M/S. North West Switchgear Limited vs Commnr. Of Central Excise, New Delhi

Authority in original in show cause notice dated 3.12.1993 held that the fan regulators were classifiable under the sub-heading 8414.20 as had been contended by the assessee. It was also held that the Board Circular No.7/87 dated 24.6.1987 was applicable to the facts of the case. The Commissioner of Central Excise reviewed the order passed by the authority in original in exercise of its powers under Section 35E(2) and directed that an appeal be preferred accordingly and appeal was filed. The appellants filed their memorandum of cross objection. The learned Commissioner upheld the order passed by the authority in original holding that 'fan regulators' were/are classifiable under sub-heading 8414.20 of the Tariff Act and not under 8414.99 and rejected the appeal. Being aggrieved with the order passed by the Commissioner of Appeals, the revenue preferred appeal No. E/Appeal No. 506/95-B before the Tribunal.

Against the show-cause-notice dated 28.6.1994 the authority in original stuck with its view in the earlier order and held that the 'fan regulators' were classifiable under the sub-heading 8414.20 and not under 8414.99 and dropped the demand. Commissioner (A) did not agree with the order in original and taking a contrary view held that the goods were classifiable under sub-heading 8414.99 and not under 8414.20. The appellants preferred appeal No. E/Appeal No. 1554/96-B against the order of the Commissioner of Appeals before the Tribunal. These two sets of appeals were clubbed together and disposed of by the Tribunal by a common order dated 20.1.2000.

This view also finds support from the General Notes to Section XVI of HSN under heading "Accessory Apparatus". The explanatory note provides that accessory instrument e.g. regulators, presented with machine or apparatus to which they normally belongs are classified with that machine or apparatus, if they are designed to measure check, control or regulate one specific machine or apparatus. Therefore, if fan regulators are manufactured by a unit like the appellants and cleared as such and not along with fan, it will be classifiable under the sub-heading 8414.99. If the contention of the appellants is accepted that the regulators have to be classified under 'electric fans', whether sold with the fan or separately, then no 'part or accessory' will be covered by heading 8414.99. In the Board's circular No.7/87, the Board clarified that 'fan regulators' will not be classified under Chapter 85 as Electrical Resistors and their classification under sub- heading 8414.20 along with fan would be appropriate. The issue before the Board was not that, when regulators were cleared as such without fans, would be classifiable under sub-heading 8414.99 or that they would be classifiable under 8414.20. Accordingly, the Board clarified in Circular No.192/26/96 dated 27.3.96 that when the regulators are cleared along with the fans as a whole, they are classifiable under sub-heading 8414.20 but when 'fan regulators' are cleared separately not in combination with the fans they are classifiable as "parts & accessories of electrical fans" under sub-heading 8414.99 of the Schedule to the Tariff Act. There is a separate sub-heading of "parts and accessories" in heading 8414. The Sub-heading 8414.91 covers parts and accessories "of goods covered by the sub-heading 8414.10" and the sub-heading 8414.99 covers parts and accessories of "other" goods under the heading 8414 and the sub-headings 8414.20 and 8414.80. 'Fan regulators' being accessories of 'electric fan' would thus be covered under the sub-heading 8414.99.

Accordingly, we do not find any merit in these appeals and hold that the 'fan regulators' manufactured by the assessee, which are sold as such "without the electric fan" would be classifiable under sub-heading 8414.99 as accessories of fans.

The Tribunal, in Civil Appeal No.553-554 of 2001 filed by M/s. North West Switchgear Limited , has held that differential duty cannot be demanded from the appellants against which the revenue has not filed any appeal.

For the reasons stated above, we do not find any merits in Civil Appeal Nos. 553-554 of 2001 and dismiss the same.

The order passed by the Tribunal in Civil Appeal No.4382 of 2001 in so far as the classification is concerned is confirmed but keeping in view the facts and circumstances, the penalty of Rs.10,000/- imposed on the appellants is set aside. Costs shall follow the event.