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2006 (12) TMI 272 - AT - Central ExciseClassification of goods - Lifts/Escalators - classified under Chapter tariff heading 8428 - HELD THAT - While the Interpretative Rules are applied in determining the classification under Central Excise Law certain prior conditions are required to be applied. Under the Customs Law, any product which is entering India requires to be classified. But under Excise Law only such goods which first satisfy the criteria of manufacture are to be classified. There is finding that parts cleared in those cases constitute full machinery but in appellant s case, the specific finding of the Hon ble High Court that the lift/escalator comes into existence only on the customer s end, has not been controverted. In the case relating to M/s. Vinar Systems Ltd. 2001 (2) TMI 200 - CEGAT, KOLKATA there is a clear finding that parts cleared from the appellants factory would constitute a complete material, handling equipment in a CKD condition. In the case relating to M/s. Flat Products Equipments Ltd. 1999 (8) TMI 270 - CEGAT, MUMBAI , there is a clear claim by the party that the entire material required for manufacture of Rolling Mils come into their factory for preassembly, inspection and testing which has been accepted by the Tribunal. In the case relating to M/s. Vishwa Industries 1998 (9) TMI 239 - CEGAT, CALCUTTA , there is a finding that the items were cleared in CKD condition as complete system for the purpose of transportation. In the case relating to BHP Engg. 2000 (3) TMI 92 - CEGAT, COURT NO. II, NEW DELHI , the, dispute relates to non-observance of procedure prescribed in Ministry s letter dated 10-3-93 in respect of piecemeal clearance of all parts for a complete conveyor. Further, the very same components while cleared by the appellant for maintenance purpose are being assessed under Chapter 8431. The classification cannot change merely because they were supplied under a single contract. This view has been supported in the case of CCE v. Kone Elevators India Ltd. 2001 (6) TMI 142 - CEGAT, CHENNAI . Thus, Commissioner s finding on classification and demand of duty cannot be faulted. The appeal is, therefore, rejected.
Issues Involved:
1. Classification of parts of lifts and escalators. 2. Application of Interpretative Rules and Section Notes. 3. Burden of proof on classification. 4. Relevance of previous judgments and expert opinions. Detailed Analysis: 1. Classification of Parts of Lifts and Escalators: The primary issue is whether the items cleared by the appellant should be classified under Chapter heading 8428 (as lifts/escalators) or under 8431 (as parts). The appellant argued that the goods cleared under the contract for supply of lifts/escalators have all the essential characters of the lift/escalator and should be classified under Chapter 8428. The department, however, classified them as parts under Chapter 8431, as the parts were cleared over time and only assembled at the customer's site. The Tribunal observed that lifts/escalators are not fully manufactured at the appellant's premises but are assembled and commissioned at the customer's site. The Hon'ble Bombay High Court had previously ruled that the final product (lifts/escalators) comes into existence only at the customer's site and is not excisable as it becomes immovable property. 2. Application of Interpretative Rules and Section Notes: The appellant contended that Notes 2(a) of Section Note of Chapter XVI and Rule 2(a) of Interpretative Rules should be applied, classifying the clearances under Chapter 8428. However, the Tribunal noted that under Excise Law, only goods that satisfy the criteria of manufacture are to be classified. Since the appellant only manufactured parts or components, and not full lifts/escalators, the classification under Chapter 8431 was deemed appropriate. The Tribunal emphasized that the essential character test applies to parts as well, and the parts listed did not constitute a full machinery as per the classification list, price list, or RT-12 return. 3. Burden of Proof on Classification: The appellant argued that the burden of proof to classify the manufactured items under a particular Chapter Heading falls on the department. The Tribunal, however, upheld the department's classification under Chapter 8431, as the parts were cleared over time and did not constitute a fully finished lift/escalator. 4. Relevance of Previous Judgments and Expert Opinions: The appellant relied on several judgments and an expert affidavit to support their claim. However, the Tribunal found these cases distinct in facts. The Hon'ble Bombay High Court's finding that lifts/escalators come into existence only at the customer's site was not controverted. The Tribunal also noted that the same components, when cleared for maintenance purposes, were classified under Chapter 8431, and classification cannot change merely because they were supplied under a single contract. The Tribunal cited several judgments supporting this view, including CCE v. Kone Elevators India Ltd. Conclusion: The Tribunal upheld the Commissioner's order classifying the items under Chapter 8431 and confirming the demand of differential duty. The appeal was rejected, affirming that the parts cleared by the appellant did not constitute a full lift/escalator and were correctly classified as parts. Final Judgment: The appeal is rejected, and the Commissioner's finding on classification and demand of duty is upheld.
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