K. Prakash Anand, Member (T)

1. The issue in this matter relates to classification of Tool Cabinets manufactured by M/s. Steel Authority of India Ltd. These were manufactured by Mechanical Work Zone of the unit and then transferred to the Machine shop under the cover of factory's internal gate passes. The department's case is that the tool cabinets are movable articles made for placing on the floor, and, having all the essential characteristics of furniture, they are liable to duty.

2. The matter was adjudicated by Additional Collector of Central Excise, Madhya Pradesh, who held that the impugned goods were classifiable under Central Excise Tariff Item 40 and not under Item 68 ibid, as claimed by the appellant company. He also observed, that in spite of categorical directions of the local Central Excise Officer, the appellant company failed to take out licence and to pay duty. Accordingly, the learned Additional Collector confiscated the 60 pieces of tool cabinets allowing the appellant company the option to redeem them on payment of fine of Rs. 20,000/-. He also imposed a penalty of Rs. 10,000/-. The appeal before us is against this order.

3. We have heard Shri S.N. Mathur. consultant on behalf of the appellant company and Shri L.C. Chakravorty, JDR on behalf of the department.

4. The learned consultant heavily relies on the clarification issued by the Central Board of Excise and Customs vide their F. No. 33/26/68-CX. VII, dated 21-11-1968. In this letter, it was clarified that specially designed manufactures of steel like counters, storage cabins, cat-walks etc. for use In Industrial establishments cannot be regarded as steel furniture. It was pointed out in this letter that as per the Explanatory Notes to the B.T.N. only movable articles which have the essential characteristic that they are constructed for placing on the floor or ground and which are used mainly with the utilitarian purpose to equip private dwellings, hotels, theatres, cinemas, offices, churches, schools, cafes, restaurants, laboratories, hospitals, dentists, surgeries etc. or ships, aircraft, railway coaches, ambulances, caravan-trailers or similar means of transport, should be regarded as covered by the Item furniture'. Shri Mathur pleads that In view of this clarification, the department has no case at all for treating the Impugned goods as furniture.

5. It is also submitted, that the cabinets are not of standard size. They have been designed specially for use in their own establishments and cannot be known in the market, or be sold, as furniture.

6. It is further claimed that the appellant company was exempted from having a Central Excise licence in view of the provisions of the Notification No. 31/76-C.E., dated 28-2-1976 as amended by Notification No. 133/78-C.E., dated 10th June, 1978.

7. It is also urged that the department has invoked Rule 9(2) of Central Excise Rules which is not legally sustainable as this is not a case of clandestine removal of goods. In support of this, Shri Mathur relies on the case of Union Carbide Co. Ltd. v. Assistant Collector of Central Excise and Ors. 1978 ELT (J 180) and the case of N.B. Sanjana, Assistant Collector of Central Excise, Bombay and Ors. v. The Elphinstone Spinning and Weaving Mills Co. Ltd. - 1978 ELT (J 399).

8. In conclusion, the learned consultant urges that the imposition of penalty is a stigma on a public sector undertaking and no penalty is leviable for a mere technical or venial breach of rule Hindustan Steel Ltd. case -1978 ELT (J159).

9. Shri L.C. Chakravorty, JDR responds briefly by reiterating the view taken by the lower authorities.

10. We have carefully considered the facts of the case and the submissions made before us. The main issue that is to be decided in this case is whether tool cabinets not of standard size, designed especially for use within the plant of the Steel Authority of India and claimed to be not commercially known and saleable as furniture can be classified under Central Excise Ta