Per K.S. Venkataramani: These two appeals involve a common issue and arise out of two orders Sri. No.44/CEX/1987 and Srl.No.45/CEX/1987 dated 8.7.87 passed by the Collector of Central Excise Pune. The facts in brief are that appellants therein manufacturing Conveyors, xxxxxxxx Stackers/Reclaimer and parts thereof. They filed a classification list wef.1.3.86 claiming classification as follow:-

The component parts namely idlers, pulleys and structurals are manufactured in the factory of the assessee and certain other bought out items like electric motors, gear box, belting switches coupling etc. are assembled at the site of the customers to form conveyors, stackers/reclaimers. The Department found that the appellants have paid duty on the items manufactured in their factory namely idlers, pulleys and structurals at the rate of 15% ad valorem under Sub-heading 8428.00 Central Excise Tariff. A statement was given on 28.10.86 by Shri D R. Purohit, the Assistant Manager (Finance) of the appellants. He stated inter alia that the bought, out items are generally never brought into the factory but are assembled at the site directly. He further stated it was not at all possible to make complete assembly of Conveyor system in the factory and then to despatch and to attach it to the earth. He stated that there project like Conveyors and stacker reclaimers are tailor made system. He said that they classified parts of conveyors produced by them like idlers and pulleys which are cleared as replacement parts under sub-heading 843 1.00 Central Excise Tariff Act. When these are cleared for use as component parts as a Conveyors Shri Purohit said they classified them under Sub-heading 8428.00. The Department found that the appellants is not manufacturing complete Conveyors stacker/reclaimer at their factory but manufactured certain essential component parts like idlers pulleys and structurals and the department took the view that as such they are classifiable under heading 8431.00. The department also noted that there is no practice of manufacture/assembling the entire conveyors in the factory and then clearing it in CKD condition. So also, the Department felt that the component parts have not the essential characteristics of conveyors. Therefore, classification of these parts according to the department would be more appropriate under sub-heading 8431.00 and not under sub-heading 8428.00. Proceedings x were, therefore, initiated against the appellants for the classification of the goods at the higher rate of duty as parts and on considering the appellants defence the Collector found that though appellants had contracted for supply of Conveyors stacker/reclaimers, they only manufacture some of the components required for erection of the material handling equipment and some of the items are bought out , straight away go to the site for assembly and erecting. This position, the Collector observed had been confirmed in the statement of Shri Purohit. The Collector therefore, concluded that the appellant are not manufacturing entire conveyors, stackers and reclaimers but only the components required for these machinery and the Collector held that as such it cannot be accepted that these are complete machinery in C.K.D./S.K.D. condition. The Collector, therefore, confirmed the demand of duty for Rs.9,37,944.64 under Rule 9(2) of Central Excise Rules read y with Section 11A of the Central Excises and Salt Act, 1944. He imposed an penalty of Rs. 1 lakh on the appellants. This is in respect of the Appeal No. E/71 5/87-BI, which related to the period March 1986 to November 1986. In the other appeal relating to the period March 1986 to December 1986, the Collector confirmed the demand for Rs. 81,474.50 and im