2018 (9) TMI 1345 - AT - Central Excise

Misdeclaration of manufactured goods - Manufacture of Sewing machines or not - exemption under N/N. 6/2002 dated 01.03.2002 - Revenue case is that the appellant was actually manufacturing Embroidery Machines and were misdeclaring the same as Sewing Machines and were wrongly availing the benefit of exemption notification - Held that - The machines manufactured by the respondent performed both the functions i.e. Embroidery as well as Sewing. The Appellant Authority has also examined the working of the machines and have observed that whereas embroidery machine cannot perform the function of sewing machine, a sewing machine can perform both the functions. The HSN explanatory notes has been well adopted by appellate authority to conclude that it is only those machines which can be only used for embroidery would were fall under the category of embroidery machines. In case the machine worked for both the functions, they have to be held as sewing machine classifiable under the head 84.52 and entitled to the exemption. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Request for adjournment by respondent
2. Classification of machines as Sewing Machines or Embroidery Machines
3. Entitlement to exemption under Notification No.6/2002

Request for Adjournment:
The appellate tribunal, after hearing the learned A.R. for the revenue and noting the respondent's request for adjournment, decided to proceed with the appeal without the respondent's presence. The tribunal found that the revenue's appeal could be resolved in the absence of the respondent and rejected the request for adjournment.

Classification of Machines:
The case involved a dispute regarding the classification of machines manufactured by the appellant as either Sewing Machines or Embroidery Machines. The revenue contended that the appellant was misdeclaring Embroidery Machines as Sewing Machines to avail exemption benefits. The revenue conducted investigations and concluded that the machines were Embroidery Machines based on their functions and agreements with another company. However, the Commissioner (Appeals) analyzed the issue in light of HSN Explanatory notes and precedent decisions, determining that machines capable of both sewing and embroidery functions should be classified as Sewing Machines under heading 84.52 and entitled to exemption.

Entitlement to Exemption:
The appellant, engaged in manufacturing Sewing Machines entitled to duty exemption under Notification No.6/2002, faced demands of excise duty due to the revenue's classification of their machines as Embroidery Machines. The appellate authority upheld the Commissioner (Appeals)'s decision that the machines were correctly classified as Sewing Machines eligible for exemption. The revenue failed to provide evidence to counter this finding, leading to the rejection of their appeal.

In conclusion, the appellate tribunal dismissed the revenue's appeal, affirming the classification of the appellant's machines as Sewing Machines eligible for exemption under Notification No.6/2002. The tribunal upheld the decision of the Commissioner (Appeals) based on the analysis of HSN Explanatory notes and the functionality of the machines, emphasizing that machines capable of both sewing and embroidery functions should be classified as Sewing Machines.