2017 (2) TMI 977 - AT - Central Excise

Classification of goods - columns, fabricated beams, structure and staging. These items have been used for erection and support of fabricated structures in the sugar molasses mill machinery - classified under 84389010 or under chapter heading 7309? - Held that - the department is not justified in seeking to the change the classification at the end of the recipients once the classification has been accepted by jurisdictional Central Excise Officer and assessment has been done on the basis of the manufacturer s classification - appeal allowed - decided in favor of appellant.

Summary

Issues:
Classification of goods for Cenvat Credit under Central Excise Act based on actual usage in factory.

Analysis:
The appeals were filed against orders passed by the Commissioner of Central Excise (Appeals), Delhi-III, Gurgaon, regarding the classification of certain items for Cenvat Credit. The appellants, manufacturers of sugar and molasses, had taken credit on items used for fabricated structures in the sugar molasses mill machinery. The department contended that the items were wrongly classified under tariff item 84389010 and should have been classified under chapter heading 7309 based on actual usage in the factory. Two show cause notices were issued, resulting in confirmation of demands, interest, and penalties under Section 11AC of the Central Excise Act. The First Appellate Authority upheld the decision, leading the appellants to appeal to the Tribunal.

The appellants argued that the goods fell under the definition of capital goods during the relevant period and referred to invoices showing the classification as 84389010. They relied on the judgment of the Hon’ble Supreme Court in a similar case to support their position. The Revenue contended that the goods were wrongly classified by the manufacturer and justified the correct classification based on actual usage. The Tribunal considered the issue of changing classification at the recipient's end, citing the Supreme Court judgment that once the classification is accepted by the jurisdictional Central Excise Officer, it cannot be changed at the recipient's end based on actual usage.

The Tribunal, in line with the Supreme Court's interpretation of the law, held that the department was not justified in seeking to change the classification at the recipient's end after it had been accepted by the Central Excise Officer. Therefore, the impugned Orders-in-Appeal were set aside, and both appeals were allowed.