1994 (1) TMI 156 - AT - Central Excise

Issues Involved:
1. Correct classification of Wound Stators and Rotors.
2. Applicability of Note 2(a) and Note 2(b) to Section XVI of the Central Excise Tariff.
3. Consideration of affidavits and certificates provided by the appellants.
4. Relevance of previous Tribunal rulings and High Court decisions.
5. Calculation and confirmation of differential duty.

Issue-wise Analysis:

1. Correct Classification of Wound Stators and Rotors:
The primary issue was whether Wound Stators and Rotors should be classified as parts of electric motors under Heading 85.03 or as parts of compressors under Heading 84.14. The appellants argued that these items should be classified as parts of electric motors because they are used in Hermetically Sealed Compressors, which are a type of electric motor. The Department contended that since these parts are used solely in compressors, they should be classified under Heading 84.14. The Tribunal upheld the Department's classification, stating that the rotors and stators are integral parts of compressors and do not come into existence as separate electric motors.

2. Applicability of Note 2(a) and Note 2(b) to Section XVI of the Central Excise Tariff:
The Assistant Collector relied on Note 2(a) to Section XVI, which states that parts included in any headings of Chapter 84 or 85 should be classified in their respective headings. He also referred to Note 2(b), which states that parts suitable for use solely or principally with a particular kind of machine should be classified with that machine. The Tribunal agreed with the Assistant Collector's application of these notes, concluding that the rotors and stators are parts of Hermetically Sealed Compressors and should be classified under Heading 84.14.

3. Consideration of Affidavits and Certificates:
The appellants provided affidavits and certificates from technical institutions to support their claim that the rotors and stators are parts of electric motors. However, the Assistant Collector and the Tribunal found these documents unconvincing. The affidavits were considered to lack evidential value as they were given at the instance of the appellants and did not address the specific use of these parts in sealed compressors. The Tribunal noted that these affidavits and certificates did not alter the fact that the rotors and stators are specifically designed for use in compressors.

4. Relevance of Previous Tribunal Rulings and High Court Decisions:
The appellants cited previous Tribunal rulings and a Gujarat High Court decision to argue that rotors and stators should be classified as parts of electric motors. However, the Tribunal found these cases distinguishable. The previous rulings were related to different tariff items and circumstances, such as parts of monoblock pumps and power-driven pumps. The Tribunal emphasized that the current tariff structure and the specific design and use of the rotors and stators in Hermetically Sealed Compressors warranted their classification under Heading 84.14.

5. Calculation and Confirmation of Differential Duty:
The Assistant Collector confirmed differential duties for various periods, amounting to significant sums for different appellants. The Tribunal directed the authorities to grant a hearing to the appellants on the duty calculation and arrive at the correct duty to be confirmed. This direction was given in light of the appellants' contention that the duty had not been properly calculated.

Conclusion:
The Tribunal upheld the Department's classification of Wound Stators and Rotors as parts of compressors under Heading 84.14, applying Note 2(a) and Note 2(b) to Section XVI of the Central Excise Tariff. The affidavits and certificates provided by the appellants were found to lack evidential value. Previous Tribunal rulings and High Court decisions cited by the appellants were deemed distinguishable. The Tribunal also directed a re-evaluation of the differential duty calculation.

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