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1. In this appeal filed by the Revenue, the matter relates to the classification of the goods - "rotors and stators." The respondents M/s. Chitra Indus, were engaged in the manufacture of rotors and stators. These rotors and stotors were used in the manufacture of monoblock power-driven pumps. The assessees had claimed exemption in respect of these rotors and stators under Notification No. 65/86-C.E., dated 10-2-1986 (as amended) on the ground that their rotors and stators were parts of power-driven pumps which were primarily designed for handling water. The Asstt. Collector of Central Excise, Coimbatore, had classified these rotors and stators under Heading No. 85.03 of the Schedule to the Central Excise Tariff Act, 1985 (hereinafter referred to as the Tariff) which covered "parts suitable for use solely or principally with the machines of Heading Nos. 85.01 and 85.02". Heading No. 85.01 covered "Electric motors and generators (excluding generating sets)." Electric generator sets and rotary converters were classifiable under Heading No. 85.02. The Asstt. Collector of Central Excise, Coimbatore, who had adjudicated the matter observed that stators and rotors were component parts of electric motor and they were classifiable under Heading No. 85.03 in terms of Note 2(b) of Section XVI. He further observed that as they were parts of electric motors and not parts of power-driven pump, the benefit of exemption Notification No. 64/86-C.E. was not available to them. The Collector of Central Excise (Appeals), Madras, however, following an earlier decision held that classification of rotors and stators under Heading No. 85.03 was correct. He further observed that as the Department has consistently held that no electric motor comes into existence in case of manufacture of monobloc pump sets, no duty was payable at the stage of electric motor after proper duty had been paid on rotors and stators.

2. The matter was posted for hearing on 16-10-1996, when Shri P.K. Jain, SDR, appeared for the appellants/Revenue. No one is present for the respondents, M/s. Chitra Indus., to whom the notice for today's hearing has been issued on 26-9-1996 and had been acknowledged by them on 30-9-1996.

3. We have carefully considered the matter. We find that the similar issue has come up for our consideration in Appeal No. E/1883/87-B in the case of CCE, Ahmedabad v. Jyoti Electrical Motor Ltd. and the order had been dictated in the open court on 25-9-1996. In that case the Asstt. Collector of Central Excise, who had adjudicated the matter, had held that the rotors and stators which were being manufactured by the appellants in that case were separately classifiable under Chapter Heading No. 85 and they were primarily designed to create a motive power and even when this motive power is generated in the monoblock pump, it was to be correctly classifiable under Heading No. 85.03. The Collector of Central Excise (Appeals) had set aside the order of the Asstt. Collector and had taken a view that the rotors and stators were part of the monoblock pump. We have not agreed with the findings of the learned Collector of Central Excise (Appeals) and have held that the rotors and stators even if they are specifically produced for power-driven pumps had to be classified under Heading No. 85.03 as parts suitable for use with the electric motors. Paras 7 to 12 from that decision are extrated below :

"7. Rotors and stators are marketable commodity and had to be assessed on their own merit. It is the settled position that the goods even if they are used captively they had to pay CED at the appropriate rate before their clearance for captive use. In this case, at the stage of the rotors and stators even if they are specifically produced for power-driven pump, their classification under Heading No. 85.03 could not be disputed.

8. As regards Heading No. 84.13, it relates to pumps for liquids, whether or not fitted with a measuring device; liquid elevators. The power driven pumps even when they are cleared without motor are classifiable under this heading.

"Explanation V - Where any specified goods (hereinafter referred to as inputs) are used for further manufacture of specified goods (hereinafter referred to as finished goods) within the factory of production of inputs and where such inputs and finished goods fall under the same item of the said First Schedule to the said Act, the clearances of such inputs for such use shall not be taken into account for the purposes of calculating the aggregate value of clearances under this notification."

The Appellate Tribunal observed that in terms of the Explanation the clearances of inputs could not be taken into account for calculating the aggregate value of clearances only when the inputs and finished products fall under the same item of the First Schedule to the Act. It pointed out that while electric motors were mentioned under Tariff Item 30, power-driven pumps were specified under Tariff Item 30A. It said that consequently the electric motors captively consumed as inputs in the manufacture of power driven pumps could not be excluded when determining the appellant's clearances. The appellant urged that the appellant had mistakenly stated that electric motors had been used for monoblock pumps whereas only rotors and stators which were integral components of monoblack pumps had been used, and that, therefore, the same Tariff Item was attracted, thus entitling the appellants to the concession. The Submission was rejected by the Appellate Tribunal. Accordingly, it found that the appellant had exceeded the limit stipulated by Notification No. 80/80-C.E., dated 19 June 1980, and was, therefore, disentitled to the concession.