2007 (7) TMI 10 - SC - Central Excise

Classification - Revenue contended that the machinery and parts manufactured by assessee fall under Chapter 84 of CETA, 985 CESTAT supported the revenue contention

Summary

Issues:
Classification of machinery and parts under Central Excise Tariff Act, 1985.

Analysis:
The case involved the classification of machinery and parts under Chapter 84 of the Central Excise Tariff Act, 1985. The revenue alleged that the products were misclassified by the assessee, leading to show cause notices proposing a duty levy of Rs. 14,37,805. The dispute centered around the classification of various products like milk/cream pasteurizers, chilling plants, milk/cream chiller, pumps, separators, and butter packing machines. The revenue proposed specific classifications for each product under different chapter sub-headings based on their functions and usage as heat exchangers. The Assistant Commissioner confirmed the demand, leading to a total demand of Rs. 14,37,805 under Section 11-A of the Central Excise Act, 1944, with an imposed penalty of Rs. 25,000 under the Central Excise Rules, 1944. The Commissioner (Appeals) upheld the demand but set aside the penalty.

The appellant contended before the CESTAT that the items should be classified under Chapter Heading 84.34, while the revenue supported the lower authorities' orders. The CESTAT, after examining the HSN Explanatory Note, found that machines for processing milk, like pasteurizers and chillers, were excluded from Chapter Heading 84.34. The CESTAT upheld the impugned order and dismissed the appeal. The appellant argued that the lower authorities failed to appreciate the essence of various entries, HSN Explanatory notes, and chapter headings, while the revenue supported the Tribunal's judgment.

Chapter 84 of the Central Excise Tariff Act deals with Nuclear Reactors, boilers, machinery, and mechanical appliances. The relevant portion of Chapter 84 specifies that machines or appliances primarily based on heat exchange principles are excluded from certain headings. The Explanatory Notes under Chapter Heading 84.34 elaborate on the exclusion of machines for processing milk based on heat exchange principles. The notes specifically exclude refrigerating appliances, cream separators, and machines for wrapping or weighing products from Chapter Heading 84.34. The CESTAT's decision was supported by the Explanatory Notes and the Tribunal's view in classification matters was considered valid unless patently wrong. Consequently, the appeal was dismissed with no order as to costs.

In conclusion, the judgment revolved around the correct classification of machinery and parts under the Central Excise Tariff Act, 1985, specifically focusing on products related to milk processing and dairy machinery. The analysis considered the relevant chapter headings, sub-headings, and HSN Explanatory Notes to determine the appropriate classification, ultimately upholding the CESTAT's decision based on the principles outlined in the legal provisions and explanatory notes.