2005 JTR(SC) 13
2005 AIR(SC) 1205 ; 2005 AIR(SCW) 229 ; 2005 1 Scale 113 ; 2005 9 SCC 215 ; 2005 2 Supreme 164
2005(2) Supreme 164
Supreme Court of India
(From Central Excise Customs and Gold (Control) Appellate Tribunal, New Delhi)
S.N. Variava, Dr. AR. Lakshmanan & S.H. Kapadia, JJ.
Commissioner of Central Excise, New Delhi —Appellant
versus
M/s. Sapna Foam Udyog Ltd. —Respondent
Civil Appeal No. 2210 of 2000
Decided on 5-1-2005
Counsel for the Parties :
For the Appellant : R. Venkataramani, Sr. Advocate, G. Umapathy, P. Parmeswaran, Ashok Panigrahi, S. Gowthaman, B. Krishna Prasad, Advocates.
For the Respondent : R.C. Verma, Mukesh Verma, Manish Shanker and Vivek Vishnoi, Advocates.
Act
Referred
:CENTRAL EXCISE AND SALT ACT : S.35(e)
CENTRAL EXCISE TARIFF ACT : Item.40.08, Item.94.01
(A) The impugned order was passed under the Central Excise and Salt Act, 1944, specifically Section 35E read with the Central Excise Tariff Act, where Item 40.08 and Item 94.01 govern classification. Section 35E contemplates the exercise of power to set aside an order of an Assistant Collector if the goods are found to be classified incorrectly under the Tariff. The Collector, while exercising such powers, must adhere to the principles enunciated in the earlier Matador Foam case concerning correct characterization of goods.
(B) The key legal principle is that goods attracting Central Excise duty must be classified strictly in accordance with the entries in the Tariff. If an order erroneously classifies goods under one heading when they fall under another, it is open to the Collector to set it aside and reclassify them under the correct head.
Facts of the case:
The Collector of Central Excise had set aside an order of the Assistant Collector classifying certain goods under Tariff Item 40.08 and sought to reclassify them.
Findings of Court:
The Court held that the goods in question are rightly classifiable under Tariff Item 94.01 and not under Item 40.08.
Issues:
Whether the goods in question fall within the scope of Tariff Item 94.01 and whether the Collector was justified in setting aside the Assistant Collectors order.
Ratio Decidendi:
The classification of goods under the Central Excise Tariff must be in accordance with the true nature of the goods, and an erroneous classification by an inferior authority can be corrected by the Collector under Section 35E.
Result:
The impugned judgment is set aside, the appeal is allowed, and the goods are held to be classifiable under Tariff Item 94.01.
(A) The impugned order was passed under the Central Excise and Salt Act, 1944, specifically Section 35E read with the Central Excise Tariff Act, where Item 40.08 and Item 94.01 govern classification. Section 35E contemplates the exercise of power to set aside an order of an Assistant Collector if the goods are found to be classified incorrectly under the Tariff. The Collector, while exercising such powers, must adhere to the principles enunciated in the earlier Matador Foam case concerning correct characterization of goods.
(B) The key legal principle is that goods attracting Central Excise duty must be classified strictly in accordance with the entries in the Tariff. If an order erroneously classifies goods under one heading when they fall under another, it is open to the Collector to set it aside and reclassify them under the correct head.
Facts of the case:
The Collector of Central Excise had set aside an order of the Assistant Collector classifying certain goods under Tariff Item 40.08 and sought to reclassify them.
Findings of Court:
The Court held that the goods in question are rightly classifiable under Tariff Item 94.01 and not under Item 40.08.
Issues:
Whether the goods in question fall within the scope of Tariff Item 94.01 and whether the Collector was justified in setting aside the Assistant Collectors order.
Ratio Decidendi:
The classification of goods under the Central Excise Tariff must be in accordance with the true nature of the goods, and an erroneous classification by an inferior authority can be corrected by the Collector under Section 35E.
Result:
The impugned judgment is set aside, the appeal is allowed, and the goods are held to be classifiable under Tariff Item 94.01.
Judgment
S.N. Variava, J.—Parties agreed that this case would be fully covered by the Judgment delivered by us today in the case of Collector of Central Excise, Kanpur vs. M/s Matador Foam & Ors. (Civil Appeal Nos. 3832-3837 of 1999). It may only be mentioned that the only point of difference, which is of no relevance to the decision in this case, is that in this case the Collector had exercised his powers under Section 35E of the Central Excise and Salt Act, 1944 to set aside the Order of the Assistant Collector classifying the goods under Tariff heading 40.08.
2. On the principles laid down in the case of M/s Matador Foam & Ors. (supra), the impugned Judgment is set aside and it is held that the goods would be classifiable under Tariff Item 94.01.
3. The Appeal is accordingly allowed. There will, however, be no order as to costs.
Appeal allowed.
***************