Skip to content


Nat Steel Equipment Pvt. Ltd. Vs. Collector of Central Excise - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1983)LC1080DTri(Delhi)
AppellantNat Steel Equipment Pvt. Ltd.
RespondentCollector of Central Excise
Excerpt:
.....item under t.i. no. 68, without assigning any reason for changing the classification of the very item, changed the classification from t.i. 68 to t.i. 40, though there was no change either in the structure end use in respect of the said item. (b) while effecting the change, no opportunity was given to the appellant to make any submissions to sustain his classification under t.i. 68.4. while it was urged before the appellate collector that the item with which the appellant was concerned was specially designed and was actually used for heavy duty in canteens of industrial establishments and as such it would not fulfil the main criterion for being classified under t.i. 40 viz. its movability, the appellate collector rejected the appeal taking the view that the criterion of movability was.....
Judgment:
1. This is a Revision Application filed before the Central Government by the appellant which stands transferred to the Appellate Tribunal for disposal as if 'if were an appeal filed before it. .

2. For a proper appreciation of the issues involved in this appeal it may be relevant to set out briefly the facts of the case leading to this appeal. The appellant in this case is a private limited company incorporated under the Companies Act, 1956 and was, Inter alia, engaged in the manufacture of hospital equipment and equipment for canteen of big industrial concerns at his factory. The item which is the subject-matter of this appeal is the Heavy Duty Hot Food Cabinet for canteens of big industrial units. This item was being classified as non-excisable upto 28-2-1975, the same not falling under any of the Central Excise Tariff Items 1 to 66. But subsequent to the insertion of the new Tariff Item 68-"All other goods not elsewhere specified" w.e.f.

1-3-1975, the Item in question came to be classified under that Tariff Item i.e. Tariff Item 68 and all the goods had been cleared by the appellant on payment of duty at the then prevailing rate. However, on a change being effected in the rate of duty on the goods falling under Tariff Item 68 from 1% to 2% ad valorem w.e.f. 18-6-1977, the appellant was obliged to file a fresh classification list indicating the above change in the rate of duty. The significant point to be kept in mind in this connection is that there was no change in the description of the Item in question. So, as per the fresh classification list filed on 11-7-1977. Nat Steel Heavy Duty Industrial Hot Food Cabinet, Model HFC/E, was included under Item No. 68 as had hitherto been approved.

However, the Assistant Collector approve the fresh classification subject to the modification that the Item in question was classified under Item No. 40 i.e. Steel Furniture, on the alleged ground that it is constructed for being placed on floor and it is mainly used with the utilitarian purpose to equip hotels, canteens etc.

3. The decision of the Assistant Collector having been made an appealable one as recorded on the classification list dated 27-7-1977, the appellant had filed an appeal on 19-11-1977 to the Appellate Collector on the following grounds:- (a) While prior to 19-8-1977, the very same Assistant Collector had approved the same Item under T.I. No. 68, without assigning any reason for changing the classification of the very Item, changed the classification from T.I. 68 to T.I. 40, though there was no change either in the structure end use in respect of the said item.

(b) While effecting the change, no opportunity was given to the appellant to make any submissions to sustain his classification under T.I. 68.

4. While it was urged before the Appellate Collector that the Item with which the appellant was concerned was specially designed and was actually used for heavy duty in canteens of industrial establishments and as such it would not fulfil the main criterion for being classified under T.I. 40 viz. its movability, the Appellate Collector rejected the appeal taking the view that the criterion of movability was not available in the case of the said Hot Food Cabinet on the ground that electrical accessories and water connection do not change the necessary characteristics of furniture.

5. The grievance of the appellant in the present appeal is that apart from the non-observance of the principles of natural justice by the Assistant Collector while effecting change in the classification from T.I. 68 to T.I. 40, the Appellate Collector had ignored the foremost criterion of movability which was the basic criterion for classification under T.I. 40 and instead relied on other criteria of secondary nature.

6. Shri K.R. Mehta, Consultant appearing for the appellant advanced arguments stressing the grounds referred to earlier and submitted that the impugned order deserves to be set aside as there is no valid reason for the adjudicating authority in departing from the undisputed criterion of movability for classification under T.I. 40, especially in the light of the clarification given by the Ministry of Finance (D.R. & I.) in their communication issued under F. No. B. 2/2/68-CX. I, dated 25-3-1968 (vide page 645-Central Excise Tariff, 3rd Edition, 1977, published by Central Law Office) which itself is in turn base on universally accepted Explanatory Note to the B.T.N.7. The Departmental Representatives endeavoured their best to advance arguments to sustain the impugned order.

8. After hearing both the parties and considering the facts and circumstances of the case, we could not help sympathising with the unenviable task to which the Departmental Representatives had been put in making use of all their ingenuity and skill to counter the irrefutable arguments of the learned consultant Shri Mehta who in his characteristic mild and measured tone built his case in a rising crescendo which had the devastating effect of demolishing the entire case of the Department which collapsed like a house built on quick sand. If we are constrained to make observations of this nature which may not be palatable to the authorities below, it is not out of a desire to pick holes in an order of the authorities below but out of the sheer sense of exasperation in having to deal with an order of this kind which does not bear evidence to the degree of responsibility expected of the responsible adjudicating authorities in the Central Excise hierarchy. The facts speak for themselves more eloquently than any arguments. It is amazing that the very item which was being classified under T.I. 68 on the basis of the clarification of the Ministry of Finance referred to earlier in their order, which again is in keeping with the universally accepted Explanatory Note to the B.T.N.is sought to be classified differently without any obvious provocation which could be traced to any change in the structure, end use etc. of the said Item subsequent to the said classification to justify such a change and that too without observance of the basic and fundamental principles of natural justice of at least affording an opportunity before effecting a change. It is needless to say that it is incumbent on the adjudicating authorities to observe the principles of natural justice even in a case where the change, if any, effected is justifiable and is for valid reasons. In this connection, the observations made by the High Court of Bombay in the case of M/s Techni-Glass Limited v. Union of India and Ors. (1981 E.L.T. 147-Bom.) are worth being reiterated. The Court observed : "It is well Settled that where the adjudicating authorities, be they in customs matters or excise matters, have preferred one of two possible meanings or placed a product in one category which could perhaps be better placed in another, the Court ordinarily ought not to interfere. However, if the adjudicating authorities have given a strained meaning to an expression used in ordinary parlance or acted in a manner not warranted by settled rules of interpretation then the Court has not merely the right to interfere but also a duty." 9. It is hoped that the adjudicating authorities would keep in view these observations and display a greater awareness of the need to tailor their orders to meet the ends of justice without approaching their solemn task in a casual or cavalier manner.

10. We, therefore, have no hesitation in allowing the appeal and setting aside the impugned order.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //