CESTAT-Chandigarh : Where assessee was engaged in manufacture of ‘Sections, Channels and Angles of iron and steel’ and while manufacturing said products it gave specified shape to flats/bars used as raw material and also cutting them into required length for use as fabrication of shutters, products classifiable under Heading No. 7216 20

CESTAT, Chandigarh Bench

Ispat Profiles, Mandi Chandigarh vs. Commissioner of Central Excise, Chandigarh

Ashok Jindal, Judicial Member And Devender Singh, Technical Member

Final Order No. A/61284/2017-EX[DB] E/2176/2007

July  17, 2017 

ORDER

Ashok Jindal, Judicial Member – The appellant is in appeal against the impugned order for confirmation of demand of differential duty on account of classification of their product.

2. The facts of the case are that the appellant is manufacturer of Sections, Channels and Angles of iron and steel and classifying same under sub-heading no. 7216.20 and paying duty thereon. Vide Notification No.16/2004-CE dated 28.02.2004, the rate of duty of all goods of chapter 72 was reduced to 8% which was subsequently increased to 12% w.e.f. 09.07.2004 but the goods classifying under chapter 7309.90 were liable to pay duty @ 16%. In consequent to that as the appellant were clearing their goods under chapter heading 7216.20 and paying duty thereon, the investigation was conducted at the end of the appellant and the process of manufacturing was recorded as under:

2. The Notice was asked to submit the manufacturing process of the finished goods manufactured by them. The manufacturing process submitted by the notice is as under:

Flat/Bars used as raw material is cold formed to give shape of section i.e. profile, Guide channel & Bottom plates. These sections are cut to required lengths as per the orders of the customers and they are dispatched to the customers without any further operation in the factory premises. The customer alongwith the sections add their own products also in fabrication of shutters i.e. the profile section brought in required cut size are fixed at both end sides with MS clips by reverting and the interlocking of sections are carried out.

3. On the basis of that it was alleged that the appellant is giving a specified shape and also cutting them into required length, as per specifications of the customer after cold rolling for use as fabrication of shutters, therefore, it was alleged that the said products is classifiable under chapter Heading 7308.90 of the Central Excise Tariff Act, 1985. In these set of facts, a show cause notice was issued to the appellant. On appeal before the Ld. Commissioner (A) by the Revenue, wherein, the Ld. Commissioner (A) hold that the product manufactured by the assessee is appropriately classifiable under chapter heading 7308.90. Consequently, the duty was demanded along with interest from the assessee. Aggrieved from the said order, the appellant is before us.

4. The Ld. Counsel for the appellant submits that on identical facts, the show cause notice was issued to Nav Durga Steel Products 2015 (316) ELT 173(Tri – New Delhi) and this Tribunal has taken a note of the facts and have decided the issue that the product in question under chapter Heading 7216.20 of the Tariff Act, therefore, the issue is no more res-Integra. Accordingly, the impugned order is to be set aside.

5. On the other hand, the Ld. AR supported the impugned order.

6. Heard both sides and considered the submissions.

7. Considering the fact that the show cause notice number C. No. V (15) SCN/ 36/ 05/ 204 dated 23.03.2005 was issued to M/s Nav Durga Steel Products. The manufacturing process in the said show cause notice is explained as under:

The Notice was asked to submit the manufacturing process of the finished goods manufactured by them. The manufacturing process submitted by the notice is as under:

Flat/Bars used as raw material is cold formed to give shape of section i.e. Guide channel & Bottom plates. These sections are cut to required lengths as per the orders of the customers and they are dispatched to the customers without any further operation in the factory premises. The customer alongwith the sections add their own products also in fabrication of shutters i.e. the profile section brought in required cut size are fixed at both end sides with MS clips by reverting and the interlocking of sections are carried out.

In these set of facts, this Tribunal examined the issue and observed as under:

5. We have considered the facts and submissions of both sides. We find that it is not contested by Revenue that impugned goods are obtained by process of cold rolling and are not further worked. Heading 72.16 includes shapes and sections of iron or non alloy steel. On the other hand Chapter 73.08 covers plates, rods, angles, shapes and sections tubes and the like prepared for use in structures. It clearly comes out that as the impugned goods came out as a result of cold rolling and were not further worked upon, they were not prepared for use in structures. In this regard we have perused Board’s circular, dated 21-11-1990 which is reproduced below:

“The matter has been examined by the Board. It is observed that classification would have to be determined in accordance with the revised heading and scheme of classification in force from 1-3-1988. Heading 7308 CETA explicitly covers plates, rods, angles, shapes and sections, tubes and the like, prepared for use in structurals of iron and steel. HSN explanatory notes under heading 7216 at page 1001 also state that heading 7216 does not cover articles prepared for use in structurals. Consequently cold roll formed shapes and sections prepared for use in structurals would be appropriately classified under sub-heading 7308.90.”

In view of the above, it is clarified that w.e.f 1-3-1988 cold roll formed sections, prepared for use in structural s, will be classifiable under sub-heading 7308.90.”

6. It is evident that Board has only clarified that 7308 explicitly covers plates, rods, angles, shapes and sections, tubes and the like, prepared for use in structurals of iron and steel. As stated earlier, the impugned goods were not prepared for use in structurals. Although Board’s clarification is not binding on quasi judicial authorities for deciding classification, it is referred to here to indicate that even the said Board’s circular does not support the contention of Revenue. Indeed the issue is fully covered by the judgement of CESTAT in the case of CCE v. Tube Investment of India Ltd. (supra), which, in fact, held as under :

“There is no evidence that the sections under reference have been further worked out by the appellant after cold-forming; and in particular that these have been prepared for use in the manufacture of shutters, even assuming that shutters by themselves can be regarded as structures. A number of operations have to be carried out on the cold-formed sections manufactured by the appellants, such as bending lath sections into convex shapes for being used as parts of shutters and in the case of guide channels and bottom plates, cutting them into required lengths and welding with 20 mm or 16 mm with MS Sheets brackets and welding of cleats. Similarly, in the case of bottom plates sections, the same are to be cut to smaller lengths and strengthened by using reinforced angles which are riveted to the plates. Further, on either side of the plates slot is made where the latches are welded for backing purposes. Thus classification under heading 72.16 is appropriate.”

The said judgment has not been set aside by any superior authority. It may be pertinent to mention that Revenue’s contention that the said judgment was issued without taking into account Board’s circular, dated 21-11-1990 is irrelevant because as stated earlier, Board’s circulars do not have any statutory standing nor are they binding on the quasi-judicial authorities and therefore not taking them into account does not in any way debilitate a quasi-judicial order. Indeed, CESTAT Larger Bench in the case of Press Metal Corporation Ltd. v. CCE – 2000 (119) E.L.T. 217 is also supportive of the classification decided by the impugned order.

7. In the light of the foregoing Revenue’s appeals are found to be devoid of merit and are therefore dismissed.

8. As the process of manufacturing has been examined by this Tribunal in the case of Nav Durga Steel Products (supra) and hold that the resultant product is classifiable under section 7216.20 of the Tariff Act and the said order has been accepted by the Revenue. Therefore, we hold that the items in question manufactured by the appellant are more appropriately classifiable under chapter heading 7216.20 of the Tariff Act. Accordingly, we do not find any merit in the in the impugned order, the same is set aside.

In result, the appeal is allowed with consequential relief, if any.