ORDER
Chittaranjan Satapathy, Member (T)
1. Heard both sides.
2. The appellants manufactured Door Handles, Hinges which have been classified under the impugned Order under Heading 83.02 for the impugned period, 1.3.97 to 28.2.99 confirming the duty-demand of Rs. 12,36,556.00 (Rupees twelve lakhs thirty-six thousand five hundred and fifty-six). The lower Appellate Authority has reduced the penalty to Rs. 1.00 lakh (Rupees one lakh). The appellants claimed classification of the impugned goods under Heading 87.08.
3. The main arguments of the learned Advocate, Shri S.N. Sinha Mahapatra appearing for the appellants are that the Excise Tariff must be interpreted differently from the Customs Tariff, the Excise Classification should be based on how the goods are known in commercial parlance as held by the Hon’ble Supreme Court in the case of G.S. Auto International Ltd. v. C.C. Excise, Chandigarh , and that Chapter 83 has only been elaborated in the Central Excise Tariff with effect from 28.2.05, whereas no such elaboration was there during the impugned period.
4. The learned D.R., Shri Y.S. Loni supports the impugned Order and states that the demand for the impugned period has been raised within the normal period and the impugned goods being articles of Base Metal, they were required to be classified under Chapter 83 and not under Chapter 87.
5. After considering the submissions on both sides and the case records, we find that the classification of similar items namely, Door Handle for refrigerator was considered by another Bench of the Tribunal in Emmes Metals Pvt. Ltd. v. Commissioner of Central Excise, Mumbai-V 2006 (198) ELT 34 (Tri. – Mumbai) and it was held as under:
Heard both sides. The dispute relates to classification of casting of door handles which the appellants have manufactured for supply to M/s. Godrej to be used as refrigerator handles. The impugned order has been passed holding classification of the impugned product under sub-heading 8418.00 whereas the appellants claimed classification under 7907.90. We find that the Heading 79.07 covers other articles of zinc whereas heading 84.80 covers refrigerators and parts of refrigerators.
2. It was represented on behalf of the appellants that the impugned goods are produced by casting of zinc and are sent to job workers for only fettling to remove runners and risers. Subsequently, these are chrome plated by M/s. Godrej and only such finished door handles are put on the refrigerator.
3. Learned advocate for the appellants cites the decision in the case of Nattoji Industries v. Collector of Central Excise, Bombay to support the claim of classification under Heading 79.07. On the other hand, learned S.D.R. cites the decision of Hon’ble Supreme Court in the case of Pefco Foundry Chemicals Ltd. v. Collector of Central Excise to state that the impugned goods should be classified as a part of refrigerator under Heading 84.84 since only chrome plating remains to be done. The learned advocate has also cited the decision in the case of Commissioner of Central Excise, Mumbai-II v. Mukund Ltd. 2004 (167) E.L.T. 177 (Tri. – Mumbai), in which one of us has opined as follows:
In view of Rule 2(a) of the General Interpretative Rules (G.I.R.) any reference in a heading to parts of machine includes a reference to incomplete and unfinished machine parts provided the same have the essential characteristics of the complete or finished machine parts. The H.S. Explanatory Notes under Heading 73.25, as quoted by the original authority in his order, also emphasizes that castings which require further working but have the essential character of a finished product would not be covered by the said heading. There can be no dispute that there are four stages in the production of a machine part:
(i) castings which are classifiable under the metal chapters.
(ii) castings which have been further worked upon but which have not obtained the essential character of a finished or complete machine part. These also have to be classified in the metal chapters.
(iii) castings which have been further worked upon and which have acquired the essential characteristics of finished or complete machine parts though these require further working. Such goods have to be classified under the machinery chapters by virtue of GIR 2(a).
(iv) castings which have been completely worked upon as finished or complete machine parts requiring classification under machinery chapters.
4. In the course of arguments, the learned advocate for the appellants suggested that the impugned goods will be more appropriately classifiable under Heading 83.02 as an article of base metal. In this connection he cites the Explanatory Notes under Heading 83.02 which reads as follows:
This heading covers general purpose classes of base metal accessory fittings and mountings, such as are used largely on furniture, doors, windows, coach work, etc. Goods within such general classes remain in this heading even if they are designed for particular uses (e.g., door handles or hinges for automobiles). The heading does not, however, extend to goods forming as essential part of the structure of the article, such as window frames or swivel devices for revolving chairs.
He also states that the appellants are willing to pay differential duty if the goods are classified under Heading 83.02.
5. In view of the Hon’ble Supreme Court’s decision in Pefco Foundry (supra), since the impugned goods only require chrome plating, the same can not be classified as a casting under Heading 79.07. However, we find merit in the submissions made by the appellants for classification of the impugned goods under Heading 83.02. The Explanatory Note under the same classifies door handles for automobiles under the Heading 83.20. Hence, door handle for refrigerators can also be more appropriately classified under the Heading 83.02 as an article of base metal.
6. We order accordingly. The impugned order is set aside and the appellants are directed to pay differential duty as applicable under Heading 83.02. The appeal is disposed off in the above terms.
6. In view of the specific Explanatory Note under Heading 83.02 clarifying that Door Handles and Hinges for automobiles are to be classified under Heading 83.02, the impugned Order passed by the authorities below cannot be faulted. The Excise Tariff is based on the Customs Tariff which is based on the internationally accepted Harmonised Systems Nomenclature. Time and again the courts have held that the Explanatory Notes to the HSN are relevant for the purpose of deciding the classification under the HSN-based tarrif. We note that the Excise Tariff was fully aligned at the heading level with the Customs Tariff and hence, the Explanatory Note to HSN for the Heading 83.02 can very appropriately be followed for deciding the coverage of the said Heading 83.02 under the Excise Tariff. The Explanatory Notes have been written by a Team of Experts keeping in view the terms of the Headings as well as the general interpretative rules which are integral parts of the legal texts.
7. Hence, there being no good reason to differ from the same, the classification of the impugned goods require to be done under Heading 83.02. We note that following the said Explanatory Note, the Tribunal in the case of Emmes Metals Pvt. Ltd. (cited supra) rejected the claim for classification of Door Handles as parts of refrigerators. In the instant case, following the said Note, we reject the claim of the appellants for classification of the impugned goods as parts of vehicles under Chapter 87 and uphold the impugned Order classifying the same under Chapter 83.
8. Considering the fact that in the case of the appellants, the very same goods were earlier classified under Chapter 87 and the appellants have been agitating against change of classification through the legal avenues available to them, though we have not accepted their claim for classification under Chapter 87, we are of the view that this is a case where the penalty requires to be set aside. We order accordingly.
9. In view of our finding above, we uphold the classification under Heading 83.02 along with the confirmation of the demand for duty and interest, but set aside the penalty. The appeal is rejected except for setting aside the penalty.
Pronounced in the court on 10.08.2007