ORDER
P.K. Kapoor, Member (T)
1. This is an appeal against the order dated 31st July, 1991 passed by the Collector (Appeals). The appellants are engaged in the manufacture of Steel Castings and C.I. Castings both machined and unmachined for goods falling under Chapters 73, 84, 85, 86 and 87 of the Schedule to the Central Excise Tariff Act, 1985. The appellants filed a classification list effective from 23-6-1988 claiming classification of steel castings of different shapes and sizes under Heading 7325.90 attracting duty @ Rs. 365/- MT, and Iron Castings under Heading 7325.10 attracting ‘nil’ rate of duty. In these classification lists the appellants claimed assessment of unmachined cast articles of iron and steel designed for use as parts of machinery falling under Chapters 84 to 87 @ Rs. 500/- MT + 5%. The appellants filed another classification list effective from 4-11-1988 in which they claimed classification of different unmachined Iron Castings under Chapters 73, 84 to 87 @ ‘Nil’ rate of duty in terms of Notification No. 275/88, dated 4-11-1988 and in respect of unmachined steel castings under Chapters 84 to 87 @ Rs. 500/- per .MT + 5% under Notification No. 223/88, dated 23-6-1988. The appellants also declared certain machined castings in Item 7 in Form I without mentioning the relevant heading under which they were proposed to be classified. On 1-6-1990 the appellants were served with a show cause notice requiring them to show cause as to why Iron and Steel Castings meant for conversion into goods covered by Chapter Nos. 73 and 84 to 87 should not be classified under Sub-heading 8483.00 in terms of Notification No. 223/88-C.E., dated 13-6-1988 and why other steel castings not designed for use as parts falling under any specific heading should not be classified under Heading 7325.10 (Iron Castings) and 7325.90 (Steel Castings) from 1-3-1988 and why fully machined Castings declared under Item No. 7 of the Classification lists should not be classified under Sub-heading No. 8430.00. After hearing the appellants the Assistant Collector by his order dated 31-1-1991/4-2-1991 classified all the Castings whether machined or unmachined (of iron and steel) under Subheading 8483.00 assessable to duty at the rate of 20% + 5% or at the rate of Rs. 500/- per M.T. in terms of Not. No. 223/88-C.E., dated 23-6-1988 and unmachined Iron Castings and meant for conversion into articles of Chapter Nos. 73 and 84 to 87 as eligible to the exemption in terms of by Notification No. 275/86-C.E., dated 4-11-1986. In this regard the main consideration which weighed with the Assistant Collector was that the Metal Chapter had been alligned with HSN with effect from 1-3-1988 and accordingly in terms of the Interpretative Rule 2(a) of the Central Excise Tariff Act, 1985 the Castings in question have to be deemed as classifiable under Sub-heading 8483.00 from 1-3-1988 on account of having acquired the essential characteristics of goods of finished goods.
2. Being aggrieved by the order passed by the Assistant Collector the appellants preferred an appeal before the Collector (Appeals), who by the impugned order dated 31-7-1991 confirmed the order passed by the Assistant Collector.
3. On behalf of the appellants the learned advocate Shri M.N. Basu appeared before us. He stated that the impugned order and confirming the order passed by the Assistant Collector was wholly misconcieved and showed non-application of mind. He contended that the Assistant Collector had erred in holding that cast articles of iron and steel intended for conversion into articles covered by Chapters 73 and 84 to 87 would be classifiable under sub-heading No. 8483.00 even when no machining after casting beyond the stage of fettling was carried out since such unmachined castings could not be deemed to have acquired the essential character of finished goods. He added that the Assistant Collector further failed in the application of mind inasmuch as once the goods are classified under sub-heading Nos. 73 or 84 to 87 the question of payment of duty in terms of Notification No. 223/86-C.E., dated 23-6-1986 did not arise. He added that the Assistant Collector’s finding that various types of cast articles of iron and steel intended for conversion of different types of goods falling under Chapter Nos. 73 and 84 to 87 would uniformally be classifiable under sub-heading No. 8483.00 also showed non-application of mind. On these grounds he pleaded that the order of the Assistant Collector as confirmed by the Collector (Appeals) may be set aside, and the matter may be remanded to the Assistant Collector for readjudication with the directions to give clear findings as regards the classification and rate of duty in respect of each item having regard to the nature and extent of machining carried out after casting and classification under Chapters 73, 84 to 87 under which the product for which the particular item of casting is meant to be used.
4. On behalf of the respondent, learned SDR Shri B.K. Singh admitted that the Assistant Collector’s order suffers from non-application of mind since he had failed to give clear findings in respect of each item of casting having regard to the extent and nature of machining, carried out and the classification of the product for which it was meant. He stated that he did not have any objection as regards the suggestion by the learned advocate that the case should be remanded to the adjudicating authority for de novo adjudication.
5. We have examined the records of the case and the submissions made on behalf of both sides. On perusal of the order passed by the Assistant Collector we are inclined to agree with the learned advocate for the appellants that it suffers from gross non-application of mind. We, therefore, set aside the impugned order and remand the case to the Assistant Collector for de novo adjudication in accordance with law. We direct that before deciding the case the Assistant Collector should grant personal hearing to the appellants and he should pass a reasoned order having regard to the nature and extent of machining carried out in respect of each item of casting and the classification of the product for which the particular item of casting was meant to be used.
6. In view of the above we allow the appeal by way of remand.