2004 (1) TMI 277 - AT - Central Excise

Classification of goods as sub-assemblies or washing machines for the purpose of duty assessment - HELD THAT - We find that the kits have to be assessed in the form in which these are being cleared from the factory. The findings of the Commissioner (Appeals) are that the kits are not being cleared in the form in which it can be considered as washing machine in CKD/SKD condition. There is no correlation of the number of such parts in each clearance. We, therefore, agree with the findings of the Commissioner (Appeals) and hold that the goods cleared are sub-assemblies. Such sub-assemblies and other parts, the state in which these are cleared, cannot be considered a washing machine in CKD/SKD condition. These cannot be considered a washing machine for the purpose of assessment. These should be assessed as parts of the washing machine. Therefore, the Commissioner (Appeals) has correctly decided the issue. The appeal of the Department is, therefore, rejected.

Summary

Issues:
The appeal involves the classification of goods as sub-assemblies or washing machines for the purpose of duty assessment.

Details of the Judgment:
The appeal was filed by Revenue against the Order-in-Appeal passed by the Commissioner of Central Excise (Appeals), Bangalore. The case involved M/s. BPL Sanyo Utilities & Appliances, Bangalore, accused of misstating assemblies/sub-assemblies of washing machines as parts to avail lower duty rates. The Commissioner (Appeals) found that the classification of goods depended on their nature at the time of clearance, not on nomenclature used. The appeal was allowed, stating the goods were sub-assemblies, not washing machines. The Revenue challenged this decision.

The Revenue argued that the goods cleared were sub-assemblies with essential characteristics of washing machines, citing a previous Tribunal decision. The Respondents contended that the goods were parts of washing machines, assembled at their NOIDA factory, where duty was paid. They referenced a Supreme Court decision supporting their position. The Respondents claimed the activity at the NOIDA factory amounted to manufacturing, justifying duty payment there. They argued for dismissal of the Department's appeal.

The Tribunal reviewed the facts and previous decisions. They noted that the goods cleared were major sub-assemblies and loose parts, essential for assembling a washing machine. However, the Commissioner (Appeals) found the goods to be sub-assemblies, not washing machines, with no correlation in parts quantity. The Tribunal agreed with the Commissioner's findings, stating the goods should be assessed as parts, not complete washing machines. They upheld the Commissioner's decision, rejecting the Revenue's appeal.

In conclusion, the Tribunal affirmed that the goods cleared were sub-assemblies, not washing machines, based on the lack of correlation in parts quantity and the assembly process at the NOIDA factory. The Commissioner's decision to assess the goods as parts was upheld, and the Revenue's appeal was dismissed.