2003 (9) TMI 83 - SC - Central Excise

Classification of goods - Stators and rotors - Held that - The circular holds (1) that if the electric motor does not come into existence as an identifiable manner and is not separable from the monobloc pumps it cannot be classified as an electric motor under Tariff Item No. 30; and (2) even though the motors cannot be classified as electric motor the rotors and stators which form part of the monobloc pumps would be classified as parts of electric motors. We find the trade notice singularly illogical. Where no electric motor comes into existence for the purpose of being classified under Tariff Item 30 it would be irrational to hold that an item would be a any part of such non-existent electric motor. Second having regard to the specific finding of fact as recorded by the Tribunal which finding has not been questioned by the Revenue before us we cannot accede to the Revenue s submission that the rotors and stators manufactured by the respondent in the process of manufacturing the monobloc pumps are classifiable under tariff Item 30D. Finally the respondent has been assessed to excise duty for the manufacture of the monobloc pumps. It was never the authorities case that the respondent had manufactured electric motors and was at any time liable to pay any excise duty under Tariff Item 30. It would follow that the parts manufactured by the respondent in connection with this end product would necessarily be a part of that end component. Since the tariff did not prior to its amendment provide separately for the exigibility of parts of monobloc pumps the item would have to be classified under Tariff Item 68 which is the residuary item - Decided against Revenue.

Summary

Issues: Classification of rotors and stators under Tariff Item 30D, applicability of Tariff Item 30 for monobloc pumps, interpretation of trade notice regarding classification, assessment of excise duty for manufacturing monobloc pumps.

Classification of rotors and stators under Tariff Item 30D: The respondent manufactured rotors and stators for monobloc pumps, which the Revenue sought to classify under Tariff Item 30D related to parts of electric motors. The Tribunal found that the rotors and stators were specifically designed for monobloc pumps, not interchangeable with electric motors, and classified them under the residuary head of Item 68, reversing the decision of the Revenue authorities.

Applicability of Tariff Item 30 for monobloc pumps: The Revenue authorities attempted to classify the rotors and stators under Tariff Item 30D, which pertains to electric motors and parts. However, the Tribunal determined that the rotors and stators were integral components of monobloc pumps, distinct from electric motors, and therefore should be classified under the residuary head of Item 68, not under Tariff Item 30.

Interpretation of trade notice regarding classification: A circular issued by the Revenue clarified that if an electric motor is not identifiable or separable from monobloc pumps, it cannot be classified under Tariff Item 30. The circular also stated that even if the motors cannot be classified as electric motors, the rotors and stators of monobloc pumps would be considered parts of electric motors. The Supreme Court deemed this interpretation illogical and upheld the Tribunal's classification of rotors and stators under the residuary head of Item 68.

Assessment of excise duty for manufacturing monobloc pumps: The respondent was assessed excise duty for manufacturing monobloc pumps, not electric motors. As the tariff did not specifically address the exigibility of parts of monobloc pumps, the end product was classified under the residuary item, Item 68. The Court dismissed the appeals without costs, emphasizing that the parts manufactured for the end product would naturally be classified under the same category as the end product itself.