2016 (11) TMI 996 - AT - Central Excise

Classification of goods - laminated safety glasses - classified under the head 84.27 or 84.28 as claimed by the appellant, or under heading 73.08/73.26 of CETA? - the decision of Gajra Gears Ltd., Vs. CCE 2015 (5) TMI 629 - SUPREME COURT referred where it was held that Fork-lift truck is operational without pallets and as such pallets are not parts of the same. If the contention of the Respondent is accepted, motor sprit will be part of a motor car as the same cannot be used without it. Once it is held that pallets are not parts of fork-lift truck, Note 2 to Section XVI is not attracted as it only provides guidance for the classification of parts and not all goods which are used or to be used with the machineries falling in Section XVI of the Tariff. - the impugned pallets, being not part of fork-lift trucks, are not classifiable under Heading 84.31 of the Tariff - it was also held in the case It is an admitted position, as explained by the appellant itself, that these pallets which are manufactured/assembled in the factory of the appellant are in the nature of material handling equipment, to keep and carry work in progress goods from one machine to the other. Thus, the use of the pallets is for carrying out the material from one machine to the other. It cannot, therefore, be said that these goods are used in relation to the manufacture in or in relation to the manufacture of the final products. We are, therefore, of the opinion that column (2) of Notification shall also not be attracted. The issue is squarely covered by the Hon ble Supreme Court decision in the case of Gajra Gears Ltd., - appeal dismissed - decided against appellant.

Summary

Issues Involved:
1. Classification of pallets and trolleys.
2. Eligibility for duty exemption under Notification No. 67/95-CE.

Issue-wise Detailed Analysis:

1. Classification of Pallets and Trolleys:
The appellants are engaged in the manufacture of laminated safety glasses and use pallets and trolleys as material handling equipment within their factory. The central issue is the classification of these pallets and trolleys under the Central Excise Tariff Act (CETA). The original adjudicating authority classified these goods under heading 73.08/73.26, denying the appellant’s claim for classification under heading 84.27 or 84.28. The Commissioner (Appeals) upheld this classification, citing the decision in Maruti Udyog Ltd. v. CCE. The appellants argued that the Larger Bench of the Tribunal in Banco Products (India) Ltd. v. CCE had held that material handling devices used within the factory are capital goods and should benefit from Notification No. 217/86-CE. However, the Tribunal found that the Supreme Court in Gajra Gears Ltd. had already examined and classified similar pallets under heading 7326.90, not under 84.31, as they were not considered parts of the machinery.

2. Eligibility for Duty Exemption under Notification No. 67/95-CE:
The second issue pertains to whether the appellants could claim the benefit of Notification No. 67/95-CE, which exempts capital goods defined in Rule 57Q of the Central Excise Rules, 1944, if manufactured and used within the factory. The Tribunal noted that the Supreme Court in Gajra Gears Ltd. had addressed this issue, concluding that the pallets did not qualify as capital goods under the definition in Rule 57Q as it existed during the relevant period (1999-2000). The Tribunal also examined the language of the Notification and the definitions provided therein. It found that the pallets, being material handling equipment used for moving goods within the factory, did not meet the criteria of being used "in or in relation to the manufacture of final products" as specified in the Notification.

Conclusion:
The Tribunal dismissed the appeal, affirming that the classification of the pallets and trolleys under heading 73.08/73.26 was correct and that the appellants were not entitled to the duty exemption under Notification No. 67/95-CE. The decision was based on the precedent set by the Supreme Court in Gajra Gears Ltd., which had addressed both the classification and the applicability of the duty exemption for similar goods.