Custom, Excise & Service Tax Tribunal
Cce, Chandigarh vs M/S Raja Forgings & Gears Limited on 28 July, 2008
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI
PRINCIPAL BENCH, COURT NO. III
Excise Appeal No. 3723 of 2006
[Arising out of Order-in-Appeal No. 781-CE/CHD/2006 dated 28.8.2006 passed by Commissioner (Appeals), Central Excise, Chandigarh]
Date of Hearing/ decision: 28.7.2008
For approval and signature:
Hon'ble Mr. M. Veeraiyan, Member (Technical)
Hon'ble Mr. P.K. Das, Member (Judicial)
1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3 Whether Their Lordships wish to see the fair copy of the Order?
4 Whether Order is to be circulated to the Departmental authorities?
CCE, Chandigarh Appellant
Vs.
M/s Raja Forgings & Gears Limited Respondent
Appearance:
Shri V. Chaudhary, SDR for the Appellant.
Shri Ajay Jain, Advocate for the Respondent CORAM: Hon'ble Mr. M. Veeraiyan, Member (Technical) Hon'ble Mr. P.K. Das, Member (Judicial) ORDER NO . ________________________ Per M. Veeraiyan (for the Bench):
This is an appeal filed by the Department against the order of the Commissioner (Appeals) No. 781/CE/CHD/06 dated 25.8.2006.
2. Heard both sides.
3. The relevant facts, in brief, are as follows:-
a) The respondent manufactures gears and transmission shafts for motor vehicles and thresher & harvester combine. The respondent claimed them as parts of harvester combine and classified them under heading 8433.00. The original authority held that transmission shaft and gears should be classified under heading 8483.90; confirmed the demand of Rs. 4,39,754/- alongwith interest; imposed penalty of Rs. 4,39,754/-.
b) On appeal by the party, Commissioner (Appeals) held that these items have been manufactured as per specific design of the buyers, and, therefore, the same were not general purpose items and were not inter-changeable for use, elsewhere than in harvester combines and allowed the appeal of the assessee. Hence, the Department is in appeal.
4.1. Learned DR draws our attention under chapter heading 8433.00 to Section note 2 to Section XVI and the chapter heading 8483 and submits that the description transmission shaft gears is more specific than parts of harvesting combine.
4.2. He also relies on the decision of the Tribunal in the case of Sree Ganesh Gears Pvt. Ltd., vs CCE, Bangalore reported in 2002 (139) ELT 307 (Tri-Bang.) wherein it has been held that gears and shafts specially and principally designed and used in power tillers should be classified under hearing 8483 and not under 8432 or 842491.
4.3. He also relies on ratio of the decision of the Honble Supreme Court in the case of Intel Design Systems (India) Pvt. Ltd., vs. CC&CE reported in 2008 (223) ELT 135 (SC) where items like contractors, switches, control box etc. which are used specifically solely or principally with armoured vehicles are held classifiable under heading 8536.90 and not under heading 8710.
5. Learned Advocate for the respondent submits that order of the Commissioner (Appeals) has rightly relied on the decision of the Honble Supreme Court in the case of G.S. Auto reported in 2003 (54) RLT 479 (SC). He submits that items being of specific design for use only in harvest combines is classifiable under proper heading 8435 and the order of the Commissioner (Appeals) is legal and proper.
6. We have carefully considered the submissions from both sides.
6.1 Chapter sub-heading 8433.00 reads as follows-
Harvesting or threshing machinery, including straw or folder balers; grass cr has mowers; machines for cleaning, sorting or grading eggs, fruit or other agricultural produce, other than machinery of heading No. 84.37.
Section note 2 to section XVI covering chapters 84 and 85 of the Schedule reads as follows:-
a. Parts, which are goods, included in any of the headings of chapter 84 or chapter 85 (other than heading Nos. 84.09, 84.31, 84.48, 84.66, 84.72, 84.84, 85.03, 85.22, 85,29, 85.38 and 85.48) are in all cases to be classified in their respective headings b. Other parts, if suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading( including a machine 84.79, or 85.43) are to be classified with the machines of that kind or in.. heading No. 85.17 6.2 It is to noted that parts( with certain exceptions) falling under chapter 84 and 85 are required to be classified in the respective headings in terms of clause (a) of section note 2. The exclusion category of parts does not cover chapter 8433. Sub-clause (b) of note 2 does not apply to the present case.
