Judgment:
1. This is Revenue appeal against the order dated 22-7-1986, passed by the Collector (Appeals), New Delhi in respect of rejection of the benefit of the Notification No. 46/84, dated 1-3-1984 with regard to three types of table fans namely, "Chiki", "Miki" and "Tini". The respondents are manufacturers of electric fans and they had filed the classification list seeking classification of the fans manufactured by them under the erstwhile Tariff Heading 33(1)(a) along with the benefit of the Notification. The Assistant Collector in his order held that these fans can give better air if these are hung in the corner of the walls in kitchen, bathroom or cabin. These fans are efficient and giving air downward than giving air straight as in case of table fans.
On these reasons, he has held that they are required to pay duty at 10% Adv. without the benefit of the Notification rejecting the claim of classification under Tariff Item 33(1)(b). The Learned Collector has examined the literature of these fans and has come to the conclusion in respect of fans Chiki and Miki and held that they are used primarily as table fans, as they have a regular base for this purpose. He has held that main fan portion is adjustable and there is an arrangement for clamps hidden under the base to make the fans hang from wall or ceiling. But its design and manufacture are entirely different from a regular cabin fan which can never be placed on a table. Therefore, he has held that these fans are primarily designed as table fans but could also be fixed to the ceilings or walls. He further held that they are definitely not designed primarily as cabin fans, and therefore, held that it is more appropriate that they are classified as table fans only. As regards the other two fans namely, Tini and Mini, he has held that they are of small size (Blades of only 9"). He has noticed the description of these fans in the literature and has held that these two fans in question have tubular base which allow them to be placed on table. He has observed that the way 'Tini' has been described in the literature, it becomes hardly any doubt that it is primarily designed for being used on tables. He has held that there is nothing in the literature which would make 'Mini' as table fan; and that merely because they can also be hung from the wall, they would not cease to be table fans. He has held that the classification has to be on the basis of primary design and literature and hence has concluded that all the four fans should be classified as table fans.
2. The Revenue is aggrieved with this order and have stated in the appeal memo that the table fans are obviously a fan that is placeable on a table or table like object and should not have any extra/ancillary provision for being used in a capacity other than that of the table fans. They stated that the benefit of the Notification is meant only for table fans and not for multi-purpose fans and hence they are liable to pay higher duty as per the Tariff Item 33(1)(b) of the erstwhile CET at 10% without the benefit of the Notification.
4. The Learned DR submitted that as the fans are multi-purpose they go out of the category of table fans and hence the order of the Collector is required to be set aside.
5. The Learned Advocate submitted that the classification has since been approved and the benefit has been granted in the form of refund.
He also referred to Board's Circular dated 16-8-1974 in Tariff Advice No. 6 who have clarified that "All purpose Electric Fans" should be classified under TI 33(1). He has placed before us the literature as well as copy of the classification list granting approval along with the benefit of the Notification.
6. We have carefully considered the submissions made "by both the sides and have perused the materials placed before us. There is no doubt about this item being classified under TI 33(1). The Tariff description of Item No. 33 is reproduced herein below :-----------------------------------------------------------------Item No. Tariff Description Rate of duty----------------------------------------------------------------(1) (2) (3)----------------------------------------------------------------1. Table, cabin, carriage, pedestal and air Fifteen per cent circulator fans, of a diameter not ad valorem exceeding 40.6 centimetres and2. Electric fans, designed for use in an Fifteen per cent industrial system as parts ad valorem.
indispensable for its operation and3. Electric fans," not otherwise specified, Twenty per cent and regulators therefor.
