1996 (11) TMI 221 - AT - Central Excise

Summary

Issues:
Benefit of notification no. 68/86 for exemption of duty on stationary batteries when supplied separately with electrolyte.

Analysis:
The appeal in this case concerns the benefit of notification no. 68/86, dated 10-2-1986, which exempts stationary batteries from duty payment. The appellants were supplying stationary batteries without filling in the electrolyte, providing the electrolyte separately. The lower authority restricted the benefit of the notification only to the battery without the electrolyte. The appellant argued that the electrolyte was sent separately for transport convenience and to prevent spillage of hazardous chemicals. They contended that the battery and electrolyte should be treated as one entity for the notification's purpose, as they were invoiced together without separate charges for the electrolyte.

The appellant's counsel emphasized that the electrolyte was intended to be filled in the battery by the customer on-site. However, the lower authority denied the benefit of the notification, citing separate identity, shelf life, and non-transient nature of the goods. The appellant argued that the battery and electrolyte should be considered together under the interpretative rules for tariff classification, specifically referring to rule 2(a) or 2(b).

On the other hand, the SDR contended that goods should be assessed in the form they are cleared from the factory. Since the battery and electrolyte were cleared separately and known as distinct items in the market, they should be individually assessed. The Tribunal noted that the electrolyte was essential for the battery and that if filled in, the battery would qualify for the notification's benefit. The issue at hand was whether supplying the electrolyte separately for filling in the battery should affect the excise assessment.

The Tribunal observed that rule 2(a) of the Interpretative Rules, allowing clearance of goods in unassembled condition, was relevant in this case but was not considered by the lower authority. It was highlighted that the battery, comprising plates, terminals, and the container with electrolyte, forms a functional unit. The Tribunal concluded that the matter required a detailed examination in light of rule 2(a) and the notification's scope. As the lower authority did not conduct a thorough analysis, the Tribunal set aside the order and remanded the case for fresh adjudication. Consequently, the appeal was allowed for remand.