ORDER
V.K. Agrawal, Member (T)
1. In this appeal, filed by M/s. Praja Mechanicals Ltd., the issue involved is whether they were clearing parts of the conveyor classifiable under Heading 84.31 of the Schedule to the Central Excise Tariff Act, as confirmed by the Commissioner, Central Excise, under the impugned Order or they were removing conveyor as such in different consignments for ease of transport, classifiable under Heading 84.28 of the Traffic and whether the extended period of limitation is invokable for demanding the duty of excise under Section 11A(1) of the Central Excise Act.
2.1 Shri M. Chandrasekharan, learned senior Advocate, submitted that the Appellants manufacture conveyors and parts thereof; that the size of the conveyor manufactured by them varies from 8 metres to 640 metres in length and it is not possible to transport the same as a single unit under a single gate pass/invoice; that the coveyor is being supplied in piece meal in different lots/batches depending upon the length of the conveyor and its carriage; that the purchase orders of the various customers are explicit in as much it mentions conveyors; that when Orders are for “conveyor” purchase Orders mention “conveyors” and when the Orders are for “parts”, they mention ‘parts’; that as and when they clear only parts of conveyor, they pay duty at the rate applicable to parts under Heading 84.31 of the Tariff. The learned Senior Counsel, further submitted that whenever the purchase orders were for Conveyor Systems, the same were factually erected and commissioned: that the Appellants were not sending any bought out items at buyer’s premises directly or indirectly; that HP. Motors, which have been specifically mentioned in the impugned Orders, are received in their factory premises in respect of which Modvat Credit had been availed of; that after complete manufacturing and assembly each drive unit is individually tested for performance as per I.S.O. 9001 requirements and quality assurance plan. He relied upon the decision in the case of CCE, Delhi-III v. B.H.P. Engineers wherein it was held as under:
It has not been disputed by the Department that the Order received by the respondents were for conveyors and in pursuance of those purchase orders they have supplied the conveyors to their customers in different consignments for the purpose of convenience of transportation….The Explanatory Notes of H.S.N. provides that for convenience of transport many machines and apparatus are transported in an unassembled set. Although in tact, the goods are then a collection of parts, they are classified as being a machine in question and not in any separate heading for parts.
2.2 The learned senior Advocate also relied upon the following decision:
(i) Vinar System Ltd. v. Collector of Customs
(ii) Vishwa Industrial Co. (P) Ltd. v. CCE
(iii) CCE, Chennai v. Conveyor Equipments (P) Ltd.
3. Shri M. Chandrasekharan, further mentioned that the entire demand of duty which pertains to the period from 1995-1997 is time barred as the show-cause notice was issued on 4.5.2000; that the Appellants had placed all necessary documents before the Department and did not conceal or mis-declare any thing and as such extended period beyond six months is not invocable; that under their letter dated 17.3.1989 to the Superintendent Range, they had mentioned that in case of long length system, conveyor was despatched in 5 to 6 lots; that the Superintendent in his letter dated 7.4.89 clarified that “if your company is supplying conveyor system falling under Chapter 84.28 then duty is chargeable @ 5.25 (being SSI Unit) on the contract price and any additional part of system will attract duty @ 10% BED + 5% of BED as SED”; that in view of the exchange of the correspondence, it is incorrect to allege suppression. He relied upon the decision in Vishwa Industrial Co. (P) Ltd., supra, wherein it was held that when the assessee had placed all the facts before the Department, demand is barred by limitation as there was no suppression.
