Judgment:
1. These are two appeals filed by M/s. Ajay Forgings Pvt. Ltd. In both these appeals as common issues are involved for our consideration they were heard together and are being disposed of by this common order.
The matter relates to the classification of forgings, which the appellants were manufacturing for manufacturers of motor vehicle parts.
They had pleaded that their products were classifiable under Chapter 72 of the Tariff and they were eligible for concessional rate of duty under Notification No. 174/88-C.E., dated 13-5-1988 as amended. The Revenue had classified these products as parts of machinery classifiable under different Chapters 82, 85,86 and 87 as the case may be.
2. Shri Rajesh Chibber, Advocate appearing for the appellants stated that the goods produced by them were not machinery parts and they required a number of processes before they could take the shape of identifiable machinery parts. He submitted that the similar matters had come up before the Tribunal and they had taken the view that un-machined forgings were not classifiable as machinery parts.
3. Shri P.K. Jain, SDR appearing for the respondents/Revenue referred to the Order-in-Appeal passed by the Collector of Central Excise (Appeals), Ghaziabad and reiterated the observations of the Appellate Authority.
4. We have carefully considered the matter. The Collector of Central Excise (Appeals) in his order had recorded as under :- "To know the correct position, nature and the process of manufacture of forgings I visited the unit of the appellants. I have noticed that the appellants are manufacturing forgings by the process of die forgings which are ready for final machining. These forgings had acquired the shape and essential character of machinery parts. These forgings ceased to be simple pieces of steel within the meaning of Tariff Heading 72. The Heading 72 would for example cover an ingot roughly hammered into the shape of a flattened zig-zag and requiring further shaping to produce a Crank Shaft, but it would not cover a crank shaft forging ready for machining, as such the scope of Heading No. 72.07 is very narrow and restricted." 5. He had only stated that the forgings were ready for machining. There is no dispute that the forgings had not actually been machined. Without precision machining, the forged products could not be considered as a part of machinery.. In the case of Tata Iron & Steel Co. Ltd. v. U.O.I, reported at 1988 (35) E.L.T. 605 (SC),M/s. Tata Iron & Steel Co. Ltd. (TISCO) were engaged in the manufacture of forged products for railways. The goods were supplied to the railways in rough machined condition under which excess steel or manufacturing defects were removed and these products were subsequently precision machined by the Railways themselves at their workshop before being put to use. The Hon'ble Supreme Court in that case had held that since the precision machining was done at Railway's workshop, the appellants, TISCO were not liable to pay duty under Tariff Item 68 of the Old Central Excise Tariff. However, the rough machine stage duty was leviable.
6. The ld. Advocate appearing for the appellants had drawn our attention to the communication from their customers wherein the customers had stated that the goods received by them from the appellants were subjected to further processing like machining, threading, boring, etc. before they were used as component parts. The Collector (Appeals) in his order had stated that the forgings manufactured by the process of die forgings were subject to processes like skin cutting and proof machining. As held by the Hon'ble Supreme Court in the case of TISCO, referred to above, the process upto proof machining will not take the forged product beyond the purview of forgings as such.
7. In the case of Jaypee Forgers v. CCE, Bombay reported at 1995 (11) R.L.T. 76 (CEGAT-B), the Tribunal had held that un-machined forgings and forged products of steel which had not acquired the essential character of motor vehicle parts were classifiable as forged products.
The forged products which are machined, polished, holed, etc. and made fit for being used as machine parts alone assume a different name, character and use other than of the forged products. In the matter before us, there is nothing to show that these forged products were subjected to such processes as to assume a definite shape of a machine part.
8 Taking all the relevant considerations into account, we set aside the Order-in-Appeal. As a result, both these appeals are allowed. Ordered accordingly.