of Central Excise, Bangalore Vs. M/S. Mysore Electricals Industries Ltd.  Insc
807 (15 November 2006)
& Altamas Kabir Dr.Ar.Lakshmanan, J.
appeal is directed against the final order No.1943 of 2004 dated 06.12.2004
passed by the Customs, Excise and Service Tax Appellate Tribunal, Bangalore in Appeal No.E/399/2001. The
appellant before us is the Commissioner of Central Excise, Bangalore.
have heard Mr.T.S.Doabia, learned senior counsel for the appellant and Mr.A.R.Madhav
Rao, learned counsel for the respondent.
issue involved in the present appeal is whether the Single Panel Circuit
Breakers are classifiable under CSH 8535.00 (rate of duty 5%) as claimed by the
assessee or under CSH 8537.00 (rate of duty 20%) as per the revenue and whether
the Board's Circular F.No.32/8/94-CX (Section 37B Order) dated 14.7.2004, which
has clarified that the Single Panel Circuit Breakers are classifiable under
Chapter 85.37, has retrospective effect.
is engaged in the manufacture of electrical appliances falling under Chapter 85
of the CETA, 1985. The assessee had filed the classification list classifying
the products under chapter 8535.00 CETA 1985 and availing the benefit of
notification No.52/93 dated 28.02.1993 attracting duty @ 5% ad valorem.
cause notice was served on the assessee to classify the goods in question under
CSH 8537.00 attracting duty at the rate of 20%, as single control panel
manufactured by the assessee consists of a panel equipped with more than two
apparatus of Heading Nos.8535 and 8536 (like circuit
breaker/fuses/switches/plugs/socket/relays). The relevant tariff entries are
quoted herein below :- "Heading 85.35 :- electrical apparatus for
switching of protecting electrical circuits, or for making connection or in
electrical circuits (for example -switches, fuses, lightning arrest voltage
limiters, surges suppressors, plugs, junction boxes).
85.37 :- `Boards, panels, consoles, des-cabinets and other bases, equipped with
two or more apparatus of heading No.85.35 or 85.36, for electric control or the
distribution electricity." The Assistant Commissioner decided the
classification of the products in question, under CSH 8537.00 and confirmed the
duty demand of Rs.22,13,129/-.
by the aforesaid order, the assessee preferred an appeal to the Commissioner
(Appeal) who by his order dt.28.11.1995, set aside the impugned order dated
31.10.1994 and remanded the same for denovo, for the reasons that the order was
passed without hearing the assessee in respect of the first show cause notice
case was again taken up and the Adjudicating Authority relying mainly on the
two entries in the tariff decided that the Single Panel Circuit Breaker
manufactured by the assessee has to be classified under CSH 8537.00 and
confirmed the duty demand of Rs.22,13,129/-.
by the said order, the assessee preferred an appeal to the Commissioner
(Appeals) who observed that to merit classification of the panel under CSH
8537.00, it should contain two or more apparatus of Heading No.8535.00 or
8536.00 and in the instant case, the single panel contains only the circuit
breaker falling under Chapter 85.35 and hence the subject panel is not
classifiable under Chapter 85.37 and accordingly the Single Panel Circuit
merits classification under Chapter 85.35, and accordingly set aside the order
and allowed the appeal. The department preferred an appeal against the said
order in the Customs, Excise and Service Tax Appellate Tribunal, Bangalore which relied on a ruling of the
Tribunal in the case of Eswaran & Sons Engineers Ltd.
