Judgment
1. Shri V. Sridharan, ld. counsel for the applicants submits that a demand of Rs. 6,19,150.86 has been confirmed and a penalty of Rs. 1,50,000/- has been imposed upon the applicants in respect of Bus Ducts manufactured by them which according to the Department fall for classification under Heading 85.44 of the CETA, 1985 as "other insulated electric conductors, whether or not fitted with connectors", while according to the assessees, the item is more appropriately classifiable under Heading 85.36 as "electrical apparatus for making connections to or in electrical circuits." He refers to the pamphlets and submits that Bus Ducts are used in electric panel boards and distribution boards and it is used for the purpose of tapping of electricity in electric circuits. The applicants had been filing classification lists during the relevant period and except for the year 1987 in which the said item has not been described in the classification list. Subsequent classification lists describing the item and covering the entire period of demand have been filed and the lists have been approved by the Department. In the classification lists, the item has been described as Bus Duct and parts suitable for use with apparatus of Heading 85.37 mentioned at Sl. No. 1 & 2 of the classification list namely; Panel Board and Distribution Board. Gate Passes have also been filed regularly by the applicants and RT 12 returns describing the commodity as Bus Duct had also been assessed and in this view of the matter, the demand is hit by time as the show cause notice demanding duty for the period from 31-1-1987 to 25-9-1991 has been issued only on 25-9-1992. Lastly, he submits that even assuming without admitting that the item would be classifiable under Heading 85.44, the applicants would be entitled to the benefit of concessional rate of duty in terms of SI. No. 4 of Notification 69/86 dated 10-2-1986. He, therefore, prays for waiver of pre-deposit of duty and penalty and stay of recovery thereof.2. Ld. DR Shri S.K. Sharma contends that the item is nothing but an electric conductor which has colour coated bars which are also insulated bars. The insulation is further enforced by gaps between the bars and the use of other insulating material like moulding material and the item cannot be considered as an electrical apparatus as according to him, apparatus cannot be supplied in running length while a Bus Duct can be supplied in different lengths to suit the requirements of each customer. The item also only taps electric currents and is not used for making connections to or in any electric circuits and therefore, the item is properly classifiable under Heading 85.44 "insulated electric conductors". He refers to the Trade Notice at page 91 of the Paper Book issued in respect of the classification of Isolated Phase Bus Duct and Industrial Bus Duct in support of contention regarding classification. An order has also been issued under Section STB of the Act on 6-12-1993 clarifying in the same the Circular dated 13-5-1991. Regarding the time bar, his contention is that in the year 1987, the item had never been declared by the applicants and for the subsequent period, they have deliberately mis-classified the item as parts suitable for use with the apparatus of Heading 85.37 and looking at it from this angle, demand cannot be said to be barred by limitation. Regarding the benefit of notification, he fairly concedes that if the item is held to be classifiable under 85.44, it would be entitled to the benefit of Notification 69/86 attracting rate of duty at 25%. He, therefore, pleads that the application be rejected and the applicants directed to deposit the entire amount of duty and penalty.
3. On hearing both sides and carefully considering their submissions, we are of the view that the merits of the matter regarding classification of the product can be gone into in detail with reference to HSN, Catalogues of the product etc. at the time of final hearing of the appeal. However, the applicants have made out a strong prima facie on limitation in view of the approved classification lists describing the item, RT12 returns as assessed, and the entire material was before the Department regarding the item and therefore, it cannot be said that there has been any deliberate misclassification of the product warranting invocation of the extended period of limitation.
Accordingly, we waive the requirement of pre-deposit of duty and penalty and stay the recovery thereof pending the appeal.
4. Appeal is listed for final hearing on 29-6-1994 alongwith other matters involving the similar issues.