ad valorem---------------------------------------------------------------- The Tariff Item 33(2) refers that the Electric fans designed for use in an industrial system which should have some special shape or quality which would not be essential for their use for any other purpose. The present type of fans, which are in question, do not come within the category of TI 33(ii). TI 33(3) refers to electric fans, not otherwise specified, and regulators thereof. In this case as the Learned Collector (Appeals) has held that these fans are to be treated as table fans in view of its design and use and has also held that merely because these fans could be hung that by itself would not be a cause for taking out the fans out of the category of the table fan. However, as can be seen, the classification of both table, cabin, carriage, pedestal and air circulator fans, of a diameter [not] exceeding 40.6 centimetres and regulators fall within the Tariff Item 33(1) and therefore, there could be no cause for grievance for classification under Tariff Item 33(1) which we uphold. As regards the benefit of the Notification, it is seen that the Notification grants partial exemption and the duty is only 5% in respect of electric fans of a diameter (blade sweep) not exceeding 40.6 centimetres and regulators therefor-(b) Cabin, carriage, Ten per cent ad valorempedestal and air 7. The department's plea is that these fans have to be considered within the category (b) above and not as category (a). We do not agree with this submission as the classification under Tariff Item 33(1) as table [fan] has been upheld, therefore, for the purpose of granting the exemption, it cannot be considered as cabin fans and, therefore, the benefit thereof under the Notification has to be granted.
8. In that view of the matter, the reasoning arrived at by the Collector is correct, and it requires to be upheld. There is no merit in this appeal and hence the same is rejected.
With due respects to Hon. Member (J) my views and orders are as follows :- 9. I observe that no technical literature or catalogue has been filed by either side in the present case. All that has been produced in the Court on behalf of the Respondents is a piece of paper showing the impression or imprint of various types of fans being manufactured by Khaitans (perhaps intended for advertisement) but it does not indicate any specifications and does not incorporate any technical or commercial write-up, and is of no evidentiary value.
10. The description given in the copies of classification list filed before us also does not give sufficient details.
11. However, the brands designated as 'TINT & 'MINI' had been described before the Collector (Appeals), as per Para 3 of his order, as follows :- "3. The other two fans namely TINI' and 'MINI' are of small size (Blades of only 9"). It would be interesting to see how these fans are described in the literature of the appellants, "'Tini' A light and vertically tilted marvel, with only 230 mm (9") blades.
Tini can hop on to your office desk, dressing table, stay by your bedside or breeze into your bathroom.
"'Mini' Petite and perfectly balanced with 230 mm (9") aerofoil section moulded blade which is corrosion resistant. Built with a robust motor for efficient air displacement it can work at voltages ranging from 170 to 230. The ideal fan for small shops, puja rooms, bathrooms." It is not clear as to how the Ld. Collector has treated them as 'table fans' simply in view of the above description in the face of the A.C's observations that they could be hung in the corner of the walls of the cabin, bathroom or a cabin which has not been denied, contradicted or shown to be wrong by the Respondents. The A.C. has also mentioned in his finding that these were normally not used as table fans and they were not known as table fans in the general public and the Ld.
Collector has not recorded any finding in this respect; and it is significant that the Respondents have not been able to rebut the contention of the department which was necessary particularly when the Respondents had staked a claim to the benefit of the notification in question on a basis of which was at variance with their own description and declaration in the classification list. The Respondents have not filed any document even at this stage to show that they were commercially known or marketed as table fans or were generally used as table fans. Ld. Collector (Appeals) may be right in his observations that these have not been specially designed as 'cabin fans' but that by itself does not mean that they could be called 'table fans', even if they had a tabular base which allowed them to be placed on table also, particularly when the Respondents had themselves described 'MINI' and 'TINI' as "multi-purpose" and "all purpose" fans in their classification list dated 1-3-1984.
12. In so far as CHIKI and MIKI are concerned, the Ld. Collector himself finds that "no doubt the main fan portion is adjustable and there is an arrangement for clamps hidden in the base to make the fans hang from wall or ceiling". Again while he may be correct in observing that they have not been specially designed to be used as a 'cabin fans' there is nothing to show that they were primarily or principally meant to be used as table fans. The 'literature' presented before Ld.
Collector has not been filed before us, but in view of the description and uses indicated by the Ld. Collector after its perusal and seeing the models it may be observed 'en passe' that it would be more appropriate to call them "multi-purpose" rather than 'table fan'.
13. Further, the SCN dated 23-3-1984 with reference to which the case has been adjudicated refers only to multi-purpose and all purpose 'Mini' and 'Tini' fans. Hence, the A.C. and the Collector and the Tribunal were required to confine themselves to these two types only.
