1996 (7) TMI 370 - AT - Customs

Summary

Issues Involved:

1. Classification of imported "Crank Shaft Forgings" for Countervailing Duty (CVD) purposes.
2. Valuation of the imported goods.

Issue-wise Detailed Analysis:

1. Classification of Imported "Crank Shaft Forgings" for CVD Purposes:

The primary issue revolves around whether the imported crank shaft forgings should be classified under Tariff Item 68 or Tariff Item 26AA(ia) for CVD purposes. The appellants contended that the goods were raw crank shaft forgings requiring further processing and should be classified under CET Item 26AA. They argued that the processes carried out on the crank shaft forgings were permissible and did not change their classification from raw forgings to finished crank shafts.

The Department, however, classified the goods under Tariff Item 68, asserting that the crank shafts had already undergone significant processes and assumed the essential characteristics of a crank shaft, making them finished motor vehicle parts.

The Tribunal considered various judgments, including BHEL v. Collector of Customs and Bajaj Auto Ltd. v. Collector of Customs, which supported the appellants' position that rough machine forgings should be classified under Item 26AA. The Tribunal also referenced the Supreme Court's ruling in Tata Iron and Steel Co. Ltd. v. Union of India, which held that forged products in rough machined condition should be classified under Item 26AA.

The Tribunal noted that the imported crank shaft forgings required approximately 40 additional processes before becoming finished crank shafts, indicating they had not yet acquired the essential characteristics of finished motor vehicle parts. Therefore, the Tribunal concluded that the crank shaft forgings should be classified under Tariff Item 26AA for CVD purposes.

2. Valuation of the Imported Goods:

The appellants claimed a refund for the excess duty paid due to an incorrect unit price of DM 239 instead of DM 214. They provided evidence, including a credit note from the supplier, to support their claim. The Collector (Appeals) had remanded the matter for re-consideration based on the evidence produced by the appellants.

The Tribunal upheld the Collector's decision to remand the issue for re-evaluation of the valuation aspect, requiring no further modification.

Separate Judgments:

Judgment by Member (Judicial):

The Member (Judicial) agreed with the appellants, concluding that the crank shaft forgings should be classified under Tariff Item 26AA for CVD purposes. He emphasized that the goods had not undergone processes that would give them the essential characteristics of finished crank shafts and required further processing.

Judgment by Vice President:

The Vice President disagreed, asserting that the crank shaft forgings had already acquired the essential characteristics of crank shafts and should be classified under Tariff Item 68. He emphasized that the processes carried out on the crank shafts went beyond mere fettling and aligned with the Department's classification.

Final Order by Third Member:

The Third Member, agreeing with the Member (Judicial), concluded that the crank shaft forgings should be classified under Tariff Item 26AA(ia) for CVD purposes. The appeals were allowed in favor of the appellants, granting them consequential relief.

Final Order:

In view of the majority opinion, the item is classifiable under Tariff Item 26AA(ia) under the Old Tariff for the purposes of countervailing duty. The appeals are therefore allowed in terms of the observations of Hon'ble Member (Judicial) with consequential relief, if any due.