1996 (8) TMI 565 - AT - Central Excise

Summary

Issues Involved:

1. Refund of duty paid by M/s. BHEL for goods supplied to M/s. Grasim.
2. Eligibility of goods for the benefit of Notification No. 78/90 CE.
3. Classification of goods under Tariff Heading 84.21 as ESP.
4. Application of Interpretative Rule 2(a) for incomplete or unfinished goods.
5. Compliance with the conditions of Notification No. 78/90 CE.
6. Provisional assessment and final reconciliation of duty.
7. Interpretation of the notification in light of larger social purposes.

Issue-Wise Detailed Analysis:

1. Refund of Duty Paid by M/s. BHEL for Goods Supplied to M/s. Grasim:

The appeals arise from the same impugned order, where the Ld. Collector (Appeals) allowed M/s. Grasim Industries Ltd. (Grasim) a refund of duty paid by M/s. BHEL. The duty was initially paid at full rate due to the absence of a necessary certificate at the time of clearance. Grasim filed a refund claim after receiving the certificate, which was initially rejected by the Assistant Collector on the grounds that the entire Electrostatic Precipitator (ESP) was not cleared from M/s. BHEL's factory but included 54 MT of material supplied directly by sub-vendors.

2. Eligibility of Goods for the Benefit of Notification No. 78/90 CE:

The Ld. Collector (Appeals) directed the issue to be examined under Interpretative Rule 2(a). The Assistant Collector, in de novo adjudication, rejected the refund claim again, stating that the goods cleared piecemeal did not attain the essential characteristics of an ESP. The Ld. Collector (Appeals) on further appeal held that the rejection was incorrect and allowed the appeal with consequential relief.

3. Classification of Goods under Tariff Heading 84.21 as ESP:

The Ld. SDR for the department argued that the Ld. Collector erroneously observed that the parts of the ESP were classified under Tariff Heading 84.21. He contended that the goods were classified under Tariff Heading 84.04 as boiler parts. The Ld. Collector (Appeals) had directed the Assistant Collector to decide the refund claim based on whether the goods cleared by M/s. BHEL could be considered as ESP in terms of Rule 2(a).

4. Application of Interpretative Rule 2(a) for Incomplete or Unfinished Goods:

The Ld. Collector (Appeals) emphasized that the goods should be examined to determine if they had attained the essential characteristics of an ESP under Rule 2(a). The Assistant Collector failed to comply with this directive, leading to an improper order. The Ld. Collector (Appeals) in the impugned order held that the ESPs, as claimed, had come into existence without proper enquiry.

5. Compliance with the Conditions of Notification No. 78/90 CE:

The Ld. Advocate for the appellants argued that M/s. BHEL had obtained the necessary certificate from DGTD, GOI, as required by Notification No. 78/90. The authorities should have granted the benefit of concessional assessment based on this certificate. The Board's order under Section 37B clarified that the benefit of the notification would be available even when goods are cleared in CKD and SKD conditions.

6. Provisional Assessment and Final Reconciliation of Duty:

The Ld. Collector (Appeals) noted that the classification of the goods was provisional, and each consignment was cleared as ESP. The entire system weighing about 800 MT could not be cleared at once and had to be cleared in consignments over time. The Ld. Collector (Appeals) set aside the order-in-original and allowed the appeal, observing that the conditions of the Section 37(B) order had been satisfied.

7. Interpretation of the Notification in Light of Larger Social Purposes:

The Ld. Advocate for the appellants emphasized that the notification aimed to address effluents and pollutants for public health. The interpretation of the notification should not defeat its purpose. The Ld. Collector (Appeals) directed that the goods should be assessed provisionally and reconciled upon final clearance to determine if an ESP had been manufactured piecemeal.

Conclusion:

The appeal of the Revenue is allowed by remand. The matter is remanded to the original authority for de novo decision in light of the observations above. The methodology for effectuating the notification's purpose aligns with the department's practice for assessing boilers cleared piecemeal and the Board's instructions under Section 37B for classifying ESPs.