1996 (9) TMI 558 - AT - Central Excise

Summary

Issues Involved:
1. Classification of Die Cast Rotors and Stators.
2. Applicability of Exemption under Notification No. 64/86-C.E. and its amendment.
3. Interpretation of Central Excise Tariff Headings 84.13 and 85.03.
4. Marketability and Captive Use of Rotors and Stators.
5. Applicability of Previous Tribunal and High Court Decisions.

Detailed Analysis:

1. Classification of Die Cast Rotors and Stators
The primary issue in this case is the classification of Die Cast Rotors and Stators manufactured by the respondent. The Revenue classified these under Heading No. 85.03, which covers "parts suitable for use solely or principally with the machines of Heading Nos. 85.01 and 85.02." The respondent argued for classification under Heading No. 84.13, applicable to pumps for liquids.

2. Applicability of Exemption under Notification No. 64/86-C.E. and its Amendment
The respondent claimed exemption under Notification No. 64/86-C.E., as amended by Notification No. 236/86-C.E., on the grounds that their Die Cast Rotors and Stators were parts of power-driven pumps designed for handling water. The Asstt. Collector initially rejected this claim, classifying the items under Heading No. 85.03. The Collector (Appeals) set aside this order, but the Tribunal found that the Collector (Appeals) had not decided the matter correctly.

3. Interpretation of Central Excise Tariff Headings 84.13 and 85.03
The Tribunal noted that Heading No. 85.03 specifically covers parts suitable for use with electric motors, and this classification could not be disputed even if the rotors and stators were produced specifically for power-driven pumps. The Tribunal emphasized that the classification should be based on the tariff entry in force, and previous decisions under the old tariff were not applicable to the new tariff.

4. Marketability and Captive Use of Rotors and Stators
The Tribunal highlighted that rotors and stators are marketable commodities and must be assessed on their own merit, even if used captively. The settled position is that goods used captively must pay Central Excise Duty at the appropriate rate before their clearance for captive use.

5. Applicability of Previous Tribunal and High Court Decisions
The Tribunal referred to previous decisions, including the Gujarat High Court's ruling in the case of Saga Windel Engineers and the Supreme Court's decision in Elson Machines Pvt. Ltd. These decisions clarified that rotors and stators, even when used in monoblock pumps, fall under Heading No. 85.03 and not under any other heading. The Tribunal found that these precedents supported the Revenue's classification under Heading No. 85.03.

Conclusion
The Tribunal concluded that the Collector (Appeals) had not decided the matter correctly and set aside his order. Consequently, the appeal filed by the Revenue was allowed, affirming the classification of Die Cast Rotors and Stators under Heading No. 85.03.