2004 (5) TMI 357 - AT - Central Excise

Summary

Issues involved:
Classification of "3 FAG Pallets" under Central Excise Tariff Act and eligibility for exemption under Notification No. 67/95-C.E.

Classification Issue Analysis:
The appeal concerns the classification of "3 FAG Pallets" manufactured by M/s. Gajra Gears Pvt. Ltd. under the Central Excise Tariff Act. The Deputy Commissioner classified the pallets under sub-heading 7326.90, denying exemption under Notification No. 67/95-C.E. The Commissioner (Appeals) later classified the pallets under Heading 84.27, allowing the appeal. The Revenue argued that the pallets are not parts of fork lift trucks and should be classified under Heading 73.26. They contended that the pallets are material handling equipment and are appropriately classifiable under Heading 73.26. The Respondent, however, asserted that the pallets are part of material handling equipment for shifting work-in-progress goods and should be classified under Heading 84.31. The Tribunal held that as the pallets are not essential for the operation of fork lift trucks, they are not parts of the machinery and thus not classifiable under Heading 84.31.

Exemption Issue Analysis:
The second issue revolves around the eligibility of the impugned pallets for exemption under Notification No. 67/95-C.E. This Notification exempts capital goods as defined in Rule 57Q of the Central Excise Rules, 1944. At the relevant time, goods falling under Chapter 73 of the Tariff were not covered by the definition of Capital Goods. The pallets in question were neither components nor spares of fork lift trucks and did not enhance the effectiveness of the machinery. Therefore, the Tribunal concluded that the pallets are not capital goods as per Rule 57Q and are not eligible for the exemption under Notification No. 67/95-C.E. Consequently, the appeal filed by the Revenue was allowed.

This comprehensive analysis of the judgment from the Appellate Tribunal CESTAT, New Delhi, provides a detailed understanding of the issues surrounding the classification of "3 FAG Pallets" and their eligibility for exemption under Notification No. 67/95-C.E. The Tribunal's decision emphasizes the importance of the functional association and essentiality of goods in determining their classification and eligibility for exemptions under the Central Excise Tariff Act.