COMMISSIONER OF CENTRAL EXCISE, BANGALORE v. M-S. MYSORE ELECTRICALS INDUSTRIES LTD

Citation: [2006] SUPP. 9 S.C.R. 19

Court: Supreme Court of India

Bench: AR. LAKSHMANAN, ALTAMAS KABIR

Case summary

COMMISSIONER OF CENTRAL EXCISE, BANGALORE v. M-S. MYSORE ELECTRICALS INDUSTRIES LTD.pdf

Judgment text

> COMMISSIONER OF CENTRAL EXCISE, BANGALORE v. MIS. MYSORE ELECTRICALS INDUSTRIES LTD. NOVEMBER 15, 2006 [DR. AR. LAKSHMANAN AND ALTAMAS KABIR, JJ. ] Customs Excise Tariff Act, 1985; Section 37B; CSH 8535, 8536 & 8537/Central Board of Excise & Customs Circular No. 3218194-CX and Notification No. 52193 dated 2812193: Classification-Single Panel Circuit Breakers-Levy of Excise duty under CSH 8535 or 8537-Circular re-classifying the product under CSH 8537-Effective date-Held: Re-classification of the product in question could take effect prospectively from the date ofcommunication ofthe Show- · cause Notice proposing re-classification-Hence, differential amount ofExcise duty could be levied from that date. The questions which arose for consideration by this Court in the appeal ~ were as to whether Single Panel Circuit Breakers, an electrical appliance, manufactured by the respondent-assessee could be classifiable under Tariff Heading 8535.

00 of the Customs Excise Tariff Act as claimed by the assessee or classifiable under Tariff Heading 8537. 00 as classified by the Revenue for the purpose of levying excise duty and as to whether the Circular issued by . the Central Board of Excise & Customs classifying the product under the Heading 8537. 00 could be given retrospective effect. Revenue contended that much prior to issuance of Circular dated 14. 07. 1994 classifying the product in question under CSH 8537, a show cause notice was issued by the Assistant Collector on 17. 12. 1993 on the basis of ~ his interpretation of the two entries CSH 8535 and CSH 8537; that the said order is not based on the circular dated 14. 07.

1994 and, therefore, the circular had no application to the facts ofthis case; that under Section 378 of the Act, the Board is empowe11ed to issue instructions to Central Excise Officers for the purpose of maintaining uniformity in the classification of eligible goods which instructions, are required to be followed by such officers; and that switches, fuses, relays, plugs, junction boxes etc. have been given the status ofseparate/individual items. Without these items main equipments/machinery "" cannot function, therefore, though they may be parts of certain machinery, yet they have to be classified under those headings where 'they are specifically mentioned. Thus, the panels manufactured by the assessee contain more than two apparatus falling under heading 85. 35 and 85. 37 of the Act.

The respondent-assessee submitted that when there is a concurrent finding of fact in his favour, the appeal filed by ~he Revenue has no merits; that the issues involved in the present appeal is a question of fact which has been decided in his favour both by the Commissioner (Appeals) and by the Tribunal and thus there is a concurrent finding of fact in his favour; that the circular being oppressive and has to be applied only prospectively and cannot be applied retrospectively; and that for the period in question, trade notices had been issued classifying the circuit breakers under Heading No. 85. 35 or 85. 36 depending upon the voltage, such notices are binding upon the Revenue. Thus, the circuit breaker is classifiable under Heading 85. 35. Dismissing the appeal, the Court HELD: The assessee had filed a classification list effective from 01. 03. 1993, classifying the Single Panel Circuit Breakers under Heading No. 85.

35 and claiming concessional rate of duty at 5% under Notification No. 52/93 dated 28. 02. 1993. The said classification list was approved by the jurisdictional Assistant Commissioner. Thereafter, the assessee cleared the said goods in accordance with the approved classification list. When the approved classification was proposed to be revised to reclassify the Single Panel Circuit Breakers under Heading No. 85. 37 of the Tariff Act, such reclassification can take effect only prospectively from the date of communication of the show ca DR. AR. LAKSHMANAN, J. Delay condoned. This appeal is directed against the final order No. 1943 of 2004 dated 06. 12. 2004 passed by the Customs, Excise and Service Tax Appeliate. Tribunal, Bangalore in Appeal No. E/399/200 I. The appellant before us is the Commissioner ofCentral Excise, Bangalore. We have heard Mr. T. S. Doabia, learned senior counsel for the appellant and Mr. A. R. Madhav Rao, learned counsel for the respondent.

