2003 (3) TMI 143 - AT - Central Excise

Summary

Issues Involved:
1. Classification of "Roller Assembly" under Central Excise Tariff.
2. Applicability of Heading 86.07 versus Heading 85.04.
3. Interpretation of Chapter Notes and HSN Notes.
4. Determination based on the end use, nature, and character of the goods.

Issue-wise Detailed Analysis:

1. Classification of "Roller Assembly" under Central Excise Tariff:
The primary issue is whether the "Roller Assembly" should be classified under Heading 86.07 of the Central Excise Tariff, which pertains to parts of railway or tramway locomotives or rolling stock, or under Heading 85.04, which pertains to electrical transformers and parts thereof. The Division Bench's previous decision in United Engineering Industries classified the roller assembly under Heading 8607, which is now being re-evaluated.

2. Applicability of Heading 86.07 versus Heading 85.04:
Heading 8504 covers electrical transformers and their parts, while Heading 8607 covers parts of railway or tramway locomotives or rolling stock. The roller assembly in question is specifically designed for use with BHEL power transformers, facilitating movement and maintenance at the erection site. It is not suitable for other applications or marketing elsewhere, and lacks features such as braking and lubrication, which are essential for railway rolling stock.

3. Interpretation of Chapter Notes and HSN Notes:
Chapter Notes and HSN Notes are critical in determining the classification. Note 3 to Section XVII states that parts or accessories not suitable for use solely or principally with the articles of Chapters 86 to 88 are excluded from those chapters. The HSN Notes under Section XVII and Chapter 86 emphasize that only parts suitable for use solely or principally with railway or tramway locomotives or rolling stock are included. The roller assembly does not meet these criteria as it is designed solely for transformers.

4. Determination based on the end use, nature, and character of the goods:
The classification should consider the description, purpose, and use of the goods. The Apex Court's decisions in C.C.E., Bombay v. K.W.H. Heliplastics Ltd. and C.C. v. Kumudam Publications (P) Ltd. support this approach. The roller assembly's end use, nature, and character indicate it is exclusively for transformers, not railway rolling stock. It lacks the necessary features for railway use, such as braking and lubrication.

Conclusion:
The Tribunal concluded that the roller assemblies are not designed for use in railway rolling stock and do not meet the criteria for classification under Heading 8607. They are specifically designed for use with transformers and lack essential features for railway use. Therefore, the earlier decision in United Engineering Industries is overruled, and the roller assemblies are not classifiable under Heading 8607. The appeal of the assessee is allowed, classifying the roller assemblies under Heading 8504.