2005 (1) TMI 271 - AT - Central Excise

Summary

Issues:
Eligibility for exemption under Notification No. 164/87-C.E. for specific items: Sending unit of Tachometer Generators, Tachometer Generating Assembly, Fire Fighting Equipment.

Analysis:
The issue in question revolves around the eligibility of certain items for exemption under Notification No. 164/87-C.E., dated 10-6-1987. These items include the sending unit of Tachometer Generators, Tachometer Generating Assembly, and Fire Fighting Equipment. Initially, these items were cleared as exempt under the Notification against C.T. 2 Certificates issued by the Central Excise Officer in-charge of the factory where the "T-72 Main Battle Tank" is manufactured. However, the exemptions were later denied on the grounds that these items did not fall under the specified tariff entries in the exemption notification. The appellant-assessee argued for the classification of these items under Tariff Heading No. 87.10, which pertains to tanks, armoured vehicles, and parts of such vehicles.

The appellant's counsel contended that items for sole use in a particular machine should be classified as parts of that machine, while items of general use should be classified under their respective tariff. Reference was made to the decision of the apex court in previous cases and a circular by the Commissioner of Central Excise. On the other hand, the ld. SDR argued that the items in question were specifically mentioned under other tariff headings and should be classified accordingly. It was emphasized that the exemption for "parts" under Notification No. 164/87 is applicable only to items classifiable under the tariff headings mentioned in the Notification itself.

Upon reviewing the records and considering the arguments presented, it was observed that the exemption under Notification No. 164/87 applies to "parts of Main Battle Tanks" falling within specific chapters of the Central Excise Tariff Act. The wide range of goods covered by these chapters indicates that the exemption has a broad scope and is not limited to specific classifications as argued by the Revenue. The judgments of the apex court highlighted the principle that items solely for use in a particular machinery should be treated as parts of that machinery. In this case, the items in question were specifically designed for use in the Main Battle Tank and were not suitable for general use in other machines. Therefore, they qualified as "parts" of the Main Battle Tank according to the rulings and circulars referenced.

In conclusion, based on the principles established in previous judgments and the specific design and use of the items in question, it was determined that the items are eligible for exemption under Notification No. 164/87. The lower authorities were found to be incorrect in denying the exemption, and as a result, the appeals were allowed, and the impugned orders were set aside.