2017 (12) TMI 610 - AT - Central Excise

Classification of goods - Traverse Assembly - Flat Drive Reversal System - whether classified under CTH 84.48 or otherwise? - Held that - The lower appellate authority in para-3 of the impugned order has gone into detail into the performance and functioning of each of these impugned items. He has correctly observed that it is not the case that these items are sent along with a new carding machine, but that they are actually being sent separately with other items and are only being fitted to old carding frame and old carding cylinder for improving performance. Even if the card kit is classifiable under the Central Excise Tariff Heading No.84.48, these three items viz. Traverse assembly, Drive king assembly and Flat drive reversal systems which are some of the items of the unit viz card kit and having individual functions cannot be classified under 84.48 and hence they are rightly classifiable under the Heading No.84.83 (in as much as they have more gearing and shaft operation systems, with independent motors or otherwise) as held by the lower authority and attracts applicable rate of duty. Appeal dismissed - decided against appellant.

Summary

Issues:
Classification of card conversion kits under tariff heading 8448, reclassification proposed by the department, differential duty demand, penalties imposition, appeal before Commissioner (Appeals), remand by Tribunal for classification of specific products, classification of Traverse Assembly, Drive King Assembly, and Flat Drive Reversal System, arguments regarding classification under CETH 84.48 or 84.83.

Analysis:
1. The appellants, manufacturers of textile machinery, faced reclassification of card conversion kits under tariff heading 8448 by the department, leading to a demand for differential duty and penalties. The original authority classified various products under Annexure A, which was challenged in an appeal before the Commissioner (Appeals), who ordered the demand of differential duty to be applied prospectively. Both the department and the appellants filed appeals before the Tribunal, resulting in a remand regarding the classification of specific products.

2. The Tribunal remanded the matter to the Commissioner (Appeals) for reconsideration of the classification of "Traverse Assembly", Drive King Assembly, and Flat Drive Reversal System. In the subsequent proceedings, the Commissioner (Appeals) upheld the classification of these three products under 84.83 instead of 84.48, directing the payment of differential duty from 1.6.1993 onwards, leading the appellants to appeal again before the Tribunal.

3. During the hearing, the appellant's counsel explained the details of the impugned products, emphasizing their functions and components. While the appellant accepted the classification of Drive King Assembly under 84.83, the dispute revolved around the classification of Traverse Assembly and Flat Drive Reversal System under CETH 84.48. The appellant argued that these products, being part of textile machines, should fall under 84.48, contrary to the department's stance.

4. The department contended that the impugned goods were not part of new textile machinery but were sent separately to be fitted to old carding frames and cylinders, justifying their classification under 84.83 as transmission systems. The department highlighted that the items were not sent with new carding machines and were accessories to textile machinery, thus falling under 84.83 and not 84.48.

5. After considering the arguments from both sides and reviewing the facts, the Tribunal found that the impugned items, Traverse Assembly and Flat Drive Reversal System, had individual functions and were not integral parts or accessories of textile machinery under CTH 84.48. The Tribunal upheld the lower appellate authority's findings that the items were sent separately for improving performance, leading to their correct classification under 84.83. Consequently, the Tribunal rejected the appeal, finding no merit in the appellant's arguments.

This detailed analysis encapsulates the classification dispute over specific products within the broader context of reclassification and differential duty demands faced by the appellants in the textile machinery manufacturing sector.