2018 (2) TMI 1112 - SC - Central Excise

Classification of goods - components/parts of a boiler - whether the essential components/parts of a boiler cleared by the assessee would attract duty under sub-heading 8402.10 of the first schedule of Central Excise Tariff Act, 1985 or sub-heading 8402.90 of the said schedule? - Held that - relying on the HSN note Part V under Section XVI, it is concluded that such components which are essential to classify the boiler as a machine, even if transported as components, must be understood to have been transported as a complete machine - the components of the boilers cleared as parts but essential to put into operation the boilers, would be classifiable under sub-heading 8402.10 and not as claimed by Revenue under sub-heading 8402.90 - appeal dismissed - decided against Revenue.

Summary

Issues: Classification of boiler components under Central Excise Tariff Act, 1985 - Sub-heading 8402.10 or 8402.90.

Analysis:
The Supreme Court considered the issue of classifying the essential components/parts of a boiler under the Central Excise Tariff Act, 1985. The dispute revolved around whether the components cleared by the assessee should attract duty under sub-heading 8402.10 or sub-heading 8402.90 of the Tariff Act. Both the adjudicating authority and the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) concluded that the components should be classified under sub-heading 8402.10. This decision was based on an expert opinion from the Technical Adviser (Boilers), Ministry of Commerce and Industry, which outlined the essential components required for a boiler to come into existence. The expert opinion highlighted that certain parts, such as drum, feed pipe, steam pipe, economizer, superheater, and re-heater, are essential for constructing a boiler. Additionally, the court referenced the HSN note Part V under Section XVI, which states that essential components required to classify a machine as a complete unit should be considered part of the machine, even if transported separately.

The court noted that the expert had recommended segregating the parts essential for constructing a boiler from those that enhance efficiency but are not essential. While it was unclear if this segregation was done by the Revenue, the court upheld the decision of the lower authorities based on the expert opinion and the HSN note. It was concluded that components essential for putting the boilers into operation should be classified under sub-heading 8402.10, rather than sub-heading 8402.90 as argued by the Revenue. The court found no error in the orders of the Primary Authority and the First Appellate Authority and dismissed the appeal accordingly, without costs.