notification No. 71/78 and 80/80 was not required to be excluded.
On the aforesaid view the Tribunal came to the conclusion that the demand raised on this for a period beyond 6 months was not maintainable.
8. Aggrieved thereby, the revenue has come up in appeal to this Court. In our opinion, the order of the Tribunal must be sustained. In order to make the demand for duty sustainable beyond a period of six months and up to a period of 5 years in view of the proviso to Sub-section 11A of the Act, it has to be established that the duty of excise has not been levied or paid or short-levied or short-paid, or erroneously refunded by reasons of either fraud or collusion or wilful misstatement or suppression of facts or contravention of any provision of the Act or Rules made thereunder, with intent to evade payment of duty. Something positive other than mere inaction or failure on the part of the manufacturer or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise, is required before it is saddled with any liability, before the period of six months. Whether in a particular set of facts and circumstances there was any fraud or collusion or wilful misstatement or suppression or contravention of any provision of any Act, is a question of fact depending upon the facts and circumstances of a particular case. The Tribunal came to the conclusion that the facts referred to hereinbefore do not warrant any inference of fraud. The assessee declared the goods on the basis of their belief of the interpretation of the provisions of the law that the exempted goods were not required to be included and these did not include the value of the exempted goods which they manufactured at the relevant time. The Tribunal found that the explanation was plausible, and also noted that the Department had full knowledge of the facts about manufacture of all the goods manufactured by the respondent when the declaration was filed by the respondent. The respondent did not include the value of the product other than those falling under Tariff Item 14E manufactured by the respondent and this was in the knowledge, according to the Tribunal, of the authorities. These findings of the Tribunal have not been challenged before us or before the Tribunal itself as being based on no evidence.
9. In that view of the matter and in view of the requirements of Section 11A of the Act, the claim had to be limited for a period of six months as the Tribunal did. We are, therefore, of the opinion that the Tribunal was right in its conclusion. The appeal therefore fails and is accordingly dismissed.
In view of the above discussion I am of the view that the extended period cannot be invoked and as such I agree with the view expressed by learned brother Shri Section Kalyanam, Member (Judicial). The Registry is directed to place the matter before the Regular Bench for passing proper order in accordance with law.
(Pronounced in the open Court) Sd/-
(Harish Chander)
Dated: 5.8.1994 President
FINAL ORDER
15. In view of the majority decision, waiver of pre-deposit of duty and penalty is granted pending disposal of the appeal and the papers are directed to be transmitted to Special Bench, New Delhi, for disposal of the appeal.