4. Countering the arguments, Ms. Neeta Lal Butalia, learned SDR, submitted that no where it is explained as to what is a ‘conveyour system’; that in their letter dated 17.3.89, the Appellants had merely mentioned that the system consisted of various items such as track with or without bends, chain, drive unit, tension unit, various optional accessories; that similarly in the Declaration filed by the Applicants under Rule 173-B they had only mentioned various parts/components of the Conveyors; that it was specifically alleged in the show cause notice that they were clearing the parts of the conveyor declaring their products as conveyor system;” that the facts brought on record do not clearly show that the conveyor system is first assembled by them in their own factory and then the same is despatched after disassembling it; that the Adjudicating Authority has given a specific findings in the impugned order that conveyor could not come into existence from assembly of the parts cleared from their factory and that there was addition of some bought out items also and commissioning at buyer’s premises; The learned SDR emphasised that the conveyor system meant for General Motors India Ltd. would mean assembling of entire assembly line for manufacture of motor vehicle in the Appellant’s own factory and then disassembling the same; that this is not possible and there is nothing on record to show that it was done so; that no rebuttal has been made by the Appellants of the said specific allegation. She also mentioned that Board’s Circular No. 252/86/96 Cx dated 16.10.96 prescribes a procedure for movement of the goods in more than one vehicles; that the said procedure has also not been followed. She further contended that the Appellants are differentiating their supplies on the basis of the purchase Order placed by their customers; that purchase Order cannot determine the classification of the product as the goods are to be classified in the condition in which they are presented for the assessment. She relied upon the decision in the case of Space Age Engg. Projects (P) Ltd. v. CCE. Pune 1995 (78) ELT 544 (T) wherein was held that the goods manufactured and cleared from the Appellants factory were idlers, pulleys and structurals. “Only when these parts are assembled and erected at the site of the customers alongwith bought out items and are interconnected with transmission devices like conveyor belt, the whole assembled erected machinery becomes conveyor system. In such a situation, it cannot be said that the parts cleared…by themselves have acquired the essential character of conveyor and it cannot be said that it is a case of clearance of such machinery in unassembled or disassembled parts.” She contended that the said decision applies on all four to the present matter.
5. The learned SDR finally submitted that the extended period of limitation is invokable as the Appellants never disclosed the fact that they were not clearing the complete conveyor system; that in their letter dated 17.3.89, it was not disclosed by them that conveyor system was not assembled in their own factory; that what was mentioned therein was only that in case of long length system they were sending the system in 5-6 lots; that as such that letter does not help the Appellants. In reply the learned Senior Counsel mentioned that they were clearing the goods as per specific purchase Orders received from their customers; that when the purchase Order was for parts only, they had supplied parts under Heading 84.31 and when the purchase order was for conveyor system, they had cleared the Conveyor System only; that letter dated 17.3.89 clearly mentioned that where the system(sic)small length they despatch the system in one lot which clearly goes to show that the system was assembled.
6. We have considered the submissions of both the sides. In this case the show cause notice was issued by the Department on 4.5.2000 for demanding duty for the period from 1995-96 to 1996-97. We find force in the submissions of the learned Senior Counsel that the extended period of limitation under Section 11A(1) of the Central Excise Act, is not invocable as they have disclosed all the facts to the Department under their letter dated 17.3.89. In this letter the Appellants had intimated to the Department as under:
We are manufacturers of Conveyor system falling under Chapter 84.28 and Conveyor System parts falling under Chapter 84.31.
We are manufacturing and supplying conveyor system of various types and lengths according to the requirement of our customers. The system consists of various items such as:
1. Track with or without bends
2. Chain or Belt
3. Drive Unit
4. Tension unit
5. Various optional accessories
So far we have supplied covey or system varying from 8 metres to 640 metres length for a single system. Where the systems are of small lengths we despatch the system in one lot under the Heading of conveyor system (84.28) charging the specified excise duty 5% + 0.25% (BED + SED). However, in case of long length system it is not possible for us to despatch in one lot hence despatches are made in 5 lots charging excise duty @ 10% + 0.5% (BED + SED) i.e. for conveyor systems parts (84.31) while the actual supply is for the system chargeable under Conveyor Systems (84.28) @ 5% + 0.25%. We request you to kindly accord us permission to charge uniform duty on conveyor system whether it is supplied in one lot or more than one lot.
7. It is thus apparent that the position was clearly made known to the Department. In view of this it cannot be now alleged by the Revenue that the Appellants have suppressed any information from Department with an intent to evade payment of duty. Accordingly the demand of duty is barred by time limit as specified in Section 11A(1) of the Central Excise Act. The demand of duty confirmed against them is, therefore, set aside. Consequently the penalty imposed and interest demanded are also set aside. As the demand is being held to be time barred and it has been mentioned that there is no dispute for the subsequent period, we are not considering the issue of classification.
The appeal is thus allowed on the aspect of time limit.