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2018 (7) TMI 690 - HC - Central ExciseClassification of goods - Pipes and Couplings - Parts of A.C. or not - exemption notification No.6/2006 dated 1.3.2006 and circular dated 15.6.2009 - Couplings removed without payment of Central Excise Duty alongwith pipes - assessee claims that the pipes and couplings are same product and falls under same head, thus they are not liable to pay duty on the said couplings - case of Revenue is that the Pipes and Couplings falls under different heads at the relevant point of time Held that - The issue involved in this appeal is covered by the decision of the Apex Court in the case of Bharat Forge and Press Industries (P.) Ltd. 1990 (1) TMI 70 - SUPREME COURT OF INDIA , where it was held that merely because goods after processing become different commercial commodity or have a distinctive name does not change the excise classification if they continue to be goods of same species. Pipe fittings made out of pipes and tubes continue to be pipes and tubes. Therefore, it is not a different article for excise classification but only a smaller article within the same classification provided that there is no change in basic physical property and possible end use. Appeal dismissed - decided against Revenue.
Issues Involved:
1. Applicability of exemption under Notification No. 6/2006-CE to A.C. Couplings. 2. Interpretation of the term "pipes" under the exemption notification. 3. Relevance of the Circular No. 891/11/09-Cx. dated 15.6.2009. 4. Classification of pipes and couplings under the Central Excise Tariff. 5. Maintainability of the appeal under Section 35-G of the Central Excise Act, 1944. Issue-wise Detailed Analysis: 1. Applicability of Exemption under Notification No. 6/2006-CE to A.C. Couplings: The respondent, engaged in manufacturing A.C. Pressure Pipes and A.C. Couplings, claimed exemption from duty under Notification No. 6/2006-CE. The notification exempts "pipes needed for delivery of water from its source to the plant and from there to the storage facility," provided a certificate from the relevant authority is produced. The respondent produced the required certificate and cleared the goods without paying duty. The adjudicating authority, however, rejected this claim based on Circular No. 891/11/09-Cx., which stated that the exemption does not extend to pipe fittings. The Commissioner (Appeals) and the Appellate Tribunal overturned this, allowing the exemption for both pipes and couplings, emphasizing that the notification's intent was to exempt all components necessary for water delivery, including couplings. 2. Interpretation of the Term "Pipes" under the Exemption Notification: The core issue was whether the term "pipes" in the exemption notification includes couplings. The adjudicating authority, relying on the circular, held that "pipe fittings" were not covered. However, the Commissioner (Appeals) and the Tribunal found that the term "pipes" should be interpreted in the context of the notification's purpose, which is to facilitate water delivery. They concluded that excluding couplings would defeat the purpose, as couplings are integral to the water delivery system. The Tribunal emphasized that the essentiality certificate covered both pipes and couplings, thus qualifying them for exemption. 3. Relevance of Circular No. 891/11/09-Cx. dated 15.6.2009: The adjudicating authority based its decision on Circular No. 891/11/09-Cx., which clarified that the exemption does not apply to pipe fittings. However, the Commissioner (Appeals) and the Tribunal held that the circular was not applicable to asbestos cement pipes and couplings, as they are classified under the same heading in the tariff. They noted that the circular's applicability is limited to cases where fittings are classified separately from pipes. The Tribunal found that the circular could not override the legislative intent of the exemption notification. 4. Classification of Pipes and Couplings under the Central Excise Tariff: The classification of pipes and couplings was another critical issue. The respondent argued that pipes and couplings fall under the same tariff heading (6811.83), which includes "tubes, pipes, and tube or pipe fittings." The adjudicating authority's reliance on the circular was challenged, as the circular pertained to cases where fittings are classified separately. The Commissioner (Appeals) and the Tribunal agreed with the respondent, holding that the classification under the same heading supports the claim for exemption. 5. Maintainability of the Appeal under Section 35-G of the Central Excise Act, 1944: The respondent raised a preliminary objection regarding the maintainability of the appeal, arguing that issues related to the rate of duty or valuation of goods should be appealed to the Supreme Court under Section 35-L, not the High Court under Section 35-G. The High Court agreed, citing precedents that appeals involving the determination of the rate of duty or valuation are not maintainable before the High Court. The court referred to the decisions in Naveen Chemical Manufacturing and Trading Company Ltd. and Steel Authority of India Limited, which clarified that such issues should be directly appealed to the Supreme Court. Conclusion: The High Court dismissed the appeal, upholding the decisions of the Commissioner (Appeals) and the Tribunal. It concluded that the exemption under Notification No. 6/2006-CE applies to both pipes and couplings, as they are integral to the water delivery system and classified under the same tariff heading. The court also held that the appeal was not maintainable under Section 35-G, as it involved the determination of the rate of duty, which should be appealed to the Supreme Court.
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