1996 (12) TMI 152 - AT - Central Excise

Summary

Issues:
Correct classification of "pieces roughly shaped by forging of steel" under Heading 72.08 or 73.08.

Analysis:
The appeal dealt with the classification of "pieces roughly shaped by forging of steel" manufactured by the appellants. The dispute arose between the appellants claiming classification under Heading 72.08 and the Department confirming classification under Heading 73.08 as "other articles of iron or steel." The process of manufacture involved cutting duty-paid steel bars, heating, hammering, trimming, normalizing, and descaling to obtain the required shape. The adjudicating authority classified the goods under Heading 73.08, considering them as identifiable motor vehicle parts short of machining and finishing operations, and imposed duty for suppression of production facts. Both parties referred to a previous Tribunal judgment, which clarified that goods at the stage just prior to machining fall under Heading 7208.00, not 7308.90. The Tribunal agreed, emphasizing that the HSN Explanatory Notes should align with the tariff entries, and commercial understanding is crucial. Consequently, the impugned order was set aside, and the appeal was allowed.

The appellants contended that their goods were exempt from duty before and after 1-8-1983 and were under the belief that no license was required. They argued that the goods should be classified under Heading 72.08, as there was no change in the manufacturing process. They emphasized that the goods were unfinished, unpolished, and designed for further machining by customers, not ready for direct use as automobile parts. The Collector's reliance on HSN Explanatory Notes was criticized, and the limitations on the show cause notice were highlighted. The Department, while acknowledging the unfinished nature of the goods, claimed they had acquired motor vehicle part characteristics, citing the persuasive value of BTN and HSN. However, they accepted the Tribunal's precedent that forgings up to proof machining were not under sub-heading 7308.90.

During the hearing, samples of the goods were displayed to demonstrate the contrast between unmachined, unpolished pieces and machined, finished pieces identifiable as motor vehicle parts. The appellants clarified that the goods were not traded or known in the market as motor vehicle parts but as forged articles for further processing. The Tribunal observed the contrast in the displayed samples and noted the absence of evidence showing the goods were marketed as motor vehicle parts in their manufactured form. Relying on the lack of evidence and the Tribunal's precedent, the impugned order was set aside, and the appeal was allowed, granting any consequential relief to the appellants.