6.3 The decision of the Tribunal in the case of Sree Ganesh Gears cited supra clearly supports the submissions made by the learned DR. We reproduce the relevant portion.
6. We have considered the submissions and find-
(a) The classification of parts under Chapter 84 in Section XVI and the Chapters 86-88 under Section DVII have to be arrived at by applying different sets of rules as it appears from the section notes. The former i.e. under Chapter 84 Section XVI by Note 2 to Section XVI, and later by note 3 to Section XVII for parts and accessories of Chapters 86-88. The decisions therefore relied upon by the learned advocate for the appellant, which relate to parts are for motor vehicles and locomotive falling under Section XVII of Chapters 87 and 86 respectively are not applicable. To a specific question from the bench, the advocate fairly conceded and submitted that there is no specific case law covering classification for the items impugned in this case. No case is made out by the appellants that Power Tillers for which the gears and shafts are specifically meant, fall and are classified under Chapters 86-88 of Section XVII. Therefore, case law relied upon by the appellant does not help them. The case law does not induce us to read into Section note 2 to Section XVI principles and theories of interpretation applied/ upheld for Section note 3 to Section XVII. No relief is therefore found to be available based on the case law/ instructions relied upon by the appellants.
6.4. The ratio of the decision of the Honble Supreme Court in the case of Intel Design Systems (India) Pvt. Ltd. (supra) also supports the view of the learned DR. The relevant portion is reproduced below.
4. As per Rule 1 on Interpretive Rules, classification of excisable goods is to be determined according to the terms of the Heading and in terms of Section/ Chapter notes. Note 2(f) to Section XVII (which governs chapter 87) excludes the goods viz. electrical machinery and equipment (Chapter 85). The goods in question i.e. contractors, switches, control box etc. are the goods used for switching, protecting electrical circuits or for making connections to or in electric circuit. These parts/ components are specifically covered under CSH 8536.90. The CBEC Circular relied upon by the assessee is not relevant.
5. As per the Explanatory Notes to HSN the parts falling under Chapter Heading 8710 would be covered under the said chapter, provided they fulfil both the conditions i.e. they must be indentifiable as being suitable for use solely or principally for such vehicles and that they must not be excluded by the provisions of Notes to Section XVII. The identifiable parts under the said heading bodies of armoured vehicles and parts thereof, cover special road wheels for armoured cars, propulsion wheels for tanks, tracts etc. As per this requirement, the goods should not only be identifiable to be armoured vehicles, but it should so not have been excluded by Notes to Section XVI. The Chapter note 2(f) excludes electrical machinery and equipment falling under Chapter 85. Explanatory Notes to HSN relating to the parts and accessories excluded by Note 2 specify items with reference to specific Chapter Heading as per (7) (a), (k) which excludes photographs and other current collectors for electric traction vehicles, fuses, switches and other electric apparatus of Heading No. 85.35 or 85.36. The items, therefore, manufactured by the appellants are identifiable or are in the nature of goods falling under Chapter Heading 85.36. Since these fall under the category of excluded goods under Chapter Notes, even though they are used specifically solely or principally with the armoured vehicles of Chapter Heading 8710, they are classifiable under chapter Heading 8536.90 only as held by the adjudicating authority.
6.5. We find the description of the goods fit in more specifically heading 848390.
7. In view of the above, we hold that the impugned goods, namely, gears, shaft coupling shall be classifiable under 848390 as held by the original authority. We, therefore, set-aside the order of the Commissioner (Appeals) and restore the order of the original authority. While restoring the order of the original authority, we do not find justification for imposition of penalty on the respondent, as the case involves mere legal interpretation of tariff entries and no mis-declaration or suppression of facts with intention to evade can be attributed to the assessee. The classification as proposed by the Department is accepted. Duty demand along with interest is confirmed. However, the penalty is set-aside.
8. The appeal is disposed of in the above terms.
(Operative part of the order pronounced in the open Court on 28.07.2008) [M. Veeraiyan] Member [Technical] [P.K. Das] Member [Judicial] [Pant]