TMI Blog1993 (1) TMI 173X X X X Extracts X X X X X X X X Extracts X X X X ..... manufactured by the appellants out of rough steel castings received from M/s. Lasar Flow Control Ltd. for conversion into fully finished parts of railway rolling stock were classifiable under Heading 86.07 whereas during the period 11-6-1987 to 31-7-1989 they had been cleared after payment of duty under Heading 7307.20/7325.20 read with Notification No. 223/86, dated 23-6-1988 resulting in short levy amounting to Rs. 10,25,388.19. The appellants were accordingly asked to show cause why the duty short levied should not be recovered in terms of Rule 9(2) read with Section 11A of the Central Excises and Salt Act, 1944 and why penalty should not be imposed on them under Rules 9(2) and 173Q. In their reply to the show cause notice the appellants denied the allegation and contended that the processing carried out on the castings amounted only to removal of excess metal and surface cleaning and the goods continued to be rough alloy castings assessable under Heading 7307 from 11-6-1987 to 1-3-1988 and under Heading 7325.20 after 1-3-1988, read with Notification No. 89/88 dated 1-3-1988 and 223/88 dated 23-6-1988. They also contended that the demand was time barred as there were no grounds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umstance their statements could be relied upon by the Department. He contended, as far as knuckle and lock were concerned, for the removal of extra material inside the bore already existing in the casting grinding was carried out with a pencil grinder in a manner so as not to increase the bore diameter. He added that Annexure II to the show cause notice on which reliance had been placed by the Department only referred to processes undertaken for the removal of surface defects or removal of extra material inside the bore. He claimed that in respect of the disputed items only the processes mentioned in proviso to Notification No. 223/88 had been undertaken. Referring to the Collector s observations that the appellants had deliberately chosen to show the goods as classifiable under Heading 7307.20 and 7325.20, the learned Consultant argued that no mala fide intention could be attributed on the part of the appellants since the Assistant Collector even while choosing to amend the declared heading against Sr. No. 46 in the classification list No. 311/88-89 to 8607.00 had not alterated the rate of duty and the concessional assessment in terms of Notification No. 223/88. He contended that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only to justify the invocation extended of period under proviso to Section 11A of the Central Excises Salt Act, 1944. He stated that even though the knuckles and locks supplied to Railways were castings, prior to 11-6-1987 they were being classified by the appellants under Heading 86.07 but in view of the Board s clarification that such unmachined parts do not lose their identity as castings, in the clarification list Nos. 311/88-89, 471/88-89 and 543/88-89 the appellants declared Rough alloy steel castings under Chapter 7325.20 and also claimed benefit of Notification No. 223/88, dated 23-6-1988. He added that all these classification lists had been duly approved and while approving them the Assistant Collector had only substituted Heading No. 7325.20 by Heading No. 8607 but he did make any change in respect of the exemption claimed under Notification No. 223/88, dated 23-6-1988. He submitted that the appellants in their letter dated 7-9-1988 addressed to the Assistant Collector protested against this modification and informed him that in respect of rough alloy steel castings they would adopt the classification under Heading 7325.20. He contended that since the classificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during cross-examination was evidently an after thought. He stated that in the invoices prepared by the appellants in which knuckles were shown to have been sent after boring `B point, and grinding to profile proving showed beyond doubt that these parts had suffered processes such as welding, boring and grinding at the premises of job workers. He also referred to the Collector s observation that Shri O.P. Ponnusawamy, Deputy General Manager of the appellant company had confirmed in his statement dated 29-7-1989 that after receiving the knuckles from the processing units they were completing the component to the specific dimension by grinding process and carrying out the finishing process to exact dimension by applying gauges as per the drawings and specifications of the Railways. He contended that the disputed parts having undergone machining and finishing operation had in terms of Rule 2(a) of the Interpretative Rules acquired the character of Railway parts falling under Heading 86.07 and could not be treated as castings or cast articles covered by Notification No. 223/88 especially when upto 1-6-1987 the appellants were themselves classifying under proviso to Section 11A was cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n hand they have admitted that the documents they sought to produce now were in their possession but plead that the same could not be produced before authorities below inadvertantly. This can hardly be a ground for admitting the additional evidence at this stage. It may be stated that we do not require of our own the said documents as the same are not required to enable us to pass orders or for any sufficient cause. We also do not consider the necessity to admit these documents to meet the ends of justice. Tersely no question of ends of justice is involved in the instant case as the department is not trying to demand or collect any tax/duty without any section of law." Following the ratio of the decision quoted above, we allow the request for taking on record only the letters dated 1-9-1989 and 11-9-1989 of the job workers and also the record of their cross examination which were a part of the proceedings before the lower authority. However, since the remaining documents listed by in the application which were not a part of the record before the lower authority and which are not required to enable us to pass order in this case, we do not consider the necessity to admit them t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elding, grinding and boring depending upon the requirements. In this regard the Department has also referred the delivery notes under which knuckles were received back after processing by the job workers and also the machine room record of the appellants factory indicating the operations carried out on each item. 11. The appellants on the other hand have contended that the only processes undertaken in respect of the disputed items were boring, milling and drilling. In respect of `boring operations referred to by the Department they have claimed that the appellants subjected the castings to boring operations with pencil grinders to remove only the surface defects in the holes which are present in the rough castings in the form in which they were received by the appellants. It has been claimed that drilling operations were undertaken to correct the bores existing in the castings and no new bores were created by such operations. It has been claimed that grinding and milling operations were also undertaken only to remove surface defects. As regards the statements of the job workers the appellants have contended that they were made at the instance of the officers and could not be re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her than stainless steel) falling under any of the headings or sub-headings of Chapters 73, 84, 85, 86 or 87 were eligible for concessional assessment in terms of Notification No. 223/88, dated 23-6-1988, only if they were not subjected to any machining or surface treatment other than : (a) annealing, tempering, case-hardening, nitriding and similar heat treatment to improve the properties of the metal; (b) descaling, pickling, scraping and other processes to remove the oxide and crust formed during the heating of the metal; (c) rough coating intended solely to protect products from rust or other oxidation to prevent slipping during transport and to facilitate handling for ample, paints containing an active anti-rust pigment such as red lead powder, zinc oxide, zinc chromate, iron oxide (iron minium, jewel rough), and non-pigmented coatings with a basis of oil, grease, wax paraffin wax, graphite, tar or bitumen; (d) removal of small portions of the metal for testing purposes; and (e) removal of surface defects, or of excess material by grinding chipping, or proof machining, provided that in both the cases there is no change in the form of the products." In our view mill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Heading 8607 and indicated a different classification, namely, 7325 in the gate passes so as to enable them to avail the concessional rate of duty, the department is well wihtin its rights to invoke the extended time limit available under Section 11A of the fact." As regards the Collector s observation that classification of the goods under Heading 7325.00 and payment of duty at concessional rate under Notification No. 223/88 dated 23-6-1988 after having filed the classification list classifying the goods in question under Chapter 8607 amounted to a fraud, the appellants have stated that in the classification list 311/88-89, 347/88-89, 471/88-89 and 543/88/89 even though the classification of the goods in question was claimed under sub-heading 7325.00 the Assistant Collector while approving the list had unilaterally changed the classification to sub-heading No. 8607.00. It has been also claimed that even while changing the classification the concessional rate of duty under Notification No. 223/88, dated 23-6-1988 was not altered by the Department in terms of the approved classification lisits even if the goods were deemed as classifiable under sub-heading 8607.00 concessio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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