2016 (10) TMI 1136 - AT - Central Excise

Valuation - includibility - value of chassis supplied free of cost by the telecom company - classification of goods - Benefit of N/N. 6/2006-CE dated 01/03/2006 - Held that - the classification was not the subject matter agitated in the SCN, in effect, without getting the product properly classified, the proceeding to fix correct duty liability will be improper - Admittedly, the classification of the product requires re-examination. The original authority is in error to hold that Mobile Telescopic Tower cannot be classified under Chapter 87. We note that the whole final product as cleared by the appellant (MTT mounted vehicle) is considered for valuation but for classification, the original authority is considering only the MTT. This is not legally tenable. Appeal allowed by way of remand.

Summary

Issues:
Classification of goods under Chapter 73, differential central excise duty, penalty imposition, eligibility for exemption under Notification No.6/2006-CE, correct classification under Chapter 87, ownership of chassis, uniform duty determination, valuation practice, classification of final product, remand for re-examination.

Detailed Analysis:

1. Classification of Goods under Chapter 73:
The appellants were engaged in the manufacture of mobile telescopic towers (MTT) classified under heading 73082019. The officers of Central Excise noted discrepancies in the valuation method used by the appellants based on whether they purchased chassis or received them free of cost. This discrepancy led to the initiation of proceedings to recover the differential central excise duty and impose penalties.

2. Correct Classification under Chapter 87:
The appellants argued that the correct classification of the product should be under Chapter 87, as they were involved in the manufacture and fabrication of MTT mounted on chassis/trailers. They claimed that had the goods been classified under Chapter 87, they would have been eligible for exemption under Notification No.6/2006-CE. The ownership of the chassis was with the customer, and hence, the inclusion of chassis value in the final product by the appellants was disputed.

3. Uniform Duty Determination and Valuation Practice:
The Tribunal observed that irrespective of ownership or procurement method of the chassis, the final products cleared were the same. The duty determination of the final products should be uniform, and the classification of the product becomes crucial for proper valuation and duty liability assessment. The original authority's different valuation practices for the same final product were deemed contrary to the law.

4. Remand for Re-examination:
The Tribunal held that the original order was not sustainable as the classification issue was not adequately addressed. The case was remanded back to the original authority to correctly classify the final product cleared by the appellants under Chapter 87. The authority was directed to re-examine the classification, valuation, and duty liability, considering any relevant notifications and concessions, while providing the appellants with an opportunity to present their case.

In conclusion, the Tribunal allowed the appeal by way of remand, emphasizing the importance of correct classification for proper valuation and duty determination, and directing a re-examination of the case by the original authority.