under Heading 85.35 and has noted that the Board's Circular (Section 37B Order)
issued on 14.07.1994, does not have a retrospective effect but only a
prospective effect to classify the item under Chapter 85.37. Since the period
under dispute is 24.06.1993 to 22.11.1993 and 01.12.1993 to 27.02.1994 to
22.11.1993 and 01.12.1993 to 27.02.1994, which is prior to the issuance of CBEC
Circular No.32/8/94-CX dated 14.07.1994 which does not have retrospective
effect and has only prospective effect to classify the goods in question under
Chapter 85.37, the departmental appeal has been rejected. Aggrieved against the
rejection of their appeal, the Commissioner of Central Excise, Bangalore filed the above appeal before this
T.S. Doabia, learned senior counsel for the appellant took us through the
orders passed by the authorities below and also other relevant records. He
submitted much prior to 14.07.1994, a show cause notice was issued by the
Assistant Collector on 17.12.1993 on the basis of his interpretation of the
above two entries and the order passed by the Assistant Collector dated
19.12.1994 is also on the basis of his interpretation of the above two entries
and that the said order is not based on the circular dated 14.07.1994 and,
therefore, the circular had no application to the facts of this case. He would
further submit that under Section 37B of the Act, the Board is empowered to
issue instructions to Central Excise Officers for the purpose of uniformity in
the classification of eligible goods which instructions, are required to be
followed by such officers. However, under proviso A to Section 37B, an
exception is made. The said proviso states that the said instructions, orders
or directions cannot make any Central Excise Officer to dispose off a
particular case in a particular manner. Similarly, under proviso B, such
instructions shall not in the discretion of the Commissioner of Central Excise
(Appeals), discharging appellate functions. In view of the proviso to Section
37B, the said circular dated 14.07.1994 issued by the Board was not applicable
to the facts of the said case. Therefore, he would submit the circular dated
14.07.1994 had no application to the facts of the present case. It is further
submitted that switches, fuses, relays, plugs, junction boxes etc. have been
given the status of separate/individual items. Without these items also main
equipments/machinery cannot function. Therefore, though they may be parts of
certain machinery, they have to be classified under those headings where they
are specifically mentioned/classified. Thus, the panels manufactured by the assessee
contain more than two apparatus falling under heading 85.35 vide relays,
circuit breakers, switches, position indicators etc. Therefore, the goods
manufactured by the assessee are correctly classifiable under heading 85.37.
his argument, Mr. Doabia submitted that the matter requires investigation and,
therefore, be remitted to the authorities concerned for fresh consideration.
A.R. Madhav Rao, learned counsel for the respondent submitted that when there
is a concurrent finding of fact in favour of the respondent, the appeal filed
by the Department has no merits. It is submitted that the issues involved in
the present appeal is a question of fact which has been decided in favour of
the respondents both by the Commissioner (Appeals) and by the Tribunal and thus
there is a concurrent finding of fact in favour of the respondent and
department's appeal ought to be dismissed in view of the same. Learned counsel
has also invited our attention to the counter affidavit filed on behalf of the
respondent and the detailed reply made thereunder to the civil appeal filed by
the Revenue. Learned counsel further submitted the circular being oppressive
and against the respondent has to apply only prospectively and cannot be
applied retrospectively. In other words, a beneficial circular has to be
applied retrospectively while an oppressive circular has to be applied
prospectively. Thus, when the circular is against the respondents they have a
right to claim the enforcement of the same prospectively. It is further
submitted that for the period in question, trade notices had been issued
classifying the circuit breakers under Heading No. 85.35 or 85.36 depending
upon the voltage, which are binding upon the Department. Thus, he submitted
that the circuit breaker is classifiable under Heading 85.35. He would further
submit that the Tribunal has allowed the appeal filed by the respondents by
following its own order in the case of Eswaran and Sons (supra) and has not
given any finding on the merits of the matter.
have perused the order impugned in this appeal, other connected records, and
considered the rival submissions.
instant case, the assessee had filed a classification list effective from
01.03.1993, classifying the Single Panel Circuit Breakers under Heading
No.85.35 and claiming concessional rate of duty at 5% under Notification
No.52/93 dated 28.02.1993. The said classification list was approved by the
jurisdictional Assistant Commissioner, on 10.06.1993. Thereafter, the assessee
cleared the said goods in accordance with the approved classification list.
this approved classification was proposed to be revised to reclassify the
Single Panel Circuit Breakers under Heading No.85.37 of the tariff, such re-
classification can take effect only prospectively from the date of
communication of the show cause notice proposing re-classification. In the
instant case, the show cause notice was communicated to the assessee only on
as rightly urged by the learned counsel for the respondent, the
reclassification can take effect only from 27.04.1994 and accordingly the
differential duty can be demanded only from that date.
view of the above, we see no reason to interfere with the order passed by the
Commissioner (Appeals) and as confirmed by the Tribunal. The appeal is
there shall be no order as to costs.