1. The point for decision in this case is whether central excise duty on regulators for fans below 107 cm sweep would attract duty at 15% ad valorem under Sr. No. 3 sub-item No. (3) of Notification No.46/84-C.E., dated 1-3-1984 or they should be assessed at the rate of 71/2 ad valorem under Sr. No. 2 sub-item No. (3)(a) of the said notification. The authorities below have held that these regulators are assessable at 15% ad valorem under Sr. No. 3 of the Notification, whereas the appellants' claim is for assessment under Sl. No. 2 sub-item No. (3)(a).
2. The learned advocate Shri A.K. Jain for the appellants has stated during the hearing before us that the fans were of 104 cm sweep.
Regulators for these ceiling fans were supplied with the fans. Duty on the regulators was charged under Sr. No. 3 of the Notification referred to above at 15% ad valorem. The period is related to 1-3-1984 onwards.
The learned advocate has argued that ceiling fans include regulators.
For this argument he has relied on the judgment of Andhra Pradesh High Court, reported in 1982 (10) E.L.T. 378 (A.P.), in the case of Jay Engineering Works Ltd., Hyderabad v. Government of India and Ors., this Tribunal's decisions reported in 1984 (17) E.L.T. 384 (Tri.) in the case of Collector of Central Excise, Calcutta v. Polar Fans Industries No. 2, Calcutta, Government of India's decision in Re : Himadri Electricals, Calcutta, reported in 1982 (10) E.L.T. 305 (G.O.I) and this Tribunal's decision in the case of Khaitan Fans (P) Ltd. v.Collector of Central Excise, Calcutta-1, reported in 1986 (26) E.L.T.250 (Tri.). He has also relied on the Tariff Advice No. 2/71 issued by the Ministry of Finance (DR & I) vide F. No. 6/31/71-CX. I, dated 28-10-1971. The learned advocate has argued that Government of India's decision is a good guide of a contemporaneous exposition of the position of law. In support of his argument he has relied on the judgments of Hon'ble Supreme Court in the case of Collector of Central Excise, Guntur v. Andhra Sugar Ltd., reported in 1988 (38) E.L.T. 564 (S.C.) (Paragraph-50, and in the case of Collector of Central Excise v.Park Exports (P) Ltd., reported in 1988 (38) E.L.T. 741 (S.C.). In the case of Andhra Sugar Ltd. (supra), the Hon'ble Supreme Court observed "it is well settled that the meaning ascribed by the authorities issuing the notification, is a good guide of a contemporaneous exposition of the position of law." Similarly, in paragraph-11 of the judgment reported in 1988 (38) E.L.T. 741 (S.C.) the Hon'ble Supreme Court observed that "it is well-settled principle of interpretation that courts in construing a statute or notification will give much weight to the interpretation put up on it at the time of enactment or issue, . . .". In the aforesaid Tariff Advice, vide paragraph-2 thereof, it was stated that according to the Indian Standard Specification No. 347- 1966, the regulator is also a part of the ceiling fan. Ceiling fans are not normally sold without the regulators, it was also stated therein that the overwhelming trade practice was to supply the ceiling fan alongwith the regulator and to bill the fan for an amount which is inclusive of the price or the value of the regulator. In paragraph-3 of the Tariff Advice, the Ministry of Finance further observed as follows:- "3. In view of the above, this Ministry is of the opinion that the assessable value of a ceiling fan should also include the value of the regulator. But in cases where a manufacturer bills the fan without the regulator and sells the regulator separately, it may not be possible to include the value of the regulator in the value of the fan for purpose of assessment. It is only in such cases where there are genuine sales of ceiling fans without regulators and the amount billed for the fans does not include the price of the regulator that the assessment should be done without including the value of the regulator in the value of the ceiling fan." In this connection, the learned advocate has argued that ISI definition is a relevant guide for classification. For this argument, he has relied on the Supreme Court judgment reported in 1985 (20) E.L.T. 179 (S.C.) in the case of Empire Industries Ltd. and Ors. v. Union of India and Ors. (Paragraph-38) and 1988 (37) E.L.T. 480 (S.C.) in the case of Collector of Central Excise, Kanpur v. Krishna Carbon Paper Co. In paragraph-38 of the judgment reported in 1985 (20) E.L.T. 179 (S.C), the Hon'ble Supreme Court has observed that the views of the Indian Standard Institute can be looked into by the Courts with certain amount of credibility. In 1988 (37) E.L.T. 480 (S.C), the said Apex Court has observed that where no trade evidence is available, but ISI specifications are available, they should be relied upon for interpreting a tariff entry. The learned advocate has further argued that a notification should be interpreted in favour of the assessee and for this argument he has relied upon the judgments of Bombay High Court reported in 1980 (6) E.L.T. 291 in the case of Haldyn Glass Works (Pvt.) Ltd. v. ML. Badhwar and in 1981 (8) E.L.T. 144 in the case of Mechanical Packing Industries (Pvt.) Ltd. v. C.L. Nangia and Ors. The learned advocate has argued that if the regulators were sold separately and not with the electric fans, then only duty should be charged at 15% ad valorem under Sr. No. 3 sub-item (3) of the Notification No.46/84-C.E.3. The learned S.D.R. K.D. Tayal has argued that Item 33 of the erstwhile central excise tariff was amended in June, 1977 by virtue of which regulators for electric fans were included in the tariff entry, alongwith electric fans. By Notification No. 46/84-C.E., separate rate of duty at 15% ad valorem was prescribed for regulators under Sr. No. 3 of the Notification. For electric fan separate rate was prescribed under Item No. 2 of the said notification. Therefore, regulators were correctly charged to duty at 15% ad valorem. He has also argued that the decisions relied on by the learned advocate in support of his argument that electric fans include regulators relate to the period prior to issue of the aforesaid notification and hence those decisions are not applicable to the present case which relate to a period after issue of the notification. Further, he has argued, the Board's Tariff Advice dated 28-10-1971 clarified that the value of regulators should be included in the value of fan and the said clarification was not with respect to the notification. He has stated that notification specifically excluded regulators from the fans and the said notification should be interpreted strictly.
