1998 (11) TMI 244 - AT - Central Excise

Summary

Issues: Classification of goods under sub-heading 8324.00 or 8421.00 of Central Excise Tariff Act, eligibility for exemption under Notification No. 46/94.

The judgment addressed the classification of sand filters and screen filters manufactured by the appellant under sub-heading 8324.00 or 8421.00 of the Central Excise Tariff Act and the eligibility for exemption under Notification No. 46/94. The appellant claimed that the filters should be classified under sub-heading 8324.00 and be exempt from duty under the notification applicable to mechanical appliances used in agriculture or horticulture. The Assistant Commissioner and the Commissioner (Appeals) upheld the classification under sub-heading 8421.00, denying the exemption.

The appellant's counsel argued that the filters are exclusively used in the manufacture of sprinkler irrigation systems, falling under sub-heading 8324.00, eligible for exemption. They presented a certificate from a customer confirming the filters' use in agricultural machinery. The counsel relied on legal precedents and Section Note IV to Section XVI of CETA, stating that parts contributing to a defined function should be classified accordingly. They contended that the lower authorities overlooked the broader scope of the exemption notification, specifically Serial No. 26, covering parts of goods specified under Chapter 84.

The JDR contended that the filters should be classified under Heading 8421.00 as filtering or purifying machinery, thus not eligible for the exemption under Notification No. 46/94, which applies to goods under 8424.00. It was emphasized that exemption notifications must be strictly interpreted.

The Tribunal analyzed the nature of the filters and their intended use in irrigation systems. It noted that the filters' primary function is to remove impurities from irrigation water, aligning with the description of filtering or purifying machinery under sub-heading 8421.00. The Tribunal upheld the classification under 8421.00, rejecting the appellant's argument based on Section Note 2(a) of Section XVI CETA.

Regarding the eligibility for the exemption, the Tribunal found that the lower authorities only considered Serial No. 20 of the notification, overlooking the appellant's claim under Serial No. 26, which encompasses parts of goods specified under Chapter 84. As a result, the Tribunal remanded the matter to the Commissioner (Appeals) to reconsider the appellant's eligibility for exemption under Serial No. 26 of the notification, emphasizing the broader coverage of this provision.

In conclusion, the judgment clarified the classification of the filters under sub-heading 8421.00, emphasizing their function as filtering machinery. It highlighted the need for a comprehensive assessment of exemption eligibility under different provisions of the notification, directing a reconsideration based on the broader scope of Serial No. 26 for parts of goods falling under Chapter 84.