2012 (6) TMI 429 - AT - Central Excise

Classification of Honing Machine - Revenue contended that Honing Stones are classifiable under chapter 6801.90 therefore they are not eligible for the CENVAT - period involved September, 2000 to June, 2003 - Held that - It is undisputed that Honing Machine is classifiable under chapter sub-heading 8460 which is covered under sub clause 1 of Rule 57AA of the erstwhile Central Excise Rules, 1944. Also, Honing Machine is used for smoothing and polishing the outer surface of ball bearing. In case the outer surface is not smoothened it would adversely effect the performance of the ball bearing. Tribunal in the case of Gotze India Ltd. vs CCE has held that Honing Stone is similar to grinding wheel in so far as the function is concerned and accordingly they allowed the CENVAT Credit on the same and which was upheld by larger Bench in the case of Rathi Udyog Ltd (2000 (5) TMI 73 (Tri)). Therefore, order of Commissioner is set aside and appeal is allowed in favor of assessee with consequential relief, if any.

Summary

Issues:
1. Appeal against Order-in-Appeal setting aside lower adjudicating authority's decision.
2. Classification of Honing Stones under Central Excise Rules.
3. Eligibility of CENVAT credit for Honing Stones.
4. Interpretation of Honing Stones as capital goods.
5. Application of Tribunal's previous decisions on similar cases.

Analysis:

1. The appellant filed an appeal against Order-in-Appeal No.13/HAL/06 which set aside the lower adjudicating authority's decision to drop proceedings initiated by four Show Cause Notices.

2. The case revolved around the classification of Honing Stones under Central Excise Rules. The department contended that Honing Stones are not specified as capital goods under Rule 57AA of the Central Excise Rules.

3. The main issue was the eligibility of CENVAT credit for Honing Stones used by the appellants in the manufacture of ball and roller bearings. The department challenged the lower adjudicating authority's decision, arguing that Honing Stones are classifiable under a different category and hence not eligible for CENVAT credit.

4. The appellant argued that Honing Stones, used in conjunction with Honing Machines classified under sub-heading 8460, should be considered capital goods. They emphasized that Honing Machines are essential for smoothening and polishing the outer surface of ball bearings, crucial for their performance. The appellant relied on previous Tribunal decisions supporting their stance.

5. After considering both sides' submissions and examining the record, the Tribunal found that Honing Machines are classified under sub-heading 8460 and are crucial for the performance of ball bearings. Drawing parallels with previous decisions, the Tribunal concluded that Honing Stones are akin to grinding wheels and thus eligible for CENVAT credit. Consequently, the Tribunal set aside the Commissioner(Appeals)'s order and allowed the appeal with any consequential relief as per law.