2006 (7) TMI 437 - AT - Central Excise

Summary

Issues:
1. Waiver of pre-deposit of duty and penalty under notification No. 6/2002-CE for I.C. Engines and pump sets.
2. Interpretation of whether placing I.C. Engines and pumps together amounts to the manufacture of power driven pump sets.
3. Comparison of decisions regarding the classification of goods as power driven pump sets.
4. Application of Board's circular on classification of power driven pump sets.

Analysis:
The case involved an application for the waiver of pre-deposit of duty and penalty amounting to Rs. 1,78,08,035/- each, concerning the denial of the benefit of notification No. 6/2002-CE in relation to I.C. Engines and pump sets. The applicants were manufacturing I.C. Engines and procuring pump sets from the market, combining them along with a frame and clearing them as power driven pump sets. The issue revolved around whether this combination qualified for the exemption under the said notification.

The applicants contended that both the I.C. Engine and pump, when cleared together as power driven pump sets, were entitled to the exemption based on a Tribunal decision and a Board's circular. They argued that the goods were to be classified as power driven pump sets under heading 84.13 of the Central Excise Tariff, thus justifying their claim for the exemption. On the other hand, the Revenue relied on previous decisions from the Hon'ble High Court of Andhra Pradesh and Tribunal, emphasizing that merely placing items together did not constitute manufacturing, thereby challenging the eligibility of the applicants for the notification benefit.

In the judgment, the Tribunal referred to a case involving split air conditioners to draw a parallel, where the classification of goods was determined based on the final product cleared. Applying this reasoning, the Tribunal found that since the applicants were manufacturing I.C. Engines and clearing them with pumps as power driven pump sets, they were prima facie eligible for the exemption under the notification. The Tribunal highlighted the relevance of the Board's circular in classifying the goods and, consequently, waived the pre-deposit of duty and penalty, allowing the stay application.

In conclusion, the Tribunal's decision favored the applicants, recognizing their manufacturing process as constituting power driven pump sets eligible for the exemption under the notification. The judgment underscored the importance of the Board's circular in determining the classification of goods and upheld the applicants' claim for the waiver of pre-deposit, thereby granting them relief in this matter.