The issue involved in the present appeal is whether the Single Panel f Circuit Breakers are classifiable under CSH 8535. 00 (rate of duty 5%) as claimed by the assessee or under CSH 8537. 00 (rate of duty 20%) as per the revenue and whether the Board's Circular F. No. 32/8/94-CX (Section 37B Order) dated 14. 7. 2004, which has clarified that the Single Panel Circuit Breakers are classifiable under Chapter 85. 37, has retrospective effect. The assessee is engaged in the manufacture of electrical appliances falling under Chapter 85 of the CETA, 1985. The assessee had filed the classification list classifying the products under chapter 8535. 00 CETA 1985 and availing the benefit of notification No. 52/93 dated 28. 02. 1993 attracting duty @ 5% ad valorem. ) A show cause notice was served on the assessee to classify the goods in question under CSH 8537.

00 attracting duty at the rate of 20%, as single control panel manufactured by the assessee consists of a panel equipped with more than two apparatus of Heading Nos. 8535 and 8536 (like circuit breaker/fuses/switches/plugs/socket/relays). The relevant tariff entries are quoted herein below :- "Heading 85. 35 :- electrical apparatus for switching of protecting ! status of separate/individual items. Without these items also main equipments/ machinery cannot function. Therefore, though they may be parts of certain machinery, they have to be classified under those headings where they are specifically mentioned/classified. Thus, the panels manufactured by the assessee contain more than two apparatus falling under heading 85. 35 vide relays, circuit breakers, switches, position indicators etc. Therefore, the goods manufactured by the assessee are correctly classifiable under heading 85. 37. Concluding his argument, Mr.

Doabia submitted that the matter requires investigation and, therefore, be remitted to the authorities concerned for fresh consideration. Mr. A. R. Madhav Rao, learned counsel for the respondent submitted that when there is a concurrent finding of fact in favour of the respondent, the appeal filed by the Department has no merits. It is submitted that the issues involved in the present appeal is a question of fact which has been decided in favour of the respondents both by the Commissioner (Appeals) and by the Tribunal and thus there is a concurrent finding of fact in favour of the respondent and department's appeal ought to be dismissed in view of the same. Learned counsel has also invited our attention to the counter affidavit filed on behalf of the respondent and the detailed reply made thereunder to the civil appeal filed by the Revenue.

Learned counsel further submitted the circular being oppressive and against the respondent has to apply only prospectively and cannot be applied retrospectively. In other words, a beneficial circular has to be applied retrospectively while an oppressive circular has to be applied prospectively. Thus, when the circular is against the ill\· • . ' ( respondents they have a right to claim the enforcement of the same prospectively. It is further submitted that for the period in question, trade notices had been issued classifying the circuit breakers under Heading No. 85. 35 or 85. 36 depending upon the voltage, which are binding upon the Department. Thus, he submitted that the circuit breaker is classifiable under Heading 85. 35. He would further submit that the Tribunal has allowed the appeal filed by the respondents by following its own order in the case of Eswaran and Sons (supra) and has not given any finding on the merits of the matter.

We have perused the order impugned in this appeal, other connected . _ records, and considered the rival submissions. In the instant case, the assessee had filed a classification list effective from 01. 03. 1993, classifying the Single Panel Circuit Breakers under Heading No. 85. 35 and claiming concessional rate ofduty at 5% under Notification No. 52/93 dated 28. 02. 1993. The said classification list was approved by the jurisdictional Assistant Commissioner, on 10. 06. 1993. Thereafter, the assessee cleared the said goods in accordance with the approved classification list. When this approved classification was proposed to be revised to reclassify the Single Panel Circuit Breakers under Heading No. 85. 37 of the tariff, such re-classification can take effect only prospectively from the date of communication of the show cause notice proposing re-classification. In the instant case, the show cause notice was communicated to the assessee only on 31. 12. 1993.

Therefore, as rightly urged by the learned counsel for the respondent, the reclassification can take effect only from 27. 04. 1994 and accordingly the differential duty can be demanded only from that date. In view of the above, we see no reason to interfere with the order passed by the Commissioner (Appeals) and as confirmed by the Tribunal. The appeal is accordingly dismissed. However, there shall be no order as to costs. S. K. S. Appeal dismissed.