2005 (98) ECC 305 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

South Zonal Bench -- Bangalore

Dr. S.L. Peeran, Member (J) and Shri K.C. Mamgain, Member (T)

Instrumental Research Associates P. Ltd., Bangalore

Versus

Commissioner of Central Excise, Bangalore

Appeal No. E/312/2001

[Arising out of Order-in-Appeal No. 451/2001-CE, dated 21.6.2001, passed by the Commissioner of Customs & Central Excise (Appeals), Bangalore]

Final Order No. 1423/2004, dt. 27.8.2004, Certified on 9.9.2004

Reclassification (C. Excise)

Rule 173B of the Central Excise Rules, 1944 -- Chapter sub-heading 9032.80 -- Commissioner can open the assessment consequent on reclassification of goods which was permissible and validated by amendment of Section 11A of the Central Excise Act with retrospective effect by Section 110 of the Finance Act, 2000.

Appeal dismissed

PRESENT :

Shri K.K. Varier, Consultant for the appellants.

Shri L. Narasimha Murthy, SDR for the respondent.

Cases Cited :

1. Collector of Central Excise, Baroda v. Cotspun Ltd., 2000 (69) ECC 451 (SC)..... [Para 3]

2. ITW Signode India Ltd v. CCE, 2003 (90) ECC 757 (SC)................................... [Para 4]

Per : K.C. Mamgain

Heard both the sides in the matter.

2. The appellants are engaged in manufacturing and clearing automatic regulating or controlling instruments and apparatus for measuring the temperature, pressure, etc. They filed classification declaration No. 3/98-99 effective from 2.6.98 under Rule 173B of the Central Excise Rules, 1944, classifying the said products under Chapter Sub-Heading 9032.99. After examining technical write-up submitted by the appellants, it appeared that these goods were correctly classifiable under chapter sub-heading 9032.80. Accordingly show cause notice was issued to the appellants proposing reclassification of the goods under chapter sub-heading 9032.80 and demanding differential duty amounting to Rs. 1,17,905 for the period from 1.1.99 to 28.2.99. The case was adjudicated by the Asst. Commissioner who classified the products in dispute under chapter sub-heading 9032.80 and confirmed the demand of Rs. 1,17,905. The appeal against the said order of the Asst. Commissioner was rejected by the Commissioner (Appeals) in the impugned order.

3. Shri K.K. Varier, learned Consultant appearing for the appellants pleaded that they have no dispute on the classification of the goods under the impugned order. However, he is contesting only the demand. He pleaded that they have no objection in classifying the products under chapter sub-heading 9032.80 from the date of issue of show cause notice dated 1.9.99. He pleaded that at the time of passing the order by the Original Authority, the decision of the Supreme Court in case of Collector of Central Excise, Baroda v. Cotspun Ltd., 2000 (69) ECC 451 (SC) : 1999 (113) ELT 353 (SC) was in force and accordingly the classification could have been changed prospectively and not retrospectively. He also pleaded that amendment to Section 11A of the Central Excise Act, 1944 was brought into effect from 12.5.2000 and at the time of passing the Order-in-Original the adjudicating authority could not have been anticipated such an amendment.

4. Shri L. Narasimha Murthy, learned SDR appearing for the Revenue pleaded that the decision of the Supreme Court in case of Collector of Central Excise, Baroda v. Cotspun Ltd., referred to by the Counsel, has been overruled and the same is no longer a valid law. He also stated that by the Finance Act, 2000, the Section 11A of the Central Excise Act, 1944 was amended and the Supreme Court in the case of ITW Signode India Ltd v. CCE, 2003 (90) ECC 757 (SC) : 2003 (153) ELT 501 (SC) has observed in Para 51 of the judgment as under-

"51. The procedure laid down under Rule 173B of the Rules has specifically been included in the Act. Furthermore, by reason of the amended Act a provision has been made for reopening the approved classification lists. It is a procedural provision in terns (sic) whereof statutory authorities are required to determine as to whether the earlier classification was correctly done or not. The said authority upon giving an opportunity of hearing the parties may come to the conclusion that decision on the approval granted need not be reopened and even if the same is reopened, the reasons therefore are to be stated. As the provision of Section 11A is a recovery provision as regards non-levy or non-paid or short levy or short paid or erroneously refunded duties by reason of the said amendment the Parliament had merely provided that an approval on the basis of a classification list inter alia in case of a short levy can be recovered if a finding is arrived at that the goods had undergone a short levy. For the aforementioned purpose, Clause 110 of the Finance Act, validating actions taken under Section 11A can be taken into consideration whereby and where under a legal fiction is created."

He therefore pleaded that the action of the Asst. Commissioner has been validated by the amendment by Section 110 of the Finance Act, 2000. He also referred to the finding of the Commissioner (Appeals) who after an analysis of this amendment made in Section 11A of the Central Excise Act, 1944 and validation of certain actions taken under Section 11A of the Act, came to the conclusion that the demand can be made with the retrospective effect. The lower authority has therefore correctly demanded the duty with retrospective effect in terms of amendment to Section 11A.

5. We have carefully considered the submissions made by both the sides. We find that the appellants have not disputed the reclassification of the goods under chapter sub-heading 9032.80. We also find that the appellant's only claim is that at the time of passing the Order-in-Original, the Asst. Commissioner was bound by the decision of the Supreme Court in case of Collector of Central Excise, Baroda v. Cotspun Ltd. (supra) and therefore he could have reclassified the goods from 1.9.99. This issue was also raised before the Commissioner (Appeals). We find that the Commissioner (Appeals) has examined the plea of the appellants and he observed that amendment made in the Budget of the year 2000 by which Section 11A has been amended and action taken under Section 11A has been revalidated, he came to the conclusion that the demand can be made with the retrospective effect. The lower authority has correctly demanded the duty with retrospective effect under Section 11A. We find that the Asst. Commissioner was the proper authority who raised the demand for retrospective period. We also find that the Supreme Court in case of ITW Signode India Ltd. v. CCE (supra) has clearly held that by reason of the amendment of Section 11A of the Central Excise Act, 1944 by the Finance Act, 2000, the Parliament merely provided that an approval on basis of a classification list inter alia in case of a short levy can be recovered if a finding is arrived at that the goods had undergone a short levy. Thus, Section 110 of Finance Act, 2000 validating actions taken under Section 11A of the Central Excise Act, 1944 can be taken into consideration. We also find that the Asst. Commissioner in his order had given a finding that under Rule 173B(4), the power officer may after such further inquiry as he may consider necessary, reassess the correct amount of duty payable following the provisions of Section 11A of the Act and the assessee shall pay the deficiency, if any. Therefore he has opened the assessment consequent on reclassification of goods which was permissible and his action has been validated by amendment of Section 11A of the Central Excise Act, with retrospective effect by Section 110 of the Finance Act, 2000. Therefore, we do not find any merit in the appeal and the same is rejected.

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