2007 (8) TMI 209 - AT - Central Excise

Various motor vehicle parts cleared by the appellants from different units at different points of time have to assessed on merit in each case and not together as motor vehicle chassis in CKD/SKD condition So demand of duty by classifying the impugned goods under Heading 8706.42 is set aside

Summary

Issues:
Classification of goods supplied to vehicle factory as motor vehicle chassis under sub-heading 8706.42 or motor vehicle parts under Heading 8708.

Analysis:
The case involved a dispute regarding the correct classification of goods supplied by the appellants to a vehicle factory. The appellants contended that the goods should be classified under Heading 8708 as motor vehicle parts, while the adjudicating Commissioner classified them as motor vehicle chassis under sub-heading 8706.42, imposing duty demand and penalty.

The appellants were engaged in manufacturing motor vehicles and chassis, supplying components to the vehicle factory at Jabalpur. The dispute arose from the classification of these components supplied by the appellants. The appellants argued that the goods supplied were parts of motor vehicles, not complete chassis, as claimed by the Commissioner.

The appellants had agreements with the vehicle factory for the supply of motor vehicle chassis in CKD/SKD condition. Despite various correspondences and clarifications, the classification issue persisted. The Board clarified that the goods should be classified as a complete chassis under heading 8706, contrary to the appellants' claim for classification under heading 8708.

The appellants challenged the show-cause notice, arguing that the goods should be classified under heading 8708. The Commissioner, however, upheld the classification under heading 8706.42, emphasizing that the goods had the essential character of a complete motor vehicle chassis, as per Rule 2(a) of the Interpretative Rules.

In their defense, the appellants cited similar cases and relevant legal precedents to support their classification claim. The Department, on the other hand, supported the Commissioner's order based on legal judgments favoring the classification of similar goods as motor vehicle chassis.

Upon thorough analysis, the Tribunal found that the goods were supplied from different units of the appellant over a period of time, not presented together for assessment. Rule 2(a) required goods to be presented together to classify as a complete article. As the goods were not presented or cleared together, the Commissioner's order classifying them as motor vehicle chassis in CKD/SKD condition was deemed incorrect.

Therefore, the Tribunal set aside the impugned order, concluding that the goods should be assessed individually based on merit, not collectively as motor vehicle chassis. The duty demand and penalty imposed were overturned, and the appeal was allowed.