In this respect as already observed above, in the classification list the Respondents have themselves described these models as multi-purpose and all purpose and correctly so. Hence, there is no reason why they should be classified as 'Table fans'.
14. At the same time it is noticed that Tariff Item No. 33(1) as it stood during the relevant period covered only the specified types of fans therein and did not include multi-purpose or all purpose fans.
Hence, I do not agree with the department's view as expressed in the tariff Advice No. 6 to the effect that 'All purpose' fans or 'multi-purpose' fans were classifiable under Tariff Item 33(1). I hold that such fans could only be classified under 33(3) under the heading "electric fans, not otherwise specified, and regulators therefor." 15. I also consider that in view of the above findings, in so far as the exemption Notification No. 46/84 is concerned these would fall only under Serial No. 2(b) and would be chargeable to duty accordingly. I therefore, set aside the impugned orders and remand the matter back to A.C. for re-determination of the duty liability in the light of the above observations and findings.
16. In view of the difference of opinion between Hon'ble Member (J) and the Vice President, the matter is submitted to the Hon'ble President for reference to a Third Member for following points.
Whether fan models Tini' and 'Mini' were required to be considered as Table fans classifiable under Heading 33(1) and eligible to the benefit of S. No. 1(1)(a) of Notification No. 46/86 as proposed by Hon. Member (J) or they were required to be considered as 'Multi-purpose'/'All purpose' fans classifiable under Tariff Item 33(3) and eligible for exemption only under Serial No. 2(3)(b) of the Notification No. 46/86.
Accordingly, whether the appeal of the department was required to be rejected or the impugned order was required to be set aside and the duty liability was required to be redetermined.
Sd/- Sd/- (S.L. Peeran) (S.K. Bhatnagar) Member (J) Vice President 17. The matter has been referred to me as one of the difference of opinion. The points of reference are : Whether fan models 'Tini' and 'Mini' were required to be considered as Table fans classifiable under Heading 33(1) and eligible to the benefit of S. No. 1(1)(a) of Notification No. 46/86 as proposed by Hon. Member (J) or they were required to be considered as 'multi-purpose/'all purpose' fans classifiable under Tariff Item 33(3) and eligible for exemption only under Serial No. 2(3) (b) of the Notification No. 46/86.
Accordingly, whether the appeal of the department was required to be rejected or the impugned order was required to be set aside and the duty liability was required to be redetermined.
18. I find that the dispute is about the models named as 'Tini' and 'Mini'. The dispute is about their classification and also about the applicability of the rate of duty in terms of Notification No. 46/86.
19. On classification, the dispute centres whether the fans in question are classifiable under Heading 33(1) or under Heading 33(3).
20. Shri Y. R. Kilaniya, the learned JDR appears for the appellant whereas Shri J. S. Agarwal, the learned Advocate appears for the respondents.
21. I find that for the sake of clear understanding of the classification of the goods, the product of the relevant entry is necessary and therefore, Tariff Item 33 is reproduced below:- Item No. Tariff Description Rate of duty (1) (2) (3)1. Table, cabin, pedestal and air circulator Fifteen per cent fans, of a diameter not exceeding 40.6 ad valorem centimetres and regulators therefor.2. Electric fans, designed for use in an Fifteen per cent industrial system as parts ad valorem indispensable for its operation and3. Electric fans, not otherwise specified, Twenty per cent and regulators therefor.
ad valorem 22. Shri J.S. Agarwal, the learned Counsel for the respondents submits that the learned Collector (Appeals) after examining the relevant literature and seeing fans also had held that "The way Tini' has been described in the literature, it becomes hardly any doubt that it is primarily designed for being used on tables". He further observed that in literature, there is nothing, either, which would make 'Mini' as cabin fan and that merely because they can also be hung from the wall, they would not cease to be table fans. The ld. Counsel also submitted that the ld. Collector (Appeals) also observed that we must go by the primarily design and literature. As against this, the ld. DR submits that the fans were designed in such a way as could be used anywhere. He submits that there were hidden clamps in the fans which indicated that they could be used anywhere.
