2007 (10) TMI 487 - AT - Central Excise

Summary

Issues Involved:
1. Classification of castings/forged parts under the Central Excise Tariff Act, 1985.
2. Validity of the Show Cause Notices (SCNs) issued.
3. Applicability of CBEC Circulars.
4. Marketability and dutiability of intermediate products.
5. Jurisdictional and procedural aspects of finalizing provisional assessments.

Detailed Analysis:

1. Classification of castings/forged parts under the Central Excise Tariff Act, 1985:
The primary issue revolved around the classification of castings/forged parts. The appellant sought classification under Chapters 84, 85, and 87, asserting that the castings had attained the essential character of machinery parts. However, the Adjudicating Authority classified them under SH Nos. 7325.10 and 7326.90, emphasizing that the castings were only fettled and not proof machined, thus not losing their character as castings. The Tribunal referenced the decision in *Shivaji Works Ltd. v. CCE, Aurangabad*, which held that castings remain under Heading 73.25 until they are proof machined.

2. Validity of the Show Cause Notices (SCNs) issued:
Two SCNs were issued on 15-11-95 and 13-12-95, questioning the classification claimed by the appellant. The appellant argued that the SCNs were procedurally flawed as they did not specifically bring out the dutiable amount. The Tribunal noted that the Adjudicating Authority had relied on the appellant's own submission and the manufacturing process to determine the classification, thus validating the SCNs.

3. Applicability of CBEC Circulars:
The appellant heavily relied on CBEC Circular No. CX.4 dated 28-7-89, which suggested that castings having the essential character of machine parts should be classified under Chapters 84, 85, and 87. The Tribunal acknowledged the binding nature of circulars but noted that the circular relied upon by the appellant had been superseded by Circular No. 225/59/96-CX dated 1-7-96. The Tribunal emphasized the need for the Adjudicating Authority to consider the binding nature of applicable circulars in their decisions.

4. Marketability and dutiability of intermediate products:
The appellant argued that the castings were not marketable in their intermediate form and thus not dutiable, citing the Supreme Court's decision in *Bhor Industries Ltd.* and *Union Carbide India Ltd. v. Union of India*. The Tribunal referred to the *Vasantham Foundry* and *Mukund Limited* cases, which discussed the nature of castings and their classification. The Tribunal concluded that castings remain classified under their specific headings until they are further worked upon to acquire the essential characteristics of finished machine parts.

5. Jurisdictional and procedural aspects of finalizing provisional assessments:
The appellant contended that the finalization of provisional assessments required a show cause notice, referencing the *Anchor Porcelain Works v. CCE, Rajkot* decision. The Tribunal noted that the Adjudicating Authority had followed due process by issuing SCNs and relying on the appellant's submissions and manufacturing process. The Tribunal emphasized the need for a reasoned and speaking order, considering all legal and factual issues raised by both parties.

Conclusion:
The Tribunal set aside the impugned order for being unreasoned and not self-speaking, remanding the matter to the Adjudicating Authority for fresh consideration. The Tribunal instructed the Adjudicating Authority to examine the nature of the goods, consider all relevant circulars and legal submissions, and provide a reasoned and speaking order to resolve the matter comprehensively and avoid repetitive litigation. The appeals were allowed by way of remand.