1987 (1) TMI 341 - AT - Central Excise

Summary

Issues: Assessment of injectors under Item 68-CET vs. Item 34A of the Central Excise Tariff

Analysis:
The judgment by the Appellate Tribunal CEGAT, New Delhi, involved the assessment of injectors under Item 68-CET as opposed to Item 34A of the Central Excise Tariff. The dispute arose when the Assistant Collector decided that nozzles fitted with nozzle holders, known as injectors, should be assessed under Item 68-CET, despite already paying duty under Item 34A. The Appellate Collector agreed with this view but granted certain reliefs to the assessees. The main contention was whether the assembly of injectors constituted a new article or remained within the scope of nozzle and nozzle holders.

The respondent's counsel argued that nozzle and nozzle holder, when assembled as injectors, were covered under Item 34A, emphasizing their interdependence in internal combustion engines for fuel distribution. The department's counsel, however, contended that the assembly of nozzle and holder constituted a new article distinct from individual components, warranting assessment under Item 68. The Assistant Collector's decision was based on the manufacturing process involved in assembling injectors, including calibration tests and fitment procedures, which he deemed as indicative of a new manufacture.

The Tribunal analyzed the definitions of nozzle and injector to determine whether the assembly of nozzle and holder constituted a new article. It was observed that while nozzles and holders could be sold separately, they functioned as a unit in operation. The Tribunal highlighted the misconception in considering the assembly as a new manufacture solely based on fitting components together. Analogies were drawn with other components like pistons and piston rings, emphasizing that complementary parts may be listed separately but still constitute a single unit when in operation.

The Tribunal concluded that the assessment of injectors under Item 68 was erroneous and set aside the demand. It was held that the assembly of nozzles and holders did not amount to a new article but remained within the scope of nozzle and nozzle holders. The judgment highlighted the importance of understanding the operational functionality of components in determining their classification for excise duty assessment.