1. The dispute in the present appeal relates to the correct classification of Field Switch manufactured by the appellants. Whereas the appellants claimed the classification under heading 8535.00, the Revenue has classified the said product under heading 8537.00.
Accordingly, the demand of duty of Rs. 35,65,043.00 (Rupees thirty-five lakh sixty-five thousand and forty-three) has been confirmed against the appellants by way of issuance of a show cause notice dated 28-1-2000 for the period from 8-2-95 to 28-2-97.
2. We have heard Shri P.R. Das, learned Advocate for the appellants and Shri J.R. Madhiam, J.D.R. for the Revenue. The appellants have challenged the impugned Order on the point of classification as also on limitation. We find that the appeal can be disposed of on limitation itself, inasmuch as the show cause notice was issued on 28-1-2000 for the period from February, 1995 to February, 1997 i.e. beyond the normal period of six months, as provided under Section 11A of the Central Excise Act, 1944. The show cause notice alleges that the appellants had filed the classification lists/declarations during the relevant period under Rule 173B classifying and declaring the said product under 85.35, without declaring the details of the raw materials and the components used for the manufacture of the product in question, and as such, had suppressed the relevant information from the Revenue. The notice also alleges that with a view to convince the authority to get the lists approved attracting lower rate of duty, the appellants have suppressed the relevant information. However, at the time of scrutiny of their records like Purchase Order etc., it was revealed that the said Field Switches manufactured by them consist of two or more components, falling under headings 85.35 and 85.36 and are used for control and distribution of electricity and as such, are more appropriately classified under heading 85.37. The Commissioner in his impugned Order has referred to the retrospective amendment of Section 11A, vide Section 110 of the Finance Act, 2000, which empowers the Revenue to issue show cause notices confirming demand of duty in respect of the short payment for a period of six months or five years, as the case may be, even in those cases where the classification lists have been approved. As such, he has concluded that from the provisions of Section 110 of the Finance Act, 2000, it is clear that the issuance of the instant show cause notice dated 28-1-2000 demanding the differential duty on Field Switch manufactured and cleared by the appellants during the period from 8-2-95 to 28-2-97, is legally valid in spite of the fact that the classification lists/declarations submitted by the noticee declaring the Field Switches, had already been approved by the Department.
3. After giving our careful consideration to the facts of the instant case, we do not find any justification in the above reasoning of the learned Adjudicating Authority. Section 110 of the Finance Act, 2000 does not give power to the Revenue to invoke the extended period of limitation and to confirm the demand even where the classification lists have been filed and approved by the proper officer. The provisions of Section 11A for invoking the longer period of limitation requires suppression of facts, misstatement etc, with intent to evade payment of duty. It is not disputed that the appellants during the relevant period had filed the classification lists and the same were also duly approved by the proper officer. In fact, we find that there was number of items in the classification lists and a dispute was raised by the Revenue in respect of one of the items so declared by them and the matter was taken up for adjudication and an Adjudication Order changing the classification heading of that particular item, was passed. No dispute was raised in respect of any other item including the Field Switches involved in the present appeal and no change was made in respect of the classification of the same. In the classification lists, the appellants had clearly mentioned the item as Field Switch, and as such, it cannot be said that there was any mis-description of the product. We also note that there is no requirement, at the time of filing of the classification lists, to declare the raw materials or the component parts of the product. If the proper officer, before approval of the classification lists, entertained any doubt as regards the correct classification of the product, he was within his power to call for more records or the technical literature or use of raw materials etc. Having not done that and having approved the classification lists, the burden cannot be passed on to the appellants and it cannot be said that the said classification was claimed by the appellants with intent to evade duty.
Classification list is the basic document according to which, the rate of duty is required to be adjudged by the assessee at the time of clearance of the goods, and should have been approved by the proper officer with due care and caution at the relevant time. The allegation that the classification was made under heading 85.35 with a view to convince the authorities to get them approved, does not appeal to us.
The assessees are not experts in the field of Central Excise, and they declared the classification according to their own understanding. It is for the proper officer approving the classification lists to do the same, after proper application of mind and after satisfying himself about the correct tariff heading.
4. In view of the foregoing discussions, we are of the view that demand of duty raised after a period of six months from the relevant date, is barred by limitation. Accordingly, we set aside the impugned orders on this limited ground without expressing any opinion on the merits of the case. The appeal is thus allowed with consequential relief to the appellants.