2015 (10) TMI 1159 - AT - Central Excise

Duty demand - Captive consumption - Notification No. 6/2000 dated 01.03.2000 - Held that - There is no dispute on the fact that the assessees are manufacturer of submersible pumps and the intermediate product thrust bearing assembly is used in the manufacture of final product. They claimed Notification No. 6/2000 at Sl.No. 250 read with condition No. 5 1. Identical issue has been dealt by the Hon ble Tribunal in the case of KSB Pumps Ltd. (2004 (9) TMI 497 - CESTAT, MUMBAI) Tribunal discussed the Board s circular dated 4.12.02, which is relied by the department and also considered the Tribunal s decision in the case of Mather & Platt (I) Ltd.(2004 (2) TMI 446 - CESTAT, MUMBAI) and allowed the appeal. - impugned order is set aside - Decided in favour of assessee.

Summary

Issues:
Classification of thrust bearing assembly for duty exemption under Notification No. 6/2000 dated 01.03.2000.

Analysis:
The appeal challenged the Commissioner of Central Excise's order demanding duty on the thrust bearing assembly manufactured and consumed by the appellants in the production of Power Driven Pumps. The appellants, exempted from excise duty, claimed duty exemption under Notification No. 6/2000. The adjudicating authority classified the thrust bearing assembly as a bearing, denying the exemption. The issue was whether the thrust bearing assembly qualifies for duty exemption under the notification.

The appellant's advocate cited precedents where similar issues were resolved in favor of the appellants by the Tribunal and the Supreme Court. The Advocate argued that the thrust bearing assembly should be considered distinct from regular bearings, as per the Circular No. 678/69/2002-CX. The Circular highlighted that the thrust bearing assembly is a "Hydrodynamic Thrust Bearing," not falling under the category of regular bearings. The Tribunal's decision in the case of KSB Pumps Ltd. was referenced, where a similar issue was resolved in favor of the appellant.

Upon reviewing the records and precedents, the Tribunal found that the thrust bearing assembly used by the appellants was an intermediate product crucial for the final product, submersible pumps. The Tribunal considered the Circular and the decisions in the cases of Mather & Platt (I) Ltd. and KSB Pumps Ltd. The Tribunal concluded that the thrust bearing assembly should be exempted from duty under Notification No. 6/2000, as it was not a regular bearing but a specialized component. The Tribunal relied on the Supreme Court's decision in a similar case, setting aside the impugned order and allowing the appeal, absolving the appellants from the penalty.

In conclusion, the Tribunal ruled in favor of the appellants, holding that the thrust bearing assembly used in the manufacture of submersible pumps qualified for duty exemption under Notification No. 6/2000. The decision was based on the distinction between regular bearings and the specialized nature of the thrust bearing assembly, as clarified in the Circular and supported by previous legal precedents.