2018 (3) TMI 759 - AT - Central Excise

Classification of goods - C.I. Roller and separators - whether the C.I. Roller and separators used by the Railway department for transportation, in end unloading rake to unload the welded rails measuring more than 13 Mtr length are classifiable under Chapter 84.31 of CETA or under under the Chapter 86 - benefit of N/N. 62/95 dated 1.3.1995 - Held that - the items disputed being Separators and CI rollers are specifically used by the railways as the same are fitted to the specially designed wagons. As these items falls under Chapter 86 and as such are entitled for full exemption under N/N. 62/95-CE. - So far waste and scrap is concerned under N/N. 89/95 dated 18.5.1995, as the same arise in manufacture of goods which are fully exempt from levy of duty are also held exempt - appeal allowed - decided in favor of appellant.

Summary

Issues: Classification of CI Rollers and Separators under Chapter 84.31 or Chapter 86, Eligibility for Exemption under Notification No. 62/95

Classification Issue:
The judgment revolves around the classification of CI Rollers and Separators used by the Railway department for transportation. The question at hand is whether these items fall under Chapter 84.31 of CETA or Chapter 86 and whether they are eligible for exemption under Notification No. 62/95 dated 1.3.1995. The dispute arose from a show-cause notice issued to the Central Engineering Workshop under Central Railways, Manmad, regarding the liability of excise duty on these items.

Detailed Analysis:
The Central Engineering Workshop was manufacturing various iron and steel articles, including CI Rollers and Separators. The show-cause notice invoked the extended period of limitation for the period 2000-04, proposing a duty recovery of &8377; 47,33,076 along with penalties and interest. The Commissioner confirmed the demand on CI Rollers, Separators, waste, and scrap, imposing penalties under relevant sections. The appellant contested this decision, arguing that the items in dispute are affixed to wagons for transport and should be classified under Chapter 86, not Chapter 84 as determined by the Commissioner.

Exemption Issue:
The appellant claimed entitlement to exemption under Notification No. 62/95 dated 16.3.1995, which exempts articles under Chapter 86 when manufactured by a factory belonging to the Central Government and made available to any department of the Central Government. The appellant contended that the CI Rollers and Separators are specifically used by the railways and should be fully exempt under this notification.

Detailed Analysis:
The appellant presented that the CI Rollers and Separators are integral parts of a specially designed wagon known as the 'End Unloading Rake' (EUR) developed by the Central Engineering Workshop, Manmad. The Tribunal concluded that these items fall under Chapter 86 and are entitled to full exemption under Notification No. 62/95-CE. Additionally, waste and scrap arising in the manufacture of exempt goods were also held to be exempt under Notification No. 89/95 dated 18.5.1995. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief.

In conclusion, the judgment clarified the classification of CI Rollers and Separators under Chapter 86 and their eligibility for exemption under Notification No. 62/95. The decision favored the appellant, emphasizing the specific use of these items by the railways and granting them full exemption under the relevant notification.