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TMI Blog1985 (8) TMI 228X X X X Extracts X X X X X X X X Extracts X X X X ..... ollector was mistaken in his order because there was no suppression or misstatement of facts to warrant recovery within the extended period of 5 years under Section 11A. For the same reason there was no justification for the confiscation or for the penalty. 3. It was submitted before us by the learned counsel for M/s. Indian Hume Pipe Co. Limited that the goods MS specials manufactured by them were pipes and tubes correctly classifiable under Item 26AA(iv) and were exempted under Notification No. 69/73-C.E. These goods had been classified by the central excise under the same tariff item, and there was no change in circumstances to require a change in the classification. The Collector relied on a decision by the Bombay High Court which he said ruled that the MS specials were not assessable under Item 26AA(iv) . But the same cannot be relied upon for the purpose of classification because the Bombay High Court only decided the issue of dutiability of the products. In a decision of this Tribunal reported in 1984 (17) E.L.T. 127 (Tribunal) M/s. Structurals & Machineries (Bokaro) Pvt. Ltd., the Tribunal ruled that MS pipes and fittings cut into sections and welded to the pipes would not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... office. Classification list No. 23/1HP/81 was also approved by the Central Excise on 30.4.1982 by the Central Excise but again they cancelled the item relating to MS pipes and specials, and the exemption claimed under 69/73-C.E. In this list, however, a note was entered under the cancellation, thus - "Dealt with separately". 6. The Central Excise has never raised any problem about the MS specials. There had been some dispute about the clearances under Notification No. 118/75-C.E. and 119/75-C.E. on job work carried out by them and goods used for internal consumption. But there had never been a time when they had a dispute about the MS pipes and specials except when a civil application was fought in the Bombay High Court. That decision was delivered by the Bombay High Court on 14th October, 1964. After this the Central Excise has not questioned the clearances. It is true that when Item 68 was first introduced, they cleared goods under this item; but when they realised that this was an error, they reverted back to claim assessment under Item 26AA especially when there was an exemption for the goods. Their classification lists had not been rejected. In fact, the classification list ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MS specials were not pipes but were pipe fittings. The company, we are told, paid duty under Tariff Item 68 when this item was introduced in 1975. Subsequently, they asked for classification of MS pipes and specials under Tariff Item 26AA claiming exemption under Notification No. 69/73; the Assistant Collector classified MS pipes only under Tariff Item 26AA. The order of the Collector does not tell us what order the Assistant Collector passed in respect of the specials. The order tells us further that the factory started availing exemption under Notification No. 69/73 for MS specials along with MS pipes unilaterally without declaring facts to the department and subsequently deleted MS pipes and specials from their classification list No. 2/77 filed with the department. However, in classification list No. 11/78 and 27/79 for Tariff Item 68 they simply mentioned "MS pipes and specials". This was taken by the Collector to mean that the word "special" only referred to MS pipes. 10. We are not clear about this reasoning because it is not as if the department was not aware that the MS specials were these kinds of fittings with which we are concerned now. Nor are we clear about what is m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n before the Court that the specials on which the demands were issued by the Inspector of Central Excise were not pipes or tubes and were not covered by Tariff Item 26AA(iv). The Court said that it had now become clear that there was a good deal of misunderstanding on the part of the petitioners as well as the respondents with regard to the basis on which the specials or pipe fittings could possibly be assessed under Tariff Item 26AA(iv). The department held that during the manufacture of the specials the factory prepared pipes which were subsequently processed into these pipe specials and that the products were chargeable to excise duty not on the value of the specials or pipe fittings but on the value of the pipes which went into their manufacture. It was this that formed the basis of the judgment of the Hon'ble Court and it was on this dispute that the court gave its directions to the department to reassess the excise duty payable under Tariff Item 26AA(iv) after giving the manufacturers an opportunity to show that any of the specials or pipe fittings were not prepared from pipes and after assessing the value of the pipes, if any, which had gone into the manufacture of special o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice and ignored the MS specials or said they were going to do something about it separately; but we are not informed what the separate action was in respect of the specials. There is no doubt that MS specials were items produced by the factory and that there was once a dispute about them in 1963 before the High Court. The department cannot claim ignorance about these goods now. It may say that the party should not have taken exemption under 69/73-C.E. unilaterally; but it is not possible to say that the department did not know about the manufacture or the clearance of the goods since classification lists had been filed before the department. There is no ignorance on the part of the department even though there may have been wrong assessment and wrong availment of exemption on the part of the manufacturers. 15. The manufacturers did seem to have taken for granted that the MS specials were exempted from duty under Notification No. 69/73-C.E. We are not convinced that the correct assessment of the goods is 26AA (iv). These products were made from pipes and fittings and plates and may at first sight appear to have the general characteristics of pipes but that they are not pipes is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and we have not seen any description of them as pipes. 18. M/s. Indian Hume Pipe seek support from the Tribunal decision 1984 ECR 1057 M/s. Structurals & Machineries (Bokaro) Pvt. Ltd. This decision was taken by the appellants to be a Tribunal ruling that MS pipes and fittings fell under the Tariff Item 26AA and not under Tariff Item 68. What the Tribunal did was to decide on a product that had been cut from a pipe and welded to it. The pipe after such welding, would still remain a pipe, iron pipes or steel pipes and "would not travel outside the scope of Item 26AA of the CET". Furthermore, the Tribunal said that there was no dispute that those pipes fulfil the conditions set out in Column 3 of Notification No. 69/73-C.E. for getting exemption from the whole of the duty of excise and that this part of the claim was not disputed by the respondents. The Tribunal, therefore, held that this was a job work and that its value of Rs. 169,215.63 relating to MS pipes and fittings should be excluded from a consideration in determining the duty liability of the appellants. There is no decision here on MS fittings as such falling under Tariff Item 26AA or otherwise though this was urged by o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n approved or disapproved. The order as we have once noted, depends entirely on the judgment of the Bombay High Court, and not on the merits of the assessment of the goods. This would appear to support a view that the department went along with Item 68 until it discovered that in 1963 a decision was given on these materials by the High Court, and this was what brought about the change, and not any revelation of a fraud by M/s. Indian Hume Pipe. And, we would like to repeat, we have not been told the nature of this fraud and what it consisted of. Furthermore, the show cause notice was issued on 28-9-1981, to which a reply was given within a little over a month on 12-11-1981. 20. We were told by the counsel for M/s. Hume Pipe that they had not recovered any duty from their customers, and this was not disputed by the counsel for the department on 18-12-1984 when the application of stay filed by the firm was heard. We cannot see how the factory gained by the so-called fraudulence if it got in the sale just what it had shown in its books. We are not told of any hidden or secret benefits, unknown to the department, that accrued to the factory as a result of the transactions in MS specia ..... X X X X Extracts X X X X X X X X Extracts X X X X
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