2008 (1) TMI 290 - SC - Central Excise

Specialized processing work like winding, die casting, coil setting etc. on job work basis on customers raw materials - customers undertook further processing to manufacture rotors & stators and used them in mfg. fans order of collector holding that the rotors and stators were complete and were manufactured by the appellant, is not correct - held that the rotors & stators cleared by appellant were not finished goods, therefore, not exigible to the levy of excise duty for the relevant period

Summary

Issues:
1. Classification of goods for excise duty - Finished or unfinished.
2. Consistency in departmental decisions over similar goods.

Analysis:
1. The appellant, a small scale industry, manufactured electric fans along with rotors and stators, essential components for fan production. The issue arose when the Collector and the Tribunal classified the rotors and stators as complete products, subject to excise duty. However, the appellant argued that a previous decision by the same Collector for an earlier period deemed the rotors and stators as incomplete goods. The appellant presented evidence of this inconsistency, and the Department, upon review, acknowledged the validity of the earlier decision. Consequently, the Supreme Court accepted the appeal, overturning the Tribunal's order and ruling that the rotors and stators were unfinished goods not liable for excise duty.

2. The crucial aspect of this case revolved around the consistency in departmental decisions regarding the classification of goods for excise duty. The appellant successfully demonstrated that a prior decision by the same authority had classified similar goods differently, emphasizing the incomplete nature of the rotors and stators. The Department, upon acknowledging this inconsistency and accepting the validity of the earlier decision, led to the Supreme Court setting aside the Tribunal's order and ruling in favor of the appellant. This highlighted the importance of uniformity and consistency in departmental decisions to ensure fair treatment and compliance with excise duty regulations.