JUDGMENT
S.L. Peeran
1. This appeal arise from order-in-original No. 3/084/99 dated 17.1.94 passed by the Collector of Central Excise, Ranipur confirming duty demand of Rs. 1,04,384.07 under Rule 9(2) of CE Rules read with proviso to Section 11A and a penalty of Rs. 35,000/- under Rule 9(2) and 173Q of CE Rules and also a penalty of Rs. 25,000/- on Cement Corporation of India (CCOI) under Rule 209A of CE Rules. The appeal of CCOI is not listed for hearing. The above appeal has been transferred to this Bench in terms of the order of the Hon’ble President on the request made by the appellants.
2. The appellants were alleged to have manufactured during the period 20.3.90 to 7.4.92 a total of 82.667 MTs of MS ducts and ducts supports falling under sub-heading No. 8421.00 of CET belonging to Cement Corporation of India vide their supply orders and contracts entered into by them for supply/erection/commissioning of electrostatic precipitator falling under sub-heading 84221.00 for the cement plant belonging to Cement Corporation of India. The demands were raised in terms of the show cause notice dated 12.11.1992 alleging suppression and clearances without payment of duty and maintaining records in terms of the Rules. The appellants raised that the contention is not sustainable for the reasons that they had filed classification list and price list on 5.3.91 declaring the activity and the work carried out by them and claim exemption under notification No. 93/90 CE dated 20.3.90 and claimed the items to be structures and parts of structures, etc., falling under chapter sub-heading 7308.90. They produced copies of the approved classification list, licence, ground plans, correspondences to show that there was no suppression in the matter and department had approved the plan, issued licence and also accepted the declarations filed for L4 licence besides confirming the approved classification list. They contended that there was no suppression in the matter and the department cannot suo moto invoke larger period and alleging the item to be parts of electrostatic precipitator falling under sub-heading 8421.00 as against the approved classification under 7308.90. They also relied on larger number of judgment with the plea that the item was structures and not being goods and item being exempted and not being excisable.
3. Ld. Commissioner in the impugned order did not agree with their contentions and over ruled their pleas. Although he has accepted the fact that they had filed classification list and claimed the item to be falling under 7309.40 and had taken licence and got the classification list approved. However, he has taken a view that the function of the MS ducks had not been properly indicated in the classification list and it was only during investigation it was established that the item is essentially designed for functions/parts of electrostatic precipitator specifically classifiable under chapter sub-heading 84.21 of CET. He has taken a view that complete information had not been produced. Therefore, larger period was invokable and that 40 MS ducks were confiscable and penalty imposeable. However, he has granted release of the goods on payment of fine.
4. We have heard Ld. Counsel Shri K.R. Natarajan for the appellant and Shri Sree Kumar Memon, SDR for the respondents.
5. At the outset, Ld. Counsel pointed out that there was an approved classification in the matter and the Department cannot re-open the same without issue of show cause notice and such an action of issuing demand under different heading is not approved by the Apex Court in the case of J.L. Morison India v. Asst. Collector of Central Excise as reported in 2000 (117) ELT 537 (SC). He also relied on the following judgments to contend that demand cannot be approved without issue of show cause notice to change the classification against the approved classification list:
1. Parjan Bros. v. CC, New Delhi as reported in 1998 (99) ELT 129 (T).
2. Servall Engineering Works v. CCE, Coimbatore as reported in 1999 (105) ELT 296.
3. Batliboi & Company Ltd. v. CCE, Nagpur as reported in 1999 (34) RLT 153.
4. Best & Crompton Engineering Ltd. v. CCE, Chennai – II as reported in 1999 (33) RLT 745.
6. Ld. Counsel submits that all the details had been furnished in the classification list including the description of the activity, manufacturing process details of the item and the Department had approved the classification list after due verification and correspondence and therefore there was no suppression for invoking of larger period and hence the demands are barred by time. He also relied on the judgment of the Apex Court rendered in the case of CCE v. Chemphar Drugs and Liniments as reported in 1989 (40) ELT 216 and Bhor Industries v. CC as reported in 1989 (40) ELT 280 and Padmini Industries Ltd. v. CC as reported in 1989 (40) ELT 195.
7. Ld. Counsel further submits that the item cannot be considered as a part of electrostatic precipitator without any expert opinion produced by the Department to show that the item is part of electrostatic precipitator for classification under chapter sub-heading 84.21.
8. Ld. SDR Shri Sree Kumar Menon, reiterated the departmental view and the findings given by the Collector of Central Excise in the order.
9. On a careful consideration of the submissions and perusal of the entire records, we find lot of force in the submission made by Ld. Counsel. The appellant had taken out licence by submitting all the details and declaration Form in L4. The L4 licence had been issued to the appellant for carrying out structural (fabricated work). They had also submitted the details of fabrication work; manufacturing process, ground plan and the details of activity in the classification list. The proper officer after due scrutiny has approved the classification list. They had claimed the item to be structures and being exempted. Therefore, their plea was accepted after due verification. It is only after lapse of time that the department investigated and alleged suppression of facts and claimed the item to be a part of electrostatic precipitator. But to change this classification, the revenue has not produced any evidence in the show cause notice issued to them. Therefore, in terms of judgments which are produced before us, we are of the considered opinion that the demands raised in the show cause notice is not sustainable for the fact that there was an approval classification after due verification of all the documents and manufacturing process.
10. Even on the aspect pertaining to invoking of larger period, we find that the appellant had given all the details including the manufacturing process in their declaration, ground plan, process of manufacturing description of item in the classification list. The classification list has been approved. The conclusion is that the department was verified the activity and they are satisfied that the item manufactured was of structures falling under sub-heading 7308.90 and be exempted under the notification No. 61/90 dated 2.3.90. The Department has not brought out grounds to show that such a plea held by them and the item being structures was not so. The Department also has not produced any technical evidence to show that the item is not structures but part of electrostatic precipitator. Therefore, the plea that the demand are barred by time is accepted and upheld. Further, the dept. has not proved that the item is a part of electrostatic precipitator falling under sub-heading 84.21. In view of that matter, the appellant contentions are accepted and appeal is allowed with consequential relief, if any.
(Pronounced in Open Court on 9.10.01)