4. We have considered the records of the case and the arguments advanced before us. For proper appreciation of the arguments it is necessary to reproduce here the Tariff Item 33 and the Notification No.46/84-C.E. which were in force during the material time. These are as follows:- Sub-item (3) of Item 33 of the Tariff provided for classification of electric fans not otherwise specified, and regulators thereof. By the aforesaid notification, separate rates of duty have been prescribed for electric fans, not otherwise specified and regulators for electric fans. If the regulators are sold separately, certainly the separate rate prescribed for regulators should apply. There should be no scope for any doubt on this account. The dispute has arisen in this case as regulators were sold with the electric fans. During the hearing before us, the learned advocate has stated that the value of the electric fans charged by the appellants was inclusive of the value of regulators. The question is whether in such a case the regulator should be charged to separate rate of duty under Srl. No. 3 of the notification. The learned advocate has relied on a few earlier decisions and also the Tariff Advice issued by the Central Board of Excise and Customs in 1971. In all these decisions, it was held by this Tribunal, Government of India and also by the Hon'ble High Court of Andhra Pradesh that the electric fans include regulators. In paragraph-10 of its judgment in the case of jay Engineering Works Ltd. (supra), Andhra Pradesh High Court held as follows:- "It is a matter of common experience that the fan as such is not used without the regulator and when any customer or a purchaser asks for the fan, he has in his mind invariably the regulator also and the seller also has the same view. In spite of this, some doubt is cast whether the expression "Fan" by itself includes the regulator in view of the circumstances that fans are not invariably associated with regulators in places like cinema halls etc. This doubt has been amply cleared and set at rest by the amendment. Therefore, in the circumstances the concept of parliamentary exposition of an earlier Act can be invoked in this case and the expression "ceiling fan" used in Item 33 takes in its fold the regulator also." In paragraph-6 of the judgment reported in 1984 (17) E.L.T. 384, this Tribunal, relying on ISI specification, has observed as follows:- "These specifications clearly disclose that the fan is always understood as being associated or accompanied by regulator and regulator can be considered as an integral part of fan. The specifications furnish a guidance to several components of the commodity and their functioning. In view of the 'off position fixed in the regulator the fan cannot function unless the regulator is set in motion and as such the regulator is an indispensable part of the fan." Similarly, in the case of Khaitan Fans (Pvt.) Ltd. - 1986 (26) E.L.T.250 (supra), this Tribunal held that with effect from 18-6-1977 Tariff Item 33 was specifically amended to include regulators alongwith the fans in the Tariff Item/sub-item. "The amended Tariff makes it abundantly clear that the regulators go alongwith the fans and their cost has, therefore, to be included in the assessable value of the electric fans whenever regulators are supplied with the fans". All the above decisions related to periods prior to issue of Notification No.46/84-C.E. But in our view, this will not make any difference in the proposition that electric fans include regulators. By the Tariff amendment of 18-6-1977, Tariff Item 33 was expanded so as to cover electric fans, including regulators for electric fans, all sorts under sub-item (3) of the amended tariff item. The same statutory rate of 20% ad valorem was laid down for electric fans not otherwise specified and regulators therefor. However, by Notification No. 46/84-C.E., dated 1-3-1984, separate effective rate of duty 7 1/2% was prescribed for ceiling fan of diameter not exceeding 107 cm, 15% ad valorem was prescribed for other ceiling fans, not otherwise specified and duty of 15% ad valorem was prescribed for regulators for other electric fans.
We agree with the earlier decisions of the Tribunal that regulator is an integral part of an electric fan and without regulator the fan does not become complete. Therefore, when regulator is sold alongwith the electric fan, the regulator should be assessed at the same rate at which electric fan proper is assessable. If, however, a regulator only is sold without an electric fan, the regulator cannot be assessed at the rate applicable to electric fan because there is no fan sold.Regulator is, then, chargeable to duty according to the tariff entry.
It has, therefore, been necessary to prescribe separate rate of duty for regulator in the notification to take care for such a situation.
Accordingly, this being the position, we hold that the separate rate of duty at 15% ad valorem prescribed against Srl. No. 3 sub-item (3) (regulators for electric fan) in the notification is applicable only when regulator is sold without electric fan. Otherwise regulator is assessable alongwith the electric fan, this being an integral part of the fan.
5. In view of the foregoing discussions, we set aside the impugned order and allow the appeal.