ORDER
K.L. Rekhi, Member (T)
1. The central issue, which is common to all the 7 appeals listed above, is whether chrome-plated flush bends manufactured and cleared by the appellants were classifiable under Item 26 A(3) [as pipes and tubes] or under item 68 [as goods not elsewhere specified] of the erstwhile Central Excise Tariff.
2. We have heard both sides and have carefully considered the matter. We find that the facts of this case make an interesting reading. The appellants were manufacturing C.P. flush bends right from 1978. They had duly taken out a central excise Hence and had filed classification lists from time to time which had been approved by the Assistant Collector under Item 68 of the Tariff. The appellants went on clearing the goods after paying the duty under Item 68. They also submitted the monthly RT 12 Returns which were duly assessed by the Superintendent of Central Excise under Item 68. It appears that on 3-9-81 the preventive party of central excise visited the factory of the appellants and was of the view that the goods could be classified as copper and copper alloy pipes inasmuch as they were manufactured out of brass sheets with the process of welding. The preventive party seized the stock of the goods lying in the factory. The appellants took up the matter with the Collector for lifting the seizure. On 4-12-1981, the Assistant Collector informed them in writing that the Collector had ordered the goods to be classified under Item 26A(3) and that, therefore, the appellants should submit revised classification lists and price lists and also send particulars of all past clearances to the authorities. No show cause notice was issued to the appellants before the classification order of the Collector as contained in this letter was arrived at. Again, without any show cause notice, the Assistant Collector wrote to the appellants on 28-3-1981 that he withdrew all the previous classification lists approved under Item 68. The appellants approached the Assistant Collector for a copy of the Collector’s order on classification so that they could take up the matter in appeal but it was not supplied to them. However, on 28-1-1982, the Assistant Collector passed another order holding the goods to be classifiable under Item 26 A(3) and he despatched this to the appellants on 1-2-1982. No show cause notice preceded this order of 28-1-1982 either. Secondly, this was an order by the officer subordinate to the Collector who could only echo the Collector’s order; any independent application of mind by the Assistant Collector was rules out. As a consequence of the Collector’s order on classification, the Superintendent raised 5 demands for differential duty on RT-12 Returns for the months of July to November, 1981. The appellants filed an appeal before the Collector (Appeals) against the Assistant Collector’s order dated 28-1-1982 and the Superintendent’s 5 demands on RT-12 Returns.
3. While the matter was pending before the Collector (Appeals), it perhaps dawned on the authorities that all the proceedings so far had taken place without issue of any show cause notice. The authorities then issued two show cause notices, one on 17-3-1982 and the other on 17-4-1982, calling upon the appellants to show cause to the Collector why penalty should not be imposed on them for contravention of the Rules and why the differential duty should not be demanded from them for the past period from 1-12-1978 to 1-2-1982. The Collector adjudicated these show cause notices by his combined order-in-original dated 20-1-1984 aforesaid. In this order, the Collector again held that C.P. flush bends were classifiable under Item 26 A(3) but added that it had already been so ordered by the Assistant Collector on 28-1-1982 and so also the consequential demand for duty for the periods covered by the two show cause notices had already been made and that “there was no case to reiterate the demands already made”. The only additional thing the Collector did in this order dt. 21-8-1984 was to record a finding of absence of any deliberate omission or intention on the part of the appellants to contravene the Rules and to order that no penalty need be imposed on the appellants.
4. The Collector (Appeals) passed his order on 17-7-1984. He held that the Assistant Collector’s order dated 28-1-1982 was bad in law since the Asstt. Collector had not applied his own mind but only followed the Collector’s order on classification. However, in view of the Collector’s finding of lack of any deliberate omission or intention on the part of the appellants to suppress any facts or evade payment of duty, the Collector (Appeals) restricted the period of the demands to six months. The Collector (Appeals) ordered that this six months period should commence from 5-6-1981 since he held that the appellants had been put on notice regarding re-classification of the goods on 4-12-1981 on which date the classification issue had been clearly decided.
5. On careful consideration, we agree with the Collector (Appeal) that the classification issue stood decided by the Collector on 4-12-1981. What happened thereafter were empty formalities and they merely reiterated the said decision and quantified the demands for differential duty. But unfortunately, the decision on 4-12-1981 was arrived at by the Collector behind the back of the appellants and without issue of any show cause notice. This should be enough for us to set aside the said decision on classification. Once the Collector had decided the classification, may be unilaterally, neither he nor the Collector (Appeals) was empowered to change it for the same period.
6. Even while passing the impugned order-in-original dated 20-1-1984 in which the Collector reiterated his earlier decision on classification, he did not apply his mind to the plea of the appellants on the question of classification. The appellants had placed before the Collector a large number of letters and certificates from dealers of sanitary-ware. These certificates and letters stated that C.P. flush fiends were known in the trade, and were bought and sold, as C.P. flush bends which came in the category of sanitary fittings, and not as pipes and tubes. One could take the view that the appellants had procured all these certificates and letters from their customers for the particular occasion. But then, it was open to the Collector to make his own independent enquiries as to how C.P. flush bends were known and understood in the trade. It was by then well settled that in the absence of a statutory definition, the goods have to be classified for the purpose of central excise assessment on the basis of their understanding in the trade parlance. However, no efforts were made by the authorities to collect their own evidence of trade understanding or to refute such evidence placed before the Collector by the appellants. In the impugned order-in-original, the Collector reiterated his decision on classification under Item 26 A(3) on the sole ground that the goods were of a cylindrical shape and were used for conveyance of water. The learned DR brought to our notice that the Explanatory Notes under the C.C.C.N. covered curved tubes also in the category of tubes. Neither of these grounds are adequate. Everything which is of a cylindrical shape and which is used for conveyance of liquid cannot be categorised as pipes and tubes. We have the example of pipe fittings which too have cylindrical shapes and are used for the same purpose and yet they are a separate category from pipes and tubes. Similarly, there is also a separate category of sanitary fittings. C.P. Flush Bends are used in English type of commodes and they connect the cistern with the pot. They work on the siphon principle. In the absence of any contrary evidence adduced by the department, it is not possible to doubt the veracity of the large number of certificates and letters from the trade that C.P. flush bends were known and traded as sanitary fittings and not as pipes and tubes. As regards the C.C.C.N. we observe that the erstwhile Central Excise Tariff was not based on the C.C.C.N. Scheme. In any case, in spite of our asking, the learned representative of the department was not able to show whether the C.C.C.N. categorised C.P. flush bends or sanitary fittings as pipes and tubes. All that he could show was the Explanatory Note which said that curved tubes were to be considered as tubes. But the question is whether, in the first instance, C.P. flush bends were tubes at all or were they sanitary fittings. We hold, on the basis of the available evidence of trade parlance, that they were sanitary fittings falling under Item 68 and they were not pipes and tubes falling under Item 26 A(3).
7. In the result, we set aside the impugned order-in-original as well as the impugned order-in-appeal and allow all the 7 appeals with consequential relief to the appellants.