Judgment
The appellants herein are manufacturers of iron and steel castings as well as stainless steel castings. They filed the classification list for these castings claiming classification under Tariff Heading 73.25. They are undertaking the process of fettling and grinding as alleged in the show cause notice. However, in reply to the show cause notice the appellants stated that they are merely undertaking the removal of excess material of castings as it comes out of the mould and to remove further surface defects. It is also mentioned in the impugned order that they are cleaning the surface and removal of surface defects and excess material and there is no change in the form of castings. The Adjudicating Authority as well while classifying the goods under Chapter Headings 84 to 87 has observed the goods under dispute as semi-finished machine parts. But the description of goods has been correctly mentioned in the classification list submitted by them. In other words it is pointed out by the ld. Advocate for the appellant that the adjudicating authority himself also admits that the goods are semi-finished machine parts and further machining was undertaken by the appellants customers. ld. Advocate has also relied upon Tribunals judgment in the case of Shivaji Works Ltd. v. Collector of Central Excise, Aurangabad reported in 1994 (69) E.L.T. 674 (Tribunal) wherein it has been held that casting does not cease to be a casting and would not go into the category of machine parts unless the machining undertaken by the appellant has gone beyond the stage of proof machining.2. On the other hand the ld. JDR Shri M.P. Singh, for the respondents submits that neither the appellants nor the adjudicating authority has given any finding of fact, whether the machining is required at the customers site or whether the goods as despatched by the appellants is directly fitted as machine parts into the machine to the customers hand. In the absence of any such finding ld. JDR submits that Tribunal's judgment in the case of Shivaji Works Ltd. cannot be relied upon.
3. He also relied upon the HSN Notes which have been relied upon by the adjudicating authority in the impugned order.
4. We have carefully considered the pleas advanced from both sides. We observe that the Tribunal has examined the question as to when a casting ceased to be a casting and when it becomes an essential part of a machine or having the essential character of a part of machine. It has been found by the Tribunal in the case of Shivaj Works Ltd. that up to proof machining stage a casting does not ceased to be a casting when further machining is undertaken by manufacturer on the castings.
So-called castings to have the essential character of a machine part will depend upon the facts and circumstances of the each case. It is a settled proposition that it is the burden of the Revenue to prove that the appellants have undertaken such a process so as to take the goods from the ambit of the castings that of the machine parts so as to be classifiable under various Chapters from Chapters 84 to 87. We observe that no such conclusion has been brought on record by the adjudicating authority by way of finding or by way of an allegation in the show cause notice that by the process of grinding, beyond the stage of proof machining undertaken by the appellant as alleged in the show cause notice, the castings have acquired with essential character of a machine part. There is no findings to that effect on record. We are, therefore, of the view, relying on Tribunal's judgment in the case of Shivaji Works Ltd. (supra) that the Revenues has not proved that the goods in question have acquired the essential character of machine part falling under Chapters 84 to 87. The adjudicating authority's various findings are merely based on the broad shape of the goods. Inferring there from that it has the essential character is not at all adequate to give that finding. That finding has to based on the evidence taken from the experts or from the dealers in the trades of such parts in the business. We are of the view that the Revenue has failed to prove its case as alleged in the show cause notice or as found in the impugned order that the goods are machine parts or have the essential character thereof. Consequently we set aside the impugned order and allow the appeal with consequential relief to the appellants.