Per Smt. Archana Wadhwa :

Briefly stated the facts of the case are as under :-

1.1 The appellants are engaged in the manufacture of conveyor systems and mill rejects handling systems along with the some of their parts and components.

1.2 The appellants are manufacturing these goods against specific contracts, particularly from Coal Authorities, Power Plants etc. for lifting and conveying coal from the mines to the desired spot and/or handling coal, other materials and mill rejects in Power Plant etc..

1.3 The conveyor system which was supplied by the appellant against specific order is a compact system comprising 5 (five) conveyors, Load Control Switch and Signalling System for the conveyors. The Mill Reject Handling System, on the other hand, is a system comprising Foundation Bolts, M.S. Inserts, 2 (two) conveyors (which is an assembly of Idlers, Trainer, Pulley, Coupling, Gear Box, Structural Frames and Supports, Deck Plate, Electric Motor, Conveyor Belt, Switches, etc.) Frame Supports, Valves, Spray Water Nozzles, etc..

1.4 The appellants filed a classification list claiming classification of conveyors under sub-heading 8428.00 of the tariff and parts/spares of such conveyors under sub-heading 8431.00. The appellant manufactured some parts of the conveyor system in their own factory and purchased some of the parts from the market. The conveyor system, thereafter, was cleared by the factory in knock down condition on payment of duty thereon under the cover of various gate passes in which the corresponding order number was invariably mentioned by the appellants for ease of reference and easy identification with respective order. The department's contention is that as the appellants have cleared the goods in various parts/spares which were not fully manufactured by them, that the disputed items cleared by them have to be considered as parts of conveyor system and not a complete conveyor system. As the rate of duty on parts was 20% whereas the rate of duty on complete machinery was 15%, the differential duty has been confirmed against the appellants.

2. Arguing on the appeal, Shri B.N. Chattopadhyay, ld. consultant submitted that conveyors are identifiable item and is a specific entry under heading 8428.00 of the tariff and as such the conveyor manufactured by the appellants are liable to be classified under the same in terms of rule 1 of the rule of interpretation of the tariff and have to be assessed to duty as conveyor system. The components and parts of the system manufactured by them are properly classifiable under heading no. 84.31 of the tariff. The appellants have been filing price list along with the copies of the contracts. As such, all the activities of the appellants were in the knowledge of the Department. He submitted that the conveyor system has to be carried to the site on different dates by different trucks or lorries with a suitable challan in as much the entire conveyor system cannot be carried on a single day. He also submitted that they have bought certain parts/spares from the market. They have paid duty on the entire value of the conveyor system for which the order was placed by the party. Giving a reference to the order from M/s. Bharat Coking Coal Ltd., he points out that an order was placed by the said party on the appellants for conveyor system comprising certain equipments for a total value of Rs. 18,17,550. The appellants have paid duty at the rate of duty of 15% on the entire value of the goods i.e. Rs. 18,17,550. As such, they have, in fact, paid higher duty by taking into account the entire value of the system as assessable value. He strongly argued on the point of limitation. The period involved in the instant case is 23.12.91 to 16.3.92 whereas the show-cause notice was issued on 21.8.96. He submitted that they have been disclosing the entire fact by way of filing the classification list/price list along with relevant contracts. Monthly RT-12 returns annexed with relevant gate passes, were also