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2005 Supreme(SC) 23
2005(1) Supreme 834
Supreme Court of India
(From Central Excise Customs and Gold (Control) Appellate Tribunal, South Zonal Bench at Madras)
S.N. Variava, Dr. AR. Lakshmanan & S.H. Kapadia, JJ.
Commissioner of Central Excise —Appellant
versus
M/s. Eswaran & Sons Engineers Ltd. —Respondent
Civil Appeal Nos. 5403-5406 of 1999
Decided on 5-1-2005
Counsel for the Parties :
For the Appellant : A. Subba Rao and B. Krishna Prasad, Advocates.
Headnote:Central Excise Act, 1944—Section 37B—Central Excise Tariff Act, 1985—Tariff sub heading 8535 and sub heading 8537—Manufacture of Minimum Oil Circuit Breakers—Classification of—Assessee paid duty by classifying the same under Tariff sub heading 8535 while according to the department the item was classifiable under sub heading 8537—Department called upon the assessee to pay differential duty—Order of Assistant Collector of Central Excise that Minimum Oil Circuit Breakers were classifiable under sub heading 8537 and not under 8535.00—However, the Tribunal held that in view of the Circular dated 14.7.1994 issued by the Board u/s 37B the quantum of duty leviable needed recalculation as the said Circular operated prospectively—Whether the Circular dated 14.7.1994 was applicable to the facts of this case—(No)—Assistant Collector had taken a prima facie view for purposes of reclassification on 17.12.1993.
Held : As can be seen from the facts enumerated hereinabove, much prior to 14.7.1994 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. The order passed by the Assistant Collector dated 19.12.1994 is also on the basis of his interpretation of the above two entries. The said order is not based on the Circular dated 14.7.1994. Therefore, the Circular had no application to the facts of this case. 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 excisable 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 of a particular case in a particular manner. Similarly, under proviso (b) such Instructions, shall not bind the discretion of Commissioner of Central Excise (Appeals), discharging appellate functions. In view of the proviso to Section 37B, the said Circular dated 14.7.1994 issued by the Board was not applicable to the facts of the present case. As stated above, in the present case, the Assistant Collector had taken a prima facie view for purposes of reclassification as far back as 17.12.1993. Therefore, the Circular dated 14.7.1994 had no application to the facts of the present case. (Paras 12 and 13)
Judgment
Kapadia, J.—These appeals under section 35L of Central Excise Act, 1944, (hereinafter referred to for the sake of brevity as “the said 1944 Act”) are filed by the Department seeking to challenge the order dated 26.4.1999 passed by the Customs Excise and Gold (Control) Appellate Tribunal (for short `the tribunal’) in appeal No. E/689-692 of 1995.
2. The facts giving rise to these civil appeals, briefly stated, are as follows :
On 17th December, 1993 M/s. Eswaran & Sons Engineers Limited (hereafter referred to as ‘the assessee’) was engaged in the manufacture of Minimum Oil Circuit Breakers. The assessee paid duty by classifying the same under Tariff sub heading 8535 of Central Excise Tariff Act, 1985. According to the Department the item was classifiable under sub heading 8537. Accordingly, four show cause notices were issued on; 17.12.1993 for the period 30.6.1993 to 31.8.1993; show cause notice dated 4.4.1994 for the period 13.9.1993 to 30.9.1993; show cause notice dated 31.5.1994 for the period 1.11.1993 to 28.2.1994 and show cause notice dated August 1994 for the period March 1994 to August 1994. By the aforestated four shows cause notices, the Department called upon the assessee to pay differential duty of Rs. 9,69,638/- covering a period from 30.6.1993 to 31.8.1994. By the said four show cause notices, the Department proposed to revise the classification from sub heading 8535 to sub heading 8537.
3. By reply dated 4.2.1994 the assessee submitted that they were manufacturers of electrical goods falling under Chapter 85. They were manufacturing Switchgear Products coming under sub heading 8535.00, 8536.90, 8537.00 and 8538.00. They submitted that Minimum Oil Circuit Breaker was classified, right from inception, under tariff sub heading 8535.00 as it is an apparatus used for switching and protecting the electrical circuit in cases where the voltage exceeded 1000V. The assessee contended that the demand for duty was not maintainable because the said Minimum Oil Circuit Breaker was one single apparatus having function of breaking the current under abnormal conditions such as short circuit.
4. On the other hand, it was the case of the Department that the components of Minimum Oil Circuit Breaker performed individual functions within the said Circuit Breaker and, therefore, cannot be termed as a separate apparatus. According to the Department Minimum Oil Circuit Breaker (outdoor) was put on a control panel for controlling the electricity current. Therefore, according to the Department the item in question came within sub-heading 8537.
5. By order dated 19.12.1994, the Assistant Collector of Central Excise came to the conclusion that Minimum Oil Circuit Breakers were classifiable under sub heading 8537.00 and not under sub heading 8535.00. Reliance was placed on the Explanatory Note to Chapter 85 as well as HSN for coming to the conclusion that Circuit Breakers were classifiable under sub heading 8537.00.
6. Being aggrieved by the order of the Assistant Collector, the assessee went in appeal to the Collector of Central Excise (Appeals). Before the appellate authority the assessee placed reliance on a Circular dated 14.7.1994 issued under Section 37B clarifying that the item in question would fall under tariff sub heading 8537.00 prospectively. It was urged by the assessee before the appellate authority that in view of the said Circular dated 14.7.1994 the reclassification ordered should be given prospective effect and to that extent alone demand should be made from the assessee. On merits, the assessee contended that there were two types of Minimum Oil Circuit Breakers, namely indoor and outdoor, which consists of electrical components such as fuse, terminals, socker outlet etc. The assessee, therefore, contended that the product came under sub heading 8535.00. By Order dated 31.5.1995 the appeal was dismissed.
7. Being aggrieved by the aforestated two orders, the assessee preferred appeal to the Tribunal. By the impugned jud
