ORDER
S.L. Peeran, Member (J)
1. The appellants are Public Sector Undertaking. They have obtained clearance from the Committee of Secretaries for pursuing this matter before the Tribunal. The issue involved is classification of the product CNC system without cables, connectors, Switches, Switch Boards, control panels and cables under sub-heading 85.37 of the CET and denial of the benefit of Notification No. 87/88, dated 1-3-1988 and Notification No. 46/94-C.E., dated 1-3-1994, on these items. The duty worked out on the item is Rs. 86,31,608/- for the period 2/94 to 7/95.
2. We have heard both the sides in the matter. The learned Counsel strenuously argued that denial of the benefit of the Notifications in respect of the items which are required to be classified along with CNC system as an integral part is totally erroneous. He submits that the Assistant Commissioner in the order-in-original had examined in great length about the functioning of the CNC system and had categorically held that the items going along with it as noted above are integral part of the CNC system. Even in terms of Section XVI and Note 2(a) of the Interpretative Rules, the items which are integral part of the system are required to be classified along with the main item. He submits that the appellants had relied upon a large number of judgments, which have not been considered by the Collector (Appeals). He submits that the impugned order is not a speaking order and is totally without any consideration of the material evidence and judgments relied upon. He submits that allowing of the departmental appeal by the Collector (Appeals) is totally unjustified. He points out to the various evidence on record to show that the items are required to be classified as CNC system as has been held in the case of Himson Textile Engineering Industries Ltd. v. C.C.E, as reported in 1997 (95) E.L.T. 519, Vikas Engineering Associates v. C.C.E, as reported in 1995 (78) E.L.T. 219, and C.C.E. Madras v. Grasim Industries as reported in 1997 (68) ECR 152 wherein it has been held that components cleared in piecemeal in respect of Electrostatic precipitator as pollution control equipment were held to be classifiable along with Pollution control equipment. He also relied upon the HSN explanatory notes in support of his contention that the items in question are required to be considered as integral part of the main item i.e. CNC system. On financial aspect, he submaits that the Company has undergone a loss of Rs. 36.56 crores. He further submits that although the sales turnover and receipts are beyond Rs. 904 crores, the outgoings from this is to the extent of Rs. 94 crores. He further submits that salary of the employees for month of August 1999 could not be paid. He further points that Banking Institutions are proceedings against the appellants for recovery of the sum. He submits that the appellants have a very strong case both on merits as well as on financial hardship.
3. Shri S. Kannan, learned DR submits that the items which are directed to be separately assessed are Switch boards, Switches, connectors, control panels and cables and these cannot be considered as integral part of the machine. Some of these items have to be considered only as capital goods which is also pointed out by the Collector (Appeals). He further submits that for an item to be considered as integral part of the main item, it has to function along with the same and the function should be mechanical in nature while the items in the present case are only cables, switches, switch boards and only to monitor the supply of electricity and these cannot be considered as part and parcel of the CNC system. The learned DR also points out from the balance sheet that the sales turnover is to the tune of more than Rs. 900 crores and therefore, they should be directed to pre-deposit the entire amount as no hardship will be caused to them.
4. In counter, the learned Counsel submits that the order of the Collector (Appeals) is not a speaking order. He pointed out to the catalogue of the machine which runs into 50 pages. From this catalogue it is very clear that the item is not ordinary cable control panel, but they are computarised programme item and the machine is to work on the basis of the information fed to the computer and it is controlled by the software computerised equipment. He further submits that the Collector (Appeals) ought to have given a finding how the technical literature is not applicable in the matter when the same had been examined by the Assistant Collector. He further submits that no separate classification heading has been given for the various items for which the benefit has not been given. Therefore, the order suffers from the basic flaw in not classifying the other items for which the benefit has not been granted. Therefore, he prays that the matter may be remanded. He also submits that there is recurring effect and the appellants will be faced with financial hardship if the item is to be cleared by paying duty in view of the reclassification ordered by the Collector. He also prays for fixing a time limit for disposal of the appeal by the Collector (Appeals) so that the issue can be settled.
5. On consideration of the submissions made and on perusal of the order of the Collector (Appeals) we notice that the Collector (Appeals) has given a very brief finding and the finding does not discloses how these items i.e. cables, switches switch boards, connectors, control panels are not integral part of the CNC system. On perusal of the findings we notice that the Collector (Appeals) has confused himself to conclude that these items are for supply of electricity. He has not considered the technical literature which discloses the fact that the item is not ordinary electricity supply item but they are computerised machines by which the software CNC system is functioning. A number of judgments have been cited by the learned counsel and we notice from the ratio therein that where the machine is computerised and when a computerised machine is functioning on the basis of a centrally processing unit, the various items required for the functioning of the machine are integral part of the main machine. The Collector (Appeals) has not examined the technical literature and has also not examined the various judgments including the tariff note, section note as well as the explanatory note to the HSN. Therefore, on perusal of the order, we are satisfied that the order passed by the Collector (Appeals) is not a speaking order. He has also not considered the certificate which has been produced by the appellants in support of their contention that the items are not in the nature of supply of electricity, but are integral part of the machine. The certificate has been issued by a renowned Institution i.e. C.M.T.I. which is on record. Therefore, the impugned order is not a speaking order as it has not considered the material evidence. Therefore, while granting waiver of pre-deposit of the amount and stay of its recovery, we take up the appeal itself for disposal.
6. We set aside the impugned order and remand the matter to the Collector (Appeals) who shall reconsider the pleas of the appellant in the light of the material evidence produced by the appellants before the original authority as well as before the Collector (Appeals). The appellants are required to be heard and the matter expeditiously disposed of as the issue has got recurring effect. Thus the appeal is allowed by remand.