1999 (3) TMI 160 - AT - Central Excise

Summary

Issues:
Classification of crankshafts used in gas compressors for water coolers under Notification No. 166/86-C.E.

Issue 1: Classification under Notification No. 166/86-C.E.

The appeal centered around the classification of crankshafts used in gas compressors for water coolers under Notification No. 166/86-C.E. The appellants claimed the benefit of nil rate of duty under the notification, arguing that crankshafts are parts of gas compressors used in manufacturing water coolers. However, the lower appellate authority denied this benefit, stating that the classification of crankshafts under Heading 84.83 was not mentioned in Column (2) of the notification, which is a prerequisite for extending the benefit of the notification to parts of gas compressors. The Tribunal observed that only parts of gas compressors falling under specific headings or sub-headings mentioned in Column (2) of the notification are entitled to the benefit. Since crankshafts are specifically classified under Tariff Heading 84.83, which is not listed in Column (2) of the notification, the appellants were not eligible for the exemption. Consequently, the Tribunal upheld the lower authority's decision, rejecting the appeal.

Issue 2: Interpretation of Notification No. 166/86-C.E.

The Tribunal analyzed the relevant portion of Notification No. 166/86, specifically S. No. 01, which outlines the conditions for granting nil rate of duty on parts of gas compressors used in the manufacture of water coolers. The notification specifies the headings or sub-headings under which the parts of gas compressors must fall to qualify for the exemption. The Tribunal