In Brief
A state-owned West Bengal company manufactured electrical relays used in railway signaling systems. Excise authorities reclassified the relays from Tariff Item 8536.90 (general electrical equipment) to 8608 (railway signaling equipment), leading to demand for higher excise duty over 1995-1998. The Supreme Court held the relays correctly fall under Item 8608 based on their sole use in railway signaling (the 'principal use' test), not the general electrical classification. The Court also found the show cause notices time-barred: having approved the reclassification in 1993, authorities could not later issue multiple notices to disturb that approval without proving fraud or misstatement. The appeal was allowed and all demands were set aside.
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