SooperKanoon Citation | sooperkanoon.com/11323 |
Court | Customs Excise and Service Tax Appellate Tribunal CESTAT Delhi |
Decided On | Jun-05-1997 |
Reported in | (1997)(94)ELT163TriDel |
Appellant | Bhartia Electric Steel Co. Ltd. |
Respondent | Commissioner of C. Ex. |
After hearing the assessee the Assistant Collector confirmed the classification under Heading 8607.00 and confirmed differential duty also. The Collector having upheld the order, the present appeal is before us.
2. We have heard Shri K.K. Anand, learned Advocate for appellants and Shri G.D. Sharma, JDR, for the Revenue.
3. Under the old Tariff castings merited classification under Tariff Item No. 26AA(V) whereas parts of machinery etc. were classifiable under Tariff Item No. 68. The merits of the alternative classifications for steel castings were examined by the Patna High Court in their judgment in the case of Tata Yodogwa Limited v. Asstt. Collector of Central Excise, Jamshedpur and Ors., reported in 1983 (12) E.L.T. 17 (Pat.). In this judgment it was held that steel castings after cleaning machinery and polishing continued to fall under the same item and were not liable to duty under Tariff Item No. 68. Similar view was held by the Tribunal in the judgment in the case of Electrosteel Castings Ltd. v. Collector of Central Excise, reported in 1989 (43) E.L.T. 305 (Tribunal). It is on this ground that the assess has suggested that these goods would fall under Chapter 73 and not under Chapter 86.
4. Shri G.D. Sharma, learned JDR urged that there was a basic difference between the two Tariffs and that the lower authorities had correctly depended upon Rule 2(a) of the Rules of Interpretation of the tariff. Under this rule an article could be classified under a particular heading even it was incomplete or unfinished, Shri Anand, learned Advocate countered this by saying that where a particular classification is suggested on examination of the article and on the clear words of the Tariff Entry, there was no cause for going to the Rule 2(a).
5. This aspect was examined by the Tribunal in their judgment in the case of Shivaji Works Ltd. v. Collector of Central Excise, Aurangabad, reported in 1994 (69) E.L.T. 674 (Tribunal) on which reliance was placed by Shri Anand in this case also. The Tribunal examined the classification of castings of machine parts/motor vehicle parts where the assessee has suggested the classification under Heading 73.25 and the department had restored to classification under Chapters 84 or 87.
In that case also reliance was placed by the department on the said rule. The Tribunal had this to say in this regard : "Lower authorities have relied on Rule 2(a) of Interpretative Rules [to] arrive at the finding that the 'castings' in question are parts of machine or parts of motor vehicle. A machine part or a motor vehicle part would, subject to any section or chapter note, normally be one which is ready for use in a particular machine or motor vehicle. Rule 2(a) does not permit us to conclude that when an article squarely falls under a particular tariff heading, it can be made to fall under another heading by invoking the concept of essential character. This is against the plain reading of Rule 2(a).
But this is precisely what is attempted to be done by the lower authorities in the impugned orders. It is not denied that castings of iron and steel do fall under Heading 73.25 but because the castings have 'essential character' of products under Chapter 84, 85 or 87, such castings should be deprived of their most appropriate and only classification. Such an interpretation of Rule 2(a) is untenable. It will create clashes within different headings and disturb their harmony, [para 9.4]." 6. In the judgment in the case of Shivaji Works Ltd. (Supra), the Tribunal had referred to their judgment in the case of Tata Engg. & Locomotive Co. Ltd., Bombay v. Collector of Customs, Bombay, reported in 1983 (13) E.L.T. 1122 (CEGAT). The ratio of the judgment was that the castings which had under gone machining to give smooth finishing did not convert the goods from iron castings into parts of motor vehicles.
7. Shri Sharma claimed that it was not known whether the Customer namely the Railways undertook any process on these goods to convert them into parts of Railways, locomotive etc. He suggested that the assessee had not discharged the burden of proof conclusively that at the point of their removal, the castings had not transformed into identifiable parts falling under Chapter 86. We observe that before the introduction of the new Tariff, the department had accepted their identity as steel castings. In view of the non-applicability of the logic of Rule 2(a) it was for the department to prove that the goods had transformed into such parts from the starting point of castings.
This was not done anywhere in the proceedings.
8. On the facts as disclosed in the proceedings rind following the ratio of the judgment cited and examined by us, we hold that at the material time the goods were classifiable under Chapter 73 and not Chapter 86. We allow this appeal and set aside the lower orders and direct consequential relief if warranted.