23. On reading of the Tariff Entries reproduced above, I find that the first entry is about table, cabin, carriage, pedestal and circulator fans. There is no mention of multi-purpose fans in this entry. Entry (2) refers to special type of fan designed for use in an industrial system and Entry (3) covers electric fan, not otherwise specified. The ld. Member (Judicial) held that "classification of both table, cabin, carriage, pedestal and air circulator fans, of a diameter not exceeding 40.6 cms. and regulators fall within the Tariff Item 33(1) and there is no cause for grievance for classification under Tariff Item 33(1) which I uphold." The Ld. Vice President, after referring to observation of the ld. Collector (Appeals) observed that "he does not agree with department's view as expressed in the tariff Advice No. 6 to the effect that 'all purpose' fans or 'multi-purpose" fans were classifiable under Tariff Item 33(1)" and further held that such fans could only be classified under 33(3) under the heading 'electric fans, not otherwise specified, and regulators thereof.' 24. I find that for determining the classification of a product, the design and literature may be the factors for identifying the product but one important factor which is very relevant is the common/trade parlance test. How is the product known or understood by the people who deal in it either as consumer, traders or manufacturers. I find that in the classification submitted by the respondents herein, these fans were shown as multi-purpose and all purpose fans. No doubt, these fans could be used as table fans, cabin fans, carriage fans etc. Examining the product in this light, I find that if a person goes to a shop keeper and asks him to give a cabin fan, what type of fan will he give?. The same fan can be used as a carriage fan, as a table fan as all purpose fan. Thus by this test I find that the product is not covered by tariff entry 33(1). I therefore, agree with the learned Vice President holding that the product shall fall under T.1.33(3) as (6).
25. Now coming to the question whether these fans namely, the fans described as 'Mini' and 'Tini' fans are eligible for the benefit of Notification No. 46/84. For the sake of convenience, the entries in Table appended to 46/84 reads as under:-------------------------------------------------------------------S. No.Sub-Item No. Description Rate-------------------------------------------------------------------(1) (2) (3) (4)-------------------------------------------------------------------3.
(3) Regulators for electric Fifteen per cent fans ad valorem 26. The ld. Counsel for the respondents herein submitted that though there was no entry for multi-purpose fans against Tariff Item 33(1) or 33(2), yet the fact remains that the fans in question could be used as a table fan and since the table fan is a specified item in the Notification No. 46/84, therefore, it should attract the rate of duty applicable to table fan. The ld. Counsel submitted that while interpreting the Notification, once an item falls under concessional rate of duty then the exemption Notification should be liberally construed. He submitted that since the fans in dispute can be used as table fans and therefore, the only rate applicable to them during the material period was 5% ad valorem in terms of the Notification. As against this, the learned DR submitted that the fans in question might be used as a table fan, carriage fan, cabin fan etc. but the fact remains that it was a fan which could be put to any use at any point of time and therefore, it was neither table fan nor a cabin fan as such or a carriage fan as such but a multi-purpose fan which according to the requirement was used in any of the forms. He therefore, prayed that for purpose of Notification No. 46/84, it will fall under T.I. 33(3)(b) and attract 15% ad valorem as duty.
27. On careful consideration of these submissions, I find that the product in dispute was a multi-purpose fan, no doubt, it could be used as table fan, as cabin fan or as carriage fan at one time. However, the fact remains that the same could be a table fan at one time, a carriage fan or a cabin fan at a later stage. Thus the products actually were neither exclusively table fan nor exclusively carriage/cabin fan. Since the fans in dispute were specific item meriting the classification under sub-item No. 33(1)(a) or (b), therefore, for purpose of duty under this Notification, they will fall under sub-item (3)(b) or S. No.2 sub-item (3)(b). In view of the above findings, I agree with the learned Vice President both on the classification as well as the exemption Notification No. 46/84.
28. In view of the majority opinion, for the purpose of determining the effective rate of duty, the goods would fall under S. No. 2 sub-item (3)(b) of Notification No. 46/84. The impugned order is, therefore, set aside and the matter is remanded for redetermination of duty liability accordingly.