ORDER
Jyoti Balasundaram, Member (J)
1. The brief facts of the case are that the respondents herein are inter alia engaged in the manufacture of excisable goods namely Multi-flex systems and Heavy Duty systems. They were filing classification lists for Multi-flex systems under TI 68 of the Schedule to the erstwhile Central Excise Tariff prior to 28-2-1986 and thereafter under Chapter 73 of the Schedule to the CETA 1985. Investigation revealed that although classification lists had been submitted for parts, the as-sessees were actually marketing Multi-flex systems/components and Heavy duty systems and components as such, consisting of a combination of slotted angles, panels, cladding sheets, panel dividers etc. As per printed literature, Multi-flex systems were designed for normal loads in the homes, sheds, offices, shops, etc. and Heavy Duty systems were recommended for storage of very heavy and bulk loads. The systems could be assembled into a variety of useful items such as shelves, racks, cat walks, sheds etc.
2. Statements of various officers of the assessee company and dealers were recorded by the Excise authorities from which it was clearly brought out that all the components for the entire systems in unassembled form were cleared by the assessee and the customers did not require to procure any additional item or material for the system.
3. On the basis of investigation and evidence, the Department was of the view that the items in question were steel furniture falling for classification under TI 40 of the Schedule to the erstwhile Tariff upto 28-2-1986 and under CET sub-heading 94.03 after 1-3-1986. Therefore, a show cause notice dated 5-10-1989 was issued to the assessee proposing reclassification as above and raising a differential duty demand of Rs. 1,28,90,303.86 p for the periods 1984-85 and 1986-87, together with penal action under Rule 173Q. The notice also proposed penal action against Managing Director, Director and General Manager (Marketing) of the Company. The Adjudicating authority dropped the proceedings vide the impugned order, holding that the products of the assessee could not be considered as steel furniture as they were not used only as furniture but were capable of other applications, keeping in view the decision of the 22nd Conference of Collectors of Central Excise at Baroda on 27th and 28th August, 1984 alongwith CBEC’s letter dated 25-3-68. Hence this appeal.
4. We have heard Shri M.C. Sharma, learned CDR and Shri A. Hi-dayatullah, learned Sr. Advocate appearing alongwith Shri R.C. Pandey, learned Advocate.
The two issues for decision in the case are :
(a) the correct classification of the Multi-flex systems and Heavy Duty systems falling under the old and current Central Excise Tariff;
(b) applicability of the extended period of limitation under proviso to Section 11A(1) of the Central Excise Act, 1944.
5. The literature of the assessee describes the Multi-flex system as consisting of angles, panels, panel dividers, etc. With the system, a whole range of useful items such as shelving, work benches and tables, sheds, cat walks, mezzanine floors, etc. as required in homes, offices, sheds, factories or warehouses can be built up. The statements of officers of the company and of their dealers also clearly show that what was cleared; by the respondents, was a complete Multi-flex system, and not components or parts thereof. In these circumstances, the Tribunal’s order in the case of Commissioner of Central Excise v. New Chelur Manufacturers Pvt. Ltd. reported in 1989 (43) E.L.T. 143 wherein it has been held that parts out of which normal items of furniture such as Storage racks, etc. could be erected although other articles such as Cat walks, Ladders, Platforms, etc. could also be erected, are classifiable under TI 40 of the Schedule to the erstwhile Central Excise Tariff prior to 1-3-1986, is directly applicable. The Tribunal’s order cited supra has been upheld by the Apex Court reported in 1997 (94) E.L.T. 467. The New Chelur Manufacturer’s decision has been followed by the Tribunal in the case of Chelur Engg. Industries v. Commissioner of Central Excise, Cochin reported in 1996 (86) E.L.T. 485 wherein the Tribunal has held that shelving panels and partition plates for assembly racks or storage system are classifiable under TI 40 of the Schedule to the Central Excise Tariff upto 28-2-1986 and under Heading 94.03 of the Schedule to the CETA 1985, and not under CET sub Heading 7308.90 which is the claim of the respondents in the present case also. Following the ratio of the above decisions, we uphold the Department’s contention that Multi-flex system manufactured by the respondents herein fall for classification under TI 40 of the Schedule to the erstwhile Tariff uptp 28-2-1986 and under CET Heading 94.03 of the Schedule to the current Tariff, after 1-3-1986. Since the Tribunal’s decision in the case of New Chelur Manufacturers has been confirmed by the Apex Court, the observation in para 10.2 of the Tribunal’s order in the case of CCE v. Trigan Metal Sections reported in 1989 (39) E.L.T. 666 (wherein classification of steel panels, shelves, etc. has been held to be under TI 68 of the Schedule to the erstwhile Central Excise Tariff, in view of the Multiple uses of the products) that the New Chelur Manufacturers decision of the Tribunal cannot be taken as a final and binding decision, no longer represents the correct legal position.
6. On the aspect of limitation, we find that throughout the period in dispute, the description of the goods indicated that the assessee was clearing only parts and not complete systems. They also changed the nomenclature Of the goods from shelving systems/components to Multi-flex system/ components. The assessee had also instructed its Regional officers and staff through telex communications that they should use different nomenclature for their product while selling the same in the market and also cautioned dealers and staff not to use old names in the interest of the Company. By giving the incorrect description of the goods and by claiming the items to be parts instead of complete systems cleared under CKD condition, the assessees are guilty of mis-declaration and suppression of the correct description of the goods, obviously with the intention to evade payment of correct excise duty. The explanation of the assessees for classifying the goods under TI 68 and directing their dealers to get a certificate from every customer that the Multi-flex systems were purchased for industrial use, is that the Assistant Collector of Central Excise, vide his letter dated 5th December 1984, had returned their classification list No. 285, dated 1-3-1984 directing them to clearly indicate and undertake that when the Multi-flex system was cleared for industrial consumers, they would be cleared as TI 68 goods and when they are meant for use in office/home for use as furniture, classification should show them as TI 40 goods. However, this is a very feeble attempt on the part of the assessees to escape the charge of suppression/mis-declaration because they are unable to establish that Multi-flex systems/components classified by them under TI 68 were purchased for industrial use. Further, the assessees have admitted that even their dealers could not be in a position to clearly state the use to which the Multi-flex system was being put by the purchaser and therefore, the assessee’s claim in the classification lists for classification under TI 68, is a deliberately wrong claim. We therefore, hold that the extended period of limitation under the proviso to Section 11A(1) of the Central Excise Act, 1944 is available to the Department in this case and that no part of the demand is barred by limitation. Since we have upheld the charge of suppression, we agree with the learned CDR that the respondent company is liable for penal action and having regard to the duty amount evaded, we impose a penalty of Rs.10 lakhs on the respondents.
7. We agree with the Adjudicating authority that assembly technical service charge of 2 to 5% of the basic price for assembly of the Multi-flex systems at the customers premises will not form part of the assessable value of the goods, in the light of the decision of the Supreme Court in the case of PSI Data Systems Pvt. Ltd. v. CCE [1997 (89) E.L.T. 3 (S.C.)] wherein the Apex Court has held that charges for installation of computers are not includible in the assessable value of the computers.
8. The appeal is disposed of in the above terms.
