2016 (9) TMI 82 - AT - Central Excise

Duty liability - parts captively utilised for manufacture of power driven pumps - appellant classified the parts under sub-heading 8413.00 and claimed exemption under Notification 236/86 - parts cleared on payment of 15% duty liability - on scrutiny it was observed that these parts are finished goods themselves i.e. shaft and merit classification under sub-Heading 8483.00 attracting duty @ 20% - Held that - it is found that the identical issue in the case of EIMCO Elecon (India) Ltd. 2008 (11) TMI 492 - CESTAT, AHMEDABAD this Tribunal has held that classification of modified parts to suit machinery will be classifiable under special Heading of the CETA, 1985. It is also found that the similar issue of classification of pumps - parts and accessories of power driven pumps (such as shaft, worm wheel, nut washer, gasket, valves, bearing etc.) are classifiable in their respective Heading from 84.80 to 84.84 of CETA, 1985 is finding recording on merits by the Bench in the case of Swelore Engg. P. Ltd. 2000 (2) TMI 141 - CEGAT, COURT NO. II, NEW DELHI which are directly applicable in the case in hand. Therefore, in view of the foregoing and authoritative judicial pronouncements, the impugned order is upheld. - Decided against the appellant

Summary

Issues: Liability to duty on parts used in manufacturing power driven pumps.

The judgment addresses the issue of liability to duty on parts utilized for manufacturing power driven pumps. The appellant classified the parts under sub-heading 8413.00 and claimed exemption for captively consumed parts under Notification 236/86. However, upon scrutiny, the department observed that these parts, specifically "shaft," were finished goods themselves and should be classified under sub-heading 8483.00, attracting duty at 20%. A show-cause notice was issued for the payment of differential duty, which was confirmed by the adjudicating authority. The appellant appealed this decision, arguing that the pump shafts were solely and principally used in the manufacture of submersible pumps for water handling. They also contended that the burden of proof lay with the department in the classification dispute, which they failed to support with evidence. The first appellate authority upheld the demands, leading to the appeal before the Tribunal.

The Tribunal considered the arguments presented and examined relevant precedents. Firstly, referring to the case of EIMCO Elecon (India) Ltd., the Tribunal held that modified parts for machinery are classifiable under special headings of the Central Excise Tariff Act, 1985. Secondly, citing the case of Swelore Engg. P. Ltd., the Tribunal noted that parts and accessories of power driven pumps, including shafts, are classifiable under headings 84.80 to 84.84 of the Act. The Tribunal emphasized that parts of machines classified under specific headings should be categorized accordingly, even if tailored for specific machinery use. The Tribunal rejected the appellant's reliance on the case of Mahindra & Mahindra Ltd., distinguishing it from the current scenario where the disputed items fell under various sub-headings of Chapter 84. Additionally, the appellant's claim of purchasing parts from manufacturers or the open market without manufacturing them was dismissed for lack of substantiation. Ultimately, based on the precedents and legal analysis, the Tribunal upheld the impugned order, rejecting the appeal.

In conclusion, the Tribunal affirmed the decision regarding the liability to duty on parts used in manufacturing power driven pumps, emphasizing the correct classification of parts under specific headings as per the Central Excise Tariff Act, 1985. The judgment provided a detailed analysis of relevant precedents and legal provisions to support the dismissal of the appellant's appeal.