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Issues: Classification of rotors and stators used in the manufacture of monoblock pumps under Tariff Item 30A or 30D; Validity of show cause notices issued by revenue authority; Interpretation of circular and trade notice issued by Central Government.
Analysis: The judgment dealt with three petitions raising common questions regarding the classification of rotors and stators used in the manufacture of monoblock pumps under Tariff Item 30A or 30D. The petitioners argued that these components should be considered parts of monoblock pumps falling under Tariff Item 30A. The revenue authority, however, issued show cause notices asserting that the rotors and stators should be classified as electric motors under Tariff Item 30A. The petitioners challenged the legality of these notices. The petitioners relied on a circular issued by the Central Government in 1981, which clarified the classification of rotors and stators used in the manufacture of monoblock pumps. The circular emphasized that these components should pay duty under Tariff Item 30D before their removal for the manufacture of monoblock pumps. However, a trade notice issued by the Baroda Collectorate contradicted this circular, stating that rotors and stators should pay duty under Tariff Item 30A. The Assistant Collector of Central Excise, referring to the circular and trade notice, directed the petitioners to pay duty under Tariff Item 30D for rotors and stators. The Assistant Collector also denied the petitioners' claim for exemption under Notification No. 73/68. The petitioners sought a refund of excess duty and filed an appeal, which was rejected by the Collector of Central Excise (Appeals) and later by the Customs, Excise and Gold (Control) Appellate Tribunal. The Tribunal's decision confirmed that rotors and stators used in monoblock pumps fall under Tariff Item 30D, not 30A. The judgment concluded that rotors and stators, being parts suitable for use with electric motors, fall under Heading 85.03 and are liable to duty accordingly. The Tribunal's decision established that these components should be classified under Heading 85.03. Consequently, the show cause notices issued by the revenue authority were deemed invalid and were quashed. The petitions were successful, and the rule was made absolute with no order as to costs.
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