Customs, Excise and Gold Tribunal - Delhi
Swelore Engg. (P) Ltd. vs Commissioner Of Central Excise on 7 February, 2000
Equivalent citations: 2000(119)ELT481(TRI-DEL)
ORDER Jyoti Balasundaram, Member (J)
1. The appellants herein are engaged in the manufacture of power driven pumps falling under CET Heading 84.13. They also manufacture spares and accessories required in the assembly of PD pumps in their factory. Accordingly, they filed classification lists No. 2/88-89 effective from 1-4-1988 and No. 1/89-90 effective from 1-4-1989 classifying spares and accessories for pumps under Heading 84.13 chargeable to duty at the rate of 5%. It appeared to the Department that spares and accessories would be appropriately classifiable under their respective headings in view of note 2(a) of Section XVI of the Schedule to the CETA 1985 and hence show cause notices for modification of classification lists as well as for recovery of duty short levied, were issued. The Assistant Collector applied Rule 3A of the Rules for Interpretation of the Tariff and Note 2(a) of Section XVI and classified the items in dispute as under :
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Sl. No. Description of goods Heading No. Rate of duty
under which
the goods are
shown in Col.
2 are classified
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1. Bear Cover 84.83 20%
2. Worm Shaft 84.83 20%
3. Worm Wheel 84.83 20%
4. Worm Wheel Shaft 84.83 20%
5. Worm Wheel Lock Washer 84.83 20%
6. Worm Wheel Lock Nut 84.83 20%
7. Welcrank Body Bush & or 84.83 20% Plate
8. Welcrank Plate Ball Seat 84.83 20% 9 Ball Seat Cover 84.82 20%
10. Slide Ball Seal 84.82 20%
11. Welcrank Plate Washer 84.83 20%
12. Connecting Ball 84.82 20%
13. Guage Glass Gasket 84.84 20%
14. Crankshaft 84.83 20%
15. Coupling Guard 84.83 20%
16. Valves, Strainers & 8481.80 15%
17. Relief and/or Safety Valve 8481.80 15%
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He also confirmed the duty demands. The lower Appellate Authority upheld the order of the Adjudicating authority; hence these appeals.
2. None appears for the appellants inspite of notice. Hence we have heard the learned DR and perused the records.
3. For the purpose of understanding the issue in dispute, we reproduce below Note 2 to Section XVI of the Schedule to the CETA 1985 covering Chapters 84 and 85 :
"Subject to Note 1 to this section, Note 1 to Chapter 84 and to Note 1 to Chapter 85, parts of machines (not being parts of the articles of Heading Nos. 84.84, 85.44, 85.45, 85.46 or 85.47) are to be classified according to the following Rules:
(a) Parts which are goods included in any of the Headings of Chapter 84 or Chapter 85 (other than Heading Nos. 84.85 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 machine of Heading No. 84.79 of Heading No. 85.43) are to be classified with the machines of that kind. However, parts which are equally suitable for use principally with the goods of Heading Nos. 85.17 and 85.25 to 85.28 are to be classified in Heading 85.17.
(c) All other parts are to be classified in Heading No. 85.85 or Heading 85.48."
4. It is thus evident that parts of machines which are in themselves goods included in any other heading of Chapter 84, are in all cases to be classified in their respective headings. In the present case, parts such as valves, bearings, bearing cover, crank shaft, pulley etc. are covered by Heading Nos. 84.81, 84.84 of the Schedule to the CETA 1985. They are not parts of articles of Headings 84.84, 85.44, 85.45, 85.46 or 85.47 - they are parts of power driven pumps falling under Heading 84.14. By applying the provisions of Note 2(a) to Section XVI, these parts are required to be classified in their respective headings even though they may be machined or tailor-made to be suitable for use for solely or principally with a particular kind of machine viz. power driven pumps. We therefore, uphold the classification arrived at by the lower authorities and reject the contention of the assessees that the disputed items fall for classification under Heading 84.13 as parts of PD pumps under Heading 84.85 as machinery parts not elsewhere specified.
5. The case relied upon by the appellants viz. the decision of the Tribunal in the case of Mahindra & Mahindra Ltd. 1986 (26) E.L.T. 269 is distinguishable. In that case, the goods such as shafts, cranks, gears were classified by the Customs authorities under the Customs Tariff Heading No. 87.04/06 as parts of motor vehicles as against party's claim under Heading 84.63. The Tribunal upheld the classification as confirmed by the Revenue in view of the provisto to Section Note 2(e) of Section XVII and Section l(k) of Section Note XVI of the Import Tariff of the Customs Tariff Act, 1975, and not in view of the end-use of the products. In this case, the goods in dispute are classifiable under various sub-headings of Chapter 84 and not under Heading 84.13, in view of Note 2(a) to Section XVI of the Schedule to the CETA 1985. The further plea of the appellants that some of the parts are purchased by them either directly from manufacturer of parts, or from the open market on payment of duty and these parts are not manufactured by them, has not been substantiated and therefore, is rejected.
6. The appellants have contended that during the relevant period, they cleared goods in accordance with the approved classification list and therefore, the duty demands cannot be sustained for any period prior to the issue of the show cause notice. The material on record is not sufficient to decide this aspect, although the Assistant Collector has recorded a finding that classification list No. 2/88-89 effective from 1-4-1988 was approved by the Competent authority. However, reference is also made to issue of show cause notice on 6-12-1988 and subsequently. The details as to the period covered by the notice, dated 6-12-1988 are not available. We therefore, remand the issue of enforceability of demands to the Assistant Commissioner for fresh decision in the light of the Supreme Court judgment in the case of Commissioner of Central Excise, Vadodara v. Cotspun Ltd. reported in 1999 (113) ELT 353 (SC)] wherein it has been held that question of short levy does not arise in situations where clearances of goods have been made in accordance with the approved classification lists. If it is found that the classification lists during the period of demand were approved by the Competent authority, then needless to say, the demands cannot be enforced, having regard to the Supreme Court decision cited (supra). However, demand on clearances made otherwise, if any, will require to be confirmed. The appeals are disposed of in the above terms.