CCE Vs. HOSUR INSTRUMENTS P. LTD.

JUDGEMENT

(1.) THE respondents were engaged in the manufacture of 'measuring instruments' including Infra -red Pyrometer. They were availing the benefit of Notification No. 79/90 -CE dated 20.3.90 in respect of infra -red Pyrometer and accordingly paying duty @ 5% based on the approved classification of the goods under Sub -Heading No.9027.00 of the CETA Schedule. A show -cause notice was issued on 22.7.91 for reclassification of the goods under SH 9025.00 of the said schedule. This proposal for reclassification was approved by the Asst. Collector, against which the party preferred appeal to the Collector (Appeals.). The appellate authority upheld the above reclassification with a rider that it would be prospective in effect. The result was that the reclassification of Infra -red Pyrometer under SH 9025.00 was to take effect only from 22.7.91 (date of reclassification notice). The Revenue did not appeal against the order of the Collector (Appeals). Yet another consequence of the reclassification was that the assessee became ineligible for the benefit of concessional rate of duty under Notification No.79/90 -CE ibid. The department issued a show -cause notice denying the benefit of the Notification to the assessee on the goods reclassified under SH 9025.00 and demanding duty for a prior period. Contesting this demand, the assessee maintained that when the reclassification was prospective, there could be no retrospective demand. This argument was rejected by the adjudicating authority and the demand of duty was confirmed. Aggrieved, the assessee again approached the Collector (Appeals). The appellate authority set aside the retrospective demand on two grounds, viz. (i) the order of the Collector (Appeals), holding the reclassification of the goods prospective, had not been challenged by the Revenue and had become final and binding on them (ii) it was held by the apex court in the case of Rainbow Industries (P) Ltd. v. Collector, : 1994 (74) ELT 3 (SC) that reclassification should be effective from the date the department issued the show -cause notice and that the appellant, in that case, was not liable to pay duty in respect of the period prior to the issuance of the notice. This order of the Collector (Appeals) is under challenge in this appeal of the Revenue.

(2.) REITERATING the grounds of this appeal, learned JDR submits that the decision in Rainbow Industries (supra) was overruled by a bench of three Judges of the Supreme Court in Balarpur Industries Ltd. v. Asst. Collector of Customs in Central Excise, : 1995 (76) ELT 499 (SC). Ld. DR further submits that, with the retrospective amendment of Section 11A of the Central Excise Act by Finance Act, 2000, the demand of duty raised on the respondents for a period of six months prior to 22.7.91 was validated. In this connection, reliance has been based on the Supreme Court's judgements in Easland Combines v. CCE Coimbatore, : 2003 (152) ELT 39 (SC) and ITW Signode India Ltd. v. CCE Coimbatore,, 2003 (152) ELT 403 (SC). We have heard learned counsel for the respondents also.