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The Id. Chartered Accountant therefore submitted that even after the forgings, the forged products had not acquired the essential character of component parts as they needed further to be worked and further working of these forged products was done by the purchasers before they are identifiable as motor vehicle parts and hence the appellants' products were neither motor vehicle parts nor the forgings can be said to be motor vehicle parts.

4. It was argued by the Id. Chartered Accountant that the product of the appellants was roughly shaped forgings; that forging is the primary product; that alloy steel is used in these forgings; that the goods are un-machined forgings; that in para 9.4 of their order, this Tribunal had interpreted Rule 2(a); that according to this interpretation of Rule 2(a), the appellant's goods had not acquired the character so as to be classified under Central Excise Tariff Sub-Heading 8708.00. In support of his contention, the Id. CA cited and relied upon the decision of the Tribunal in the case of TELCO v. Collector reported in 1990 (50) E.L.T. 571. Further, the decision of the Delhi High Court in the case of: Metal Forgings Put. Ltd. reported in 1985 (20) E.L.T. 280, and the decision of the Tribunal in the case of Aravali Forgings Ltd. reported in 1994 (70) E.L.T. 693 and again another decision of the Tribunal in the case of Echjay Industries Ltd. reported in 1994 (72) E.L.T. 98 were also cited and relied upon by the Id. Chartered Accountant in support of his contention; that in the case of TELCO, the Tribunal had held that under general principles for determining the essential character for the purpose of Rule 2(a) can be laid down and facts and circumstances of each article had to be looked into to grasp the essential character of that article; that in para 9.2 of this judgment of TELCO, the Tribunal had held that "Having regard to the nature of extensive operations carried out by TELCO as set out above, it cannot be said that the imported product has acquired the essential character of an automobile part synchrome ultimately manufactured by the appellants at their works in India as explained by TELCO in their appeal"; that in para 10 of this order, it was held by the Tribunal that in view of the function of the product synchrome, it cannot be said that the product as imported had acquired the essential character of a finished product. Summing up, the Id. Chartered Accountant submitted that the admitted position was that the product was forgings or forged parts and since the product had not acquired the essential character of a motor vehicle part inasmuch as it needed machining and finishing which was done by the purchaser. Therefore, it could not be classified as a motor vehicle part falling under Central Excise Tariff sub-heading 8708.00. The Id. Chartered Accountant therefore prayed that in view of the case law cited and relied upon and the submissions made by him, the appeal may be allowed.

12. The Tribunal in the case of TELCO reported in 1990 (50) E.L.T. 571 again went into the implications of Interpretative Rule 2(a). Relevant paragraphs are para 12.1,12.2 and 12.3 which are reproduced below :-

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13. The Tribunal again examined the implications of Interpretative Rule 2(a) in the case of Echjay Industries Ltd. The relevant para is para 12 which is reproduced below : -

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14. As against this, the Id. SDR cited and relied upon the decision of the Tribunal in the case of Bajaj Auto Ltd. wherein the Tribunal again interpreted the implications of Interpretative Rule 2(a). The relevant para of this order para 5 which is reproduced below :-

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15. On careful consideration of the above decisions, we find that the general principle evolved is that in each case all the factors would have to be taken into consideration individually and then collectively to determine whether the article had attained the approximate shape or outline of the finished product and can be used only for completion into the finished article. We also observe that in the case of TELCO, Echjay and Shivaji, the Tribunal had held that the forged products/forgings had not acquired the essential character of the finished product and therefore they were classifiable as forgings or semi-finished products. These decisions of the Tribunal pertained to the disputes of classification of the goods prior to restructuring of the Central Excise Tariff in respect of Chapters 72-73 before 1-3-1988. However, the fact remains that the ratio of the decisions shall still have persuasive value. Now examining the facts of the present case with reference to the material available on record, we find that in the classification list No. 67/88, the goods have been described as (i) semi-finished products of iron or steel - forgings and forged products of steel. This classification list has been approved by the Asstt. Collector on 24-10-1988. Similarly in other classification list also for the subsequent period, the goods have been described as forgings and forged articles of steel. In the purchase orders placed by M/s. Gajra Gears and Bharat Gears, the goods have been described as forgings for different parts of motor vehicles. M/s. Bharat Gears in their letter dated 3-8-1992 have certified that "un-machined forgings supplied to us as forged condition by you undergo normalising, shot blasting, plank turning, gear cutting and further operations as required before the end use." M/s. Gajra Gears in their letter dated 22-8-1992 have certified that "We are availing modvat credit on forgings received from M/s. Jaypee Forge". However, in the purchase order of M/s. Gajra Gears, it is clearly indicated as :

19. It is a fact that with effect from 1-3-1988, Chapters 72 and 73 of the Central Excise Tariff Act, 1985 were aligned to HSN. The item 72.07 reads as :

72.07 : Blooms, billets, slabs and sheet bars (including tin plate bars) and hoe bars 7207.10-of iron 7207.20 - of steel Forged products/forgings not covered under Heading 72.07 would be classifiable under Chapter 73, 84, 85, 86, 87 etc. as blanks or semi-finished articles having essential character of machinery parts. The essential condition therefore was whether the product manufactured by the appellants fell under Heading 72.07 or not. In the Explanatory notes on page 991 of the HSN, it has been provided that "The Heading covers blooms, billets, slabs, sheet bars, pieces roughly shaped by forging, blank for angles shapes or sections and all products obtained by coiftinuous casting". Thus, we find that Item 72.07 covers pieces roughly shaped by forging. What do the words 'pieces roughly shaped' mean? The Board had clarified that in view of the order of the Hon'ble Supreme Court in the case of TISCO v. UOI reported in 1988 (35) E.L.T. 605 on two-stage levy for castings and forgings under erstwhile Central Excise Tariff and of the High Court of Gujarat (Ahmedabad)'s order dated 5-2-1988 in the case of Echjay Industries v. UOI which is against the recourse to Explanatory notes so long as the entries were not aligned with HSN, the ratio of Board's decision should be applicable mutatis mutandis to the classification of forgings as well. The Board noted that Chapters 72 and 73 of the Central Excise Tariff Act, 1985 prior to 1-3-1988 were not fully aligned with HSN. The entries in the Chapter 72 and 73 of the CETA, 1985 prior to 1-3-1988 to be interpreted in accordance with the established practice and trade understanding. Accordingly, forgings which had been subjected to processes upto and including the stage of proof machining whereby they were only smoothened and made ready for final machining to shape them into machine parts were to be recorded as pieces roughly shaped under the old tariff item 25 prior to 28-2-1986 and also under Heading 72.08 with effect from 28-2-1986.