M/S. KHAITAN ELECTRICAL LTD.versusCOLLECTOR OF CENTRAL EXCISE, NEW DELHI

A                    MIS. KHAITAN ELECTRICAL LTD.
                                   v.
                COLLECTOR OF CENTRAL EXCISE, NEW DELHI

                                   AUGUST 6, 2003

B     [S. RAJENDRA BABU, B.N. SRIKRISHNA AND G.P. MATHUR, JJ.]


           Central Excises and Salt Act, 1944-First Schedule, Tariff Item 33(/)(a)-
    Models offans-Classification-Excise Duty-Exemption of-Held: Fans are
C   designed primarily as table fans though capable of being.f1Xed on wall or
    ceiling· and are also entirely different from regular cabin fans, thus classifiable
    as table fans attract{ng 5% ad va/orem duty under Tariff Item 33(J)(a).

           Appellant-manufacturer of electric fans submitted a classification list
    for approval under Tariff Item No.33(1) of the First Schedule to the
D   Central Excises and Salt Act, 1944 for models of fans. He also claimed
    So/o excise duty under the exemption notification. Assistant Collector
    classified the products as cabin, carriage, or circulator fans and, therefore,
    falling under T.I. No.33(1)(b). Collector (Appeals) considered the design
    and manufacture and also the literature containing the description of the
    concerned models of the fans and held that they were used primarily as
E   table fans, although they were capable of being hung from wall or ceiling
    and also their design and manufacture was entirely different from regular
    cabin fans which could never be placed upon a table. He then classified
    the products as table fans which attracted 5% ad valorem duty under T.I.
    No.33(1)(a). Appellate Tribunal set aside the order of the Collector
F   (Appeals) and upheld the order of the Assistant Collector. Hence~ the
    present appeal.

         Respondent-department contended that the fans in dispute are 'multi
    purpose' and could be used .as table fan and also as cabin/carriage fans
    and that, considering their usage for different purposes, the fans in
G   common parlance cannot be termed as table fan only.

          Allowing the appeal, the Court

          HELD: The Collector (Appeals) based his decision on the fact that
    the fans in question were designed primarily as table fans, although they
H                                          268
          KHAITAN ELECTRICAL LTD. v. C.C.E. [SRIKRISHNA, J.]                269

were capable for being hung from wall or ceiling. Further, because of the           A
peculiarity of design and manufacture, the concerned fans were entirely
different from regular cabin fans which could not be adapted as table fans:
Also, the literature describes it predominantly as a table fan. Thus, the
conclusion that the models of fans should be Classified as table fans,
attracting ad valorem duty of 5% under T.I. No.33(l)(a) of the First
Schedule to the Central Excises and Salt Act,1944 was perfectly justifiable         B
and reasonable. [272-D-E; 270-A; 272-C]

      CIVIL APPELLATE JURISDICTION: Civil Appeal No. 359of1997.

     From the Judgment and Order dated 12.8.96 of the Central Excise
Custom and Gold (Control) Appellate Tribunal, New Delhi in A.No.E/2346/             C
96-B in F.O.No.E/311of1996-B.

     Joseph Vellapally, Ms. Rohina Nath and Umesh Kumar Khaitan for Ml
s. Khaitan & Co. for the Appellant.

      T.L.V. Iyer, Rajiv Nanda and B.K. Prasad for the Respondent.                  D

      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',   E
'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           F
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(l)(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             G
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        H
    270                      SUPREME COURT REPORTS [2003] SUPP. 2 S.C.R.

A   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(1)(a). Upon further appeals•to the Customs, Excise, Gold (Control)
    Appellate Tribunal (hereinafter referred to as 'CEGA T), there was a difference
    of opinion between the two Members of CEGAT. While the Judicial Member
B   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
C   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. Jn
    accordance with the majority judgment of the CEGA T the order passed by
    the Collector (Appeals) was set aside and the order Assistant Collecto.r was
    upheld. Hence, this appeals by special leave.

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

    "Item No.33 - ELECTRIC FANS
    Item No. Tariff Description                           Rate of Duty


E   33          Electric fans including
                regulators for electric fans, all
                sorts-

                Table, cabin, carriage, pedestal
                circulator fans, of a diameter not        Fifteen percent ad
F               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
G
                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.

H   3           Electric fans, not otherwise specified,   Twenty percent
           KHAITAN ELECTRICAL LTD. v. C.C.E. [SRIKRISHNA, J.]                  271
            and regulators therefor.                   ad valorem                     A

The relevant Notification No.46 of 1984 dated l.3.1984, reads as follows:
                           "EXEMPTION NOTIFICATIONS
                                ELECTRIC FANS
                               46/84 - CE, Dt. l.3.1984                               B
         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        C
         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 (I 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 exce~s   D
         of the amount calculated at the rate specified in the corresponding
         entry in column (4) of the said Table.

                                   33-ELECTRIC FANS
                                       TABLE
                                                                                      E
 S.NO.            Sub-Item. Description                       Rate

     (I)          (2)        (3)                              (4)

                  (I)       Electric fans of a diameter
                            (blade sweep) not exceeding                               F
                            40.6 centimetres and regulators
                            therefor-
                            (a) Table fans                  Five per cent ad
                                                            valorem
                                                                                      G
                            (b) Cabin carriage, pedestal      Ten percent ad
                            and air circulator fans and       valorem
                            regulators therefor .

 2   (3)                    Electric fans not otherwise
                            specified-                                                H
    272                      SUPREME COURT REPORTS (2003] SUPP. 2 S.C.R.

A
                               (a) Ceiling fans of a
                               diameter (blade sweep) not
                               exceeding l 07 centimetres         Seven and a half
                                                                  per cent ad valorem

B                              (b) Others                         Fifteen per cent
                                                                  ad valorem

     3     (3)                 Regulators for electric            Fifteen per cent
                               fans                               ad valorem

C        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
D   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 of the fans in the
E   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 CEGA T to interfere with the
    order of the Collector (Appeals). We agree with the decision of the Collector
F   (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 notifi<;ation.
G
           The appeal is accordingly allowed without any orders as to costs.

    N.J.                                                             Appeal allowed.