2008 (7) TMI 772 - AT - Central Excise

Parts of Mechanical system - Exemption - Captive consumption - assembly at buyer s site - Notification No. 67/95-CE dated 16-3-95

Summary

Issues:
1. Appeal against the order of the Commissioner (Appeals) setting aside duty demand on a part of a mechanical system.
2. Classification of components under different headings for duty exemption.
3. Captive consumption of control panel in the factory.

Analysis:
1. The appeal before the Appellate Tribunal CESTAT, CHENNAI was regarding the demand of duty on a mechanical system cleared by the respondents during a specific period. The system, including an "automatic waste evacuation system" in CKD condition, was cleared on payment of duty as per the relevant schedule. The issue arose when the control panel, classified under Heading 85.37, was claimed for exemption under a specific Notification for captive consumption. The Revenue contended that since the system was assembled at the buyer's site, the control panel could not be considered captively consumed in the factory, leading to the demand of duty. The original authority upheld the demand, but the appellate Commissioner reversed it, prompting the Revenue's appeal.

2. The Revenue's case primarily rested on the fact that the control panels were integrated into the mechanical system at the buyer's site, not in the assessee's factory. However, upon review, the Tribunal observed that the automatic waste evacuation system had been accepted to be manufactured in the assessee's factory and cleared in CKD condition during the disputed period. This acceptance indicated that components, including the control panel, were indeed captively used in the factory. The Tribunal, after considering the submissions and the history of duty payment, found the Revenue's appeal to be misconceived and subsequently dismissed it.

3. The Tribunal's decision was based on the understanding that the acceptance of duty payment for the mechanical system being manufactured in the factory implied captive consumption of its components, including the control panel. By highlighting the location of assembly and the duty payment history, the Tribunal concluded that the control panel was rightfully considered captively consumed in the factory, thus rejecting the Revenue's demand for duty. The judgment emphasized the importance of factual acceptance and consistency in determining captive consumption for duty exemption purposes.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT, CHENNAI provides a comprehensive overview of the issues involved, the arguments presented, and the ultimate decision rendered based on the interpretation of relevant legal provisions and factual circumstances.