J.B.A. Printing Inks Ltd. vs Collector Of Central Excise, New Delhi
- SCC(2000) 10 SCC 401
- AIRAIR 2000 SC 607
Ratio decidendi
The rule this decision rests on
Civil Appeal No. 1905 of 1997: Where an appellate tribunal has disposed of a matter without making categoric findings on the issues raised by either party, the appellate court will set aside the tribunal's order and remit the matter for fresh hearing to enable the tribunal to make detailed and explicit findings on the contentions of both sides. Civil Appeals Nos. 601-602 of 1998: A demand for differential excise duty based on reclassification of goods cannot be made unless the correctness of the earlier approved classification has been challenged by the issuance of a show cause notice to the assessee; once such a notice is issued, the earlier approved classification ceases to be binding and the demand for duty based on reclassification is permissible for subsequent periods. A radiator assembly designed to cool an internal combustion engine constitutes a part of that engine rather than a mere accessory thereof, and is therefore classifiable under the tariff entry covering parts suitable for use with such engines, on the principle that a functional component essential to the operation of an engine must be treated as a part of that engine.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
1. We have read the order under appeal and heard the learned Counsel. We are of the view that a more detailed consideration of the case on either side is required and that there should be categoric findings of the Tribunal in this behalf. Since counsel on either side are agreed that this is the appropriate course to follow, we do not elaborate.
2. The civil appeal is allowed. The order under appeal is set aside. The appeal (No. E/4106/89-C) is restored to the file of the Tribunal at New Delhi to be heard and disposed of afresh, after giving to either side the opportunity to file further evidence and a hearing. The appeal shall be disposed of expeditiously.
3. No order as to costs.
Civil Appeal Nos. 601-602 of 1998:
4. The appellants are manufacturers of radiatOrs. Their radiators were treated as accessories of internal combustion engines and classified under the residual entry, subheading No. 84.79 of the excise tariff. On 16th July, 1992, a demand was raised in the show cause notice issued to them which recorded this fact. It stated:
On a review taken about the classification of the above goods, it appears that the present classification of 'Radiator Assembly' an accessory of I.C. Engines of various models, the product of M/s. Fine Automotive and Industrial Radiator Private Limited, appears to be incorrect and merits reclassification under chapter sub heading No. 8409.00 considering the function of the product as the Radiator assembly appears to be a part suitable for use solely or principally with engine, which attracts BED at 20% adv.
On this basis, the appellants were asked to show cause why the differential amount of duty in the sum of Rs. 4,12,172/- for the period 1st January, 1992 to 30th June, 1992 should not be paid by them "being the duty resultant due to reclassification...from chapter heading 8479.00 to 8409.00 of the Schedule to the Central Excise Tariff Act, 1985".
5. The first contention is, and it is not in dispute, that the demand made by this show cause notice must be quashed because the issue in this behalf is covered by the Constitution Bench judgment in Collector of Central Excise, Baroda v. Cotspun Limited , where it was held:
13. The levy of excise duty on the basis of an approved classification list is the correct levy, at least until such time as to the correctness of the approval is questioned by the issuance to the assessee of a show cause notice. It is only when the correctness of the approval is challenged that an approved classification list ceases to be such.
For the reason stated in para 13 above, the demands in the two subsequent show cause notices on the same basis, but for the subsequent periods of time, cannot be quashed.
6. This raises the issue of the correctness of the new classification. The classification was under Tariff entry 84.79 on the basis that what the appellants manufactured was an accessory of an internal combustion engine and it was sought to be changed to a classification under Tariff entry 84.09 on the basis that that radiator assembly was a part suitable for use solely or principally with such engines.
7. Tariff entry 84.09 covers "parts suitable for use solely or principally with the engines of heading No. 84.07 or heading No. 84.08". Entry 84.08 covers "compression-ignition internal combustion piston engines (diesel or semi-diesel engines)". The argument on behalf of the appellants is that radiator assemblies are not parts of internal combustion engines but accessories thereof and this had been accepted by the respondents earlier. It is difficult to accept this latter argument and the argument that an internal combustion engine can function without a cooling device. It cannot do so. If, then, the cooling device is water based, being the radiator, that cooling device must be held to constitute a part of such engine.
8. In the result, except in relation to the demand made in the show cause notice dated 16th July, 1992, which stands quashed, the civil appeals are dismissed.
9. Any deposit that has been made by the appellants in respect of the demand that is quashed will now stand adjusted against the demands made by the two remaining show cause notices.
10. If the appellants claim any motivate benefit for themselves or their customers in this behalf, the claim shall be decided in accordance with law.
11. No order as to costs.
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