2004 (2) TMI 524 - AT - Central Excise

Summary

Issues: Classification of bought out items under Central Excise Tariff Act, 1985.

Analysis:
1. The appeal was filed by M/s. Superflo Pvt Ltd. against the Order-in-Appeal passed by the Commissioner of Customs and Central Excise (Appeals), Hyderabad. The appellants are manufacturers of sanitary valves falling under Chapter sub-heading No. 3922.90 of the Central Excise Tariff Act, 1985. The Central Excise Officers found that the appellants were storing bought out items in their factory stores along with valves. A Show Cause Notice was issued for demanding duty on the bought out items, considering them as essential parts of the valves.

2. The Commissioner (Appeals) confirmed the demand, stating that the bought out items are compulsory accessories for the cisterns without which the valves cannot function normally. However, the appellants argued that the bought out items like Water diverter, Gaskets, brass Bolts, etc., are purchased separately and have independent use in the flushing cisterns. These items are not essential accessories or parts for the valves manufactured by them but are meant for fitment in the cisterns at the consumer's end.

3. The Tribunal considered the submissions and observed that the bought out items purchased by the appellants are classifiable separately under different sub-headings and have no role in the manufacture of valves. These items are sold along with valves for the convenience of customers but do not contribute to the manufacture of valves. Therefore, simply clearing the bought out items along with valves does not make them liable for duty. The Tribunal found no merit in the Department's demand for duty on the bought out items and set aside the lower authorities' order, allowing the appeal.

This detailed analysis of the legal judgment highlights the classification issue under the Central Excise Tariff Act, 1985, concerning the bought out items used by the appellants in manufacturing sanitary valves. The judgment emphasizes the separate classification of these items, their independent use, and their non-essential nature in relation to the valves, leading to the Tribunal's decision to set aside the duty demand.