2006 (10) TMI 303 - AT - Central Excise

Central Excise Power driven pump sets Power driven pump amount to manufacture as by putting together a pump, an engine and platform in single carton Benefit of exemption admissible to appellant in regard to IC engines cleared along with pump sets and platform in single carton and duty was discharged on power driven pump

Summary

Issues:
Manufacturing activity in relation to power driven pumps under Notification No. 6/2002.

Analysis:
The appellant, a manufacturer of power driven pumps, claimed exemption under Notification No. 6/2002 for engines manufactured by them and cleared with pump sets. The dispute arose when the Commissioner held that merely placing a bought-out pump with their own manufactured IC Engine in a single carton did not amount to manufacturing activity. Consequently, the exemption was denied, leading to duty demands and penalties.

The appellant contested this decision, citing a clarification by the Central Board that power driven pumps are classifiable under Tariff Item No. 8413 and that engines are integral parts of such pumps. The appellant argued that the Commissioner erred in disregarding this clarification, claiming that power driven pumps are recognized as excisable items in the tariff.

Upon reviewing the case and considering the arguments presented, the Tribunal found that the appellant was discharging duty on the cleared items as power driven pumps under Tariff Entry 8413. The Tribunal noted that both the appellant and the trade recognized the items cleared as pump sets, and the tariff heading specifically acknowledged power driven pumps as excisable items. The Tribunal also referred to a circular by the Board, which clarified the classification and excisability of power driven pump sets for handling water.

The Tribunal concluded that the packets removed by the appellant constituted power driven pump sets, as they contained a pump, an engine, and a platform for mounting them together. The Tribunal emphasized that the act of assembling a pump, an engine, and a platform resulted in the creation of a new item, a power driven pump. The Tribunal held that the Commissioner's finding that there was no manufacturing activity was unsustainable, as manufacturing involves bringing into existence a new item with distinct characteristics, which was evident in this case.

In light of the above analysis, the Tribunal ruled in favor of the appellant, holding that they were eligible for the exemption in regard to IC engines under Notification No. 6/2002, and the duty already paid on power driven pumps was deemed discharged. Consequently, the impugned order was set aside, and the appeals were allowed with any consequential relief to the appellant.