2004 (3) TMI 65 - SC - Central Excise

Electrodes - Graphite electrodes - Classification of goods - whether the blanks are classifiable under Tariff Item 67 or Tariff Item 68 - Held that - preparation of graphite electrodes (in its final form) the product has to be baked at temperatures well above 2000 C whereas the blanks are baked at much lower temperatures. It is submitted that the blanks cannot be equated to electrodes inasmuch as they do not conduct electricity. In our view the temperatures at which the products are baked and the fact that blanks do not conduct electricity is entirely irrelevant. What has to be considered is the wording of Tariff Item 67. If Tariff Item 67 had only covered graphite electrodes then it could have been argued that the blanks cannot be said to be graphite electrodes. However, Tariff Item 67 also contains the words all sorts . It could not be shown to us that the final product, i.e., graphite electrodes had any varieties. Therefore, the words all sorts necessarily includes graphite electrodes in various stages of preparation. The authorities below have found on facts and this is supported by the literature produced by the Appellants that the blanks are also known as electrodes and that they contain the same properties as the final product - The blank could only be a semi-finished goods provided it is an electrode. Thus in respect of the sale transactions it would not be open to the appellants to claim that this is a completely independent product - Decided against assessee.

Summary

Issues: Classification of goods under Tariff Item 67 or Tariff Item 68

Issue 1: Classification of Blanks
The case involved the classification of certain intermediate products, referred to as green blanks, baked blanks, pitch impregnated blanks, and rebaked blanks, under Tariff Item 67 or Tariff Item 68. The authorities claimed that the blanks sold to a company should be classified under Tariff Item 67, resulting in a demand for differential duty. The lower authorities upheld this classification.

Analysis: The Supreme Court analyzed the wording of Tariff Item 67, which includes "Graphite Electrodes + anodes all sorts." The court noted that the term "all sorts" encompasses various stages of graphite electrodes preparation. Despite the temperature differences in baking the blanks compared to the final product, the court emphasized that the key consideration is the wording of Tariff Item 67. As the blanks were found to possess similar properties to the final product and were known as electrodes, the court upheld the classification under Tariff Item 67 based on factual findings.

Issue 2: Application of Rule 56B
The appellants had cleared the blanks to their sister concern under Rule 56B of the Central Excise Rules, classifying them under Tariff Item 67 as semi-finished goods. The question arose whether the appellants could claim these blanks as a separate product when sold to another company, arguing for a different classification under Tariff Item 68.

Analysis: The court agreed with the Tribunal's reasoning that since the appellants themselves classified the blanks under Tariff Item 67 while clearing them under Rule 56B, they could not assert a distinct classification for the same product in sale transactions. The court emphasized that for sale transactions, the blanks could only be considered semi-finished goods if they were electrodes. Therefore, the appellants could not treat the product differently based on the stage of the transaction.

In conclusion, the Supreme Court dismissed the appeal, affirming the classification of the blanks under Tariff Item 67 and rejecting the claim for a different classification under Tariff Item 68. The court found no grounds to interfere with the lower authorities' decision, citing factual findings and the application of Rule 56B.