2006 (3) TMI 367 - AT - Central Excise

Summary

Issues: Classification of goods under CETA Schedule, demand of duty, penalties under Section 11AC and Rule 25, waiver of pre-deposit and stay of recovery.

In this case, the main issue revolved around the classification of goods under the CETA Schedule, specifically the "Launching Mechanism" which the Commissioner classified under Heading 84.25, demanding duty of Rs. 2.41 crores. The assessee argued for classification under Heading 87.05. Additionally, two other items were classified under Heading 87.05 with duty demanded accordingly. The assessee had paid Rs. 36.67 lakhs against a demand of Rs. 44.2 lakhs. Penalties were imposed under Section 11AC and Rule 25. The application sought waiver of pre-deposit and stay of recovery for penalty amounts and the remaining duty.

Upon examination, it was found that the "Launching Mechanism" was mounted on a motor vehicle chassis. The adjudicating authority included the chassis value in the assessable value of the mechanism for duty payment. The dispute arose between Chapter 84 and Chapter 87 classification. The Commissioner, relying on HSN notes, categorized the mechanism under Heading 84.25 as a mobile equipment. However, it was argued that mounting equipment on a motor vehicle chassis falls under Chapter 87, not Chapter 84. The Tribunal agreed that the mechanism, manufactured by mounting specific equipment on a vehicular chassis, should be classified under Heading 87.05. Consequently, waiver of pre-deposit and stay of recovery were granted for the duty demanded on the differential value.

The Tribunal ordered the deposit of Rs. 7.54 lakhs for the other items within four weeks, with compliance reporting due by a specified date. In case of compliance, there would be a waiver of pre-deposit and stay of recovery for the entire penalty amount. The decision was dictated and pronounced in open court, bringing clarity to the classification dispute and the associated duty demands and penalties under consideration.