2006 (2) TMI 465 - AT - Central Excise

Summary

Issues:
Classification of Power Steering Pump under Notification No. 64/95-C.E.

Analysis:
The case involved a dispute regarding the classification of a Power Steering Pump by an appellant-unit under Heading 8413.80 and its inclusion in a 'Power Steering Kit' classified under Heading 8708, cleared to a government ordnance factory under Notification No. 64/95-C.E. The Department contended that the Power Steering Pump was not eligible for the benefit of the Notification. The lower authorities upheld the Department's view, leading to the appeal.

The appellants argued that they had previously cleared the same goods to private customers under Heading 8708.00, and the Department did not contest that classification. They clarified that the Power Steering Pump was part of the 'Power Steering Kit' under Heading 87.08, which was undisputedly eligible for the Notification's benefit. The Department claimed that by classifying the pump differently within the kit, the appellants were in error.

Upon review, the Tribunal found that the lower authority's reasoning was inconsistent. It noted that the appellants had previously classified the Power Steering Pumps under Heading 8708.00 for private customers without objection from the Department. The Tribunal highlighted that the Power Steering Kit was part of motor vehicles eligible for exemption under the Notification when used in a government ordnance factory. It was revealed that the same Power Steering Pumps were classified under Heading 8708.00 when cleared to another entity, which the Department had accepted. Therefore, the Department was estopped from taking a different stance in this case. The Tribunal concluded that the appellants correctly classified the Power Steering Pump under Heading 8708.00 in the 'Power Steering Kit' for the ordnance factory, making them eligible for the exemption. Consequently, the demand for duty was deemed unsustainable, and the appeal was allowed in favor of the appellants with appropriate reliefs.

In summary, the judgment resolved the issue of classification of the Power Steering Pump under Notification No. 64/95-C.E. by establishing that the appellants had legitimately availed the benefit of the Notification based on consistent classification practices and the eligibility of the 'Power Steering Kit' under Heading 8708.00, leading to the setting aside of the demand for duty.