2007 (1) TMI 97 - HC - Central Excise

Tribunal has denied the claim solely on the ground that classification once opted by the manufacture cannot be altered at no stage the assessee s claim about the proper classification has been adjudicated by any authorities and merely on the basis of assessee s earlier claim, a later claim has been decided the matter matter sent to Adj. Authority to first decide the question of proper classification and on that premise consequential order about modvat credit may be determined

Summary

Issues Involved:
1. Proper classification of storage tank, motor rails & platforms under Tariff Chapter 73 or Chapter 84.
2. Denial of Modvat Credit claim based on classification.

Analysis:

Issue 1: Proper Classification of Goods
The main issue in this appeal was the correct classification of the storage tank, motor rails, and platforms. The appellant initially classified these items under Tariff Chapter 73 but later claimed classification under Chapter 84. The appellant argued that these items were actively used in the manufacturing process and should be classified under Chapter 84.19. The Adjudicating Authority disallowed the modvat credit based on the initial classification under Chapter 73, while the Commissioner (Appeals) allowed the claim by considering the items under Chapter 84. The Tribunal, however, upheld the Adjudicating Authority's decision, stating that the classification once opted by the manufacturer cannot be altered. The High Court observed that the core issue of proper classification was not adjudicated by any authority, and the matter was decided based on the appellant's earlier claim without examining the issue thoroughly.

Issue 2: Denial of Modvat Credit Claim
The denial of the Modvat Credit claim was based on the classification of the items under Tariff Chapter 73. The High Court noted that the authorities did not adjudicate the core issue of proper classification under the Tariff Act. The appellant argued that his earlier claim to a particular classification should not prevent him from claiming the correct classification under a different category, especially if the initial claim was erroneous. The Court agreed with the appellant, stating that the modvat credit was disallowed without properly adjudicating the core issue of classification. Therefore, the High Court set aside the Tribunal's order and directed the case to the Adjudicating Authority to first determine the proper classification of the items in question. Only after resolving this classification issue, the consequential order regarding the modvat credit claim should be determined. The appeal was disposed of accordingly, with no costs imposed.