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CASE NO.:

Appeal (civil) 359 of 1997

PETITIONER:

KHAITAN ELECTRICAL LTD.

RESPONDENT:

COLLECTOR OF CENTRAL EXCISE NEW DELHI

DATE OF JUDGMENT: 06/08/2003

BENCH:

S. RAJENDRA BABU & B.N. SRIKRISHNA & G.P. MATHUR

JUDGMENT:

JUDGMENT

2003 Supp(2) SCR 268

The Judgment of the Court was delivered by

SRIKRISHNA, J. The appellant is engaged in manufacture of electric fans of

different varieties. In respect of its four models of fans called 'Mini',

Tini', 'Chiki' and 'Miki' the appellant submitted a classification list for

approval under T.I. no. 33(1) and also claimed concessional rate of duty @

5% ad valorem under the Notification No. 46 of 1984 dated 1.3.1984. The

Assistant Collector Central Excise issued a notice dated 23.3.1984 calling

upon the appellant to show cause as to why the aforesaid models of fans

should not be classified under Item No.33(3) and under item No.l(l)(b) of

the Notification No. 46/84.

By an order dated 19.1.85 the Assistant Collector, Central Excise,

Faridabad classified the said products under T.I, No. 33(1 )(b) for the

purpose of availing benefit of Notification No. 46/84. On appeal the

Collector of Customs and Central Excise (Appeals) took the view that

considering the design and manufacture as also the literature containing

the description of the concerned models of the fans, they were used

primarily as table fans. The Collector (Appeals) was of the view that

although there was an arrangement for clamps which enabled the concerned

models of fans to be hung from wall or ceiling, their design and

manufacture was entirely different from regular cabin fans which could

never be placed upon a table. In this view of the matter, the Collector

(Appeals) held that all the four models of fans should be classified as

table fans, attracting ad valorem duty of 5% under T.I.No. 33(l)(a). Upon

further appeals to the Customs, Excise, Gold (Control) Appellate Tribunal

(hereinafter referred to as 'CEGAT'), there was a difference of opinion

between the two Members of CEGAT. While the Judicial Member took the view

that the concerned models of fans were to be classified under T.I. no.

33(1) as table fans, both for the purpose of classification as well as the

exemption notification, the Vice President disagreed and was inclined to

uphold the view of the Assistant Collector. In view of the difference of

opinion, the matter was referred to the third Member who agreed with the

Vice President, that for the purpose of duty as well as exemption under the

notification, the fans would fall under sub-item 3(b) of serial no.2. In

accordance with the majority judgment of the CEGAT the order passed by the

Collector (Appeals) was set aside and the order Assistant Collector was

upheld. Hence, this appeals by special leave.

The Tariff details of the Item No.33 are detailed below:

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"Item No.33 - ELECTRIC FANS

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Item No. Tariff Description Rate of Duty

33 Electric fans including

regulators for electric fans, all sorts-

1 Table, cabin, carriage, pedestal

circulator fans, of a diameter not Fifteen percent ad

40.6 centimetres and regulators valorem

therefor.

2 Electric fans, designed for use in Fifteen

percent ad an industrial system as parts valorem

indispensable for its operation and

have been given for that purpose some special shape or quality which would

not be essential for their use for any other purpose, and regulators

therefor.

3 Electric fans, not otherwise specified, Twenty percent

and regulators therefor. ad valorem

The relevant Notification No.46 of 1984 dated 1.3.1984, reads as follows:

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"EXEMPTION NOTIFICATIONS

ELECTRIC FANS 46/84 - CE, Dt. 1.3.1984

Effective rates of excise duty on specified sizes of ceiling fans and table

fans have been prescribed.

GSR- In exercise of the powers conferred by sub-rule (1) of rule 8 of the

Central Excise Rules, 1994, the Central Government hereby exempts goods of

the description specified in column (3) of the Table annexed hereto and

falling under the sub-items specified in the corresponding entry in column

(2) of the said Table of item No.33 of the First schedule to the Central

Excises and Salt Act, 1944 (1 of 1944), from so much of the duty of excise

leviable thereon under the said Act at the rate specified in the said First

Schedule, as is in excess of the amount calculated at the rate specified in

the corresponding entry in column (4) of the said Table.

33-ELECTRIC FANS TABLE

S.NO. Sub-Item. Description Rate

(1) (2) (3)_______________________(4)_____________

1 (1) Electric fans of a diameter

(blade sweep) not exceeding 40.6 centimetres and regulators therefor-

(a) Table fans Five per cent ad

valorem

(b) Cabin carriage, pedestal Ten percent ad and air circulator fans

and valorem regulators therefor

2 (3) Electric fans not otherwise

specified-

(a) Ceiling fans of a diameter (blade sweep) not

exceeding 107 centimetres Seven and a half

per cent ad valorem

(b) Others Fifteen per cent

ad valorem

3 (3) Regulators for electric

Fifteen per cent

fans ad valorem

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In our view, the Order of the Collector of Customs and Central Excise

(Appeals) was well reasoned order and justified.

The stand of the Department is that the fans in dispute are 'multi purpose'

and could be used as table and also as cabin/carriage fan; that considering

their usage for different purposes the fans in common parlance cannot be

termed as table fan only. The Collector (Appeals) based his decision on the

fact that the fans in question were designed primarily as table fans,

although they were capable for being hung from wall or ceiling. He rightly

pointed out that, because of the peculiarity of design and manufacture, the

concerned fans were entirely different from regular cabin fans which could

not be adapted as table fans, also basing his decision on the description

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of the fans in the literature distributed by the appellants. The literature

describes it predominantly as a table fan, though capable of being fixed on

the wall or ceiling. In our view, this conclusion was a perfectly

justifiable and reasonable view of the matter and there was no

justification for the CEGAT to interfere with the order of the Collector

(Appeals). We agree with the decision of the Collector (Appeals).

In the result, we allow the appeal, set aside the order of the CEGAT dated

12.8.1996 and restore the decision of the Collector (Appeals) New Delhi

dated 22.7.1986 with regard to the classification of the concerned models

of fans both under the Tariff item as well as the exemption notification.

The appeal is accordingly allowed without any orders as to costs.