2002 (1) TMI 240 - AT - Central Excise

Summary

Issues:
Challenge to demand of duty and personal penalty imposition for misclassification of furnace parts under Tariff Heading 8417.10.

Analysis:
The appellants contested the orders confirming the duty demand and imposing a personal penalty for misclassifying furnace parts under Tariff Heading 8417.10. The appellants argued that the parts they manufactured should be considered as clearance of the furnace in SKD/CKD condition, distinguishing them from non-essential parts bought from the market. The consultant relied on a previous Tribunal decision to support their stance. The Revenue, represented by the JDR, reiterated that the appellants were liable to pay duty under Heading 8417.90 for the parts they manufactured. The Tribunal noted that certain parts were bought from the market and directly sent for installation, indicating that a complete furnace did not come into existence at the appellants' factory. The consultant clarified that duty was not paid on the value of the entire furnace inclusive of the bought-out items.

The Tribunal referred to previous decisions to support its findings. In the case of CCE, Delhi v. BHP Engineers, it was held that clearance of various parts of a conveyor had to be classified as a conveyor and not parts, but the manufacturer had to pay duty on the whole machinery. However, in the present case, the appellants were paying duty only on the parts they manufactured, not on the complete furnace. Similarly, in the case of Space Age Engg. Projects (P) Ltd., it was established that when an assessee manufactured only some parts of conveyor belts, those parts had to be classified as parts under a specific sub-heading. The Tribunal concluded that the component parts from the appellants' factory could not be equated with clearances of a full furnace in knocked down condition, leading to the rejection of the appeal.

In conclusion, the Tribunal upheld the duty demand and personal penalty imposition on the appellants for misclassifying furnace parts under Tariff Heading 8417.10. The decision was based on the distinction between essential parts manufactured by the appellants and non-essential parts bought from the market, as well as previous judgments establishing classification criteria for machinery parts.