OPTEL TELECOMMUNICATION LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) IN these five appeals - four filed by M/s. Optel Telecommunication Ltd. and one Appeal filed by Revenue against the common Order -in -Appeal No. 475 -478/2004 dated 25.6.04, the issue involved is whether the optical Fibre Cables manufactured by the assessee is classifiable under Heading No. 90.01 of the Schedule to the Central Excise Tariff Act as claimed by the assessee or under Heading 85.44 as confirmed by the Commissioner (Appeals) and whether the demand of differential duty raised under Section 11A of the Central Excise Act on finalisation of the assessment is recoverable in view of the revalidation of the actions taken under Section 11A of the Act in terms of Section 110 of the Finance Act.

(2.) ANOTHER issue involved in these appeals is whether parts and accessories of optical fibre cables are classifiable under Heading 90.33 as against 85.44 of the Central Excise Tariff. Hri P.C. Jain, learned Advocate, mentioned that the assessee, an undertaking of State Government of Madhya Pradesh, manufacture Optical fibre cables is respect of which first classification list No.1/89 effective from 1.7.89 was filed by them classifying the product under Heading 90.01. of the Tariff; that the proper officer approved the classification in November, 1989; that subsequently the assessee filed classification list from 1990 to 1994 which were not approved by the Department and they continued to pay the Central Excise duty under Heading 90.01; that seven show cause notice from 22.10.92 to 22.4.94 were issued to them alleging contravention of Rules 9(1), 52 A, 173 F and 173G of the Central Excise Rules, 1944 on clearance of optical fibre cables and parts and accessories by paying duty under Heading 90.01 instead of Heading 85.44 without proposing any changes in the classification lists. For the first time a show cause notice dated 9.6.94 was issued to them proposing changes in classification to Heading 85.44 on the ground that the optical fibre cables manufactured by them can not be said to be made by other than individually sheathed fibre or fibres in bundles so as to classify them under heading 90.01; that the Assistant Commissioner who adjudicated the show cause notice has held that colouring of fibre itself amounts to sheathing and accordingly optical fibre manufactured by them should be classified under Heading 85.44.

(3.) 1 Learned Advocate submitted that the show cause notice issued by the Department is very vague as it does not mention the basis for the view taken by the Department that the optical fibre cables manufactured by them can not said to be made of other than individually Sheathed fibre/fibres in bundles; but made up of individually sheathed fibre making them classifiable under Heading 85.44; that the fibres which eventually take the form of cables are not individually sheathed by them; that the expression "individually sheathed" can only mean that each individual fibre must be sheathed whereas in the case of impugned cables manufactured by them, at no stage of the various processes undertaken by them, individual fibre is sheathed; that the assessee is having a technical collaboration with M/s. Furukowa Electric Company of Japan; that the first stage in the process of manufacture is manufacture of "pre -form". The second stage is the fibre drawing process in which the pre -form is taken to the fibre drawing tower where the same is heated at one end to the melting point and then this end is pulled downwards using a computer controlled process to draw the fibre and a thin coating of UV cured acrylate is simultaneously applied to it; this coating is invisible to the naked eye; the third step involves colouring of fibres for purposes of identification using various types of colouring ink; loose tubings in which two fibres (one coloured and one with natural colour) are placed in a loose tube into which jelly is filled with the two fibres being loosely accommodated in the tube; Stranding of loose tubes; loose tubes (3 numbers of 6 numbers). along with filler PE cord are stranded around FRP center Tension Member to form the core of the cable. Jelly is applied during the core manufacturing stage and a polyester film is wrapped around the core which is held in place by PE Tapes; PE sheathing and jacketing; It is the loose tube cores which are sheathed with black LDPE and to provide extra strength to the cable with respect to rodent attack, suitable nylon jacketing is also done.