IMPORTANT POINT
When approved classification was proposed to be revised to reclassify the product, such reclassification could take effect only prospectively from date of communication of show cause.

Headnote:CENTRAL EXCISE - Central Excise Tariff Act, 1985 - Chapter 8535 and 8537 - Single Panel Circuit Breakers - Respondent manufacturer filed classification list classifying the product under Chapter 8535 and availed benefit of notification No. 52/93 dt. 28-2-1993 attracting duty @ 5% ad valorem - Show cause to assessee to classify goods under CSH 8537 as single panel consisted of panel equipped with more than two apparatus of Heading 8535 and 8536 - Adjudicating Authority confirmed the duty demand - Commissioner Appeals allowed the appeal - Tribunal noted that Board’s circular issued on 14-7-1994 did not have retrospective effect classifying item under Chapter 85.37 and since period under dispute was prior to issuance of circular, appeal was dismissed - Appeal - Reclassification could take effect only prospectively from date of communication of show-cause - No reason to interfere.
Held : In the 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. When 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 31.12.1993. Therefore, 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. In view of the above, we see no reason to interfere with the order passed by the Commissioner (Appeals) and as confirmed by the Tribunal.(Paras 15 and 16)

JUDGMENT

Dr. AR. Lakshmanan, J. - Delay condoned.

2. This 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.

3. We have heard Mr. T.S. Doabia, learned senior counsel for the appellant and Mr. A.R. Madhav Rao, learned counsel for the respondent.

4. The 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 Boards 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.

5. The assessee 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.

6. A show 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).

Heading 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."

7. 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/-.

8. Aggrieved 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 dated 31.12.1993.

9. The 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/-.

10. Aggrieved 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. Vs. CCE, Madras reported in 1991 (112) ELT 1011, which upheld the classification under Heading 85.35 and has noted that the Boards 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, wh

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2006 Supreme(SC) 1122

IMPORTANT POINT When approved classification was proposed to be revised to reclassify the product, such reclassification could take effect only prospectively from date of communication of show cause.

IMPORTANT POINT
When approved classification was proposed to be revised to reclassify the product, such reclassification could take effect only prospectively from date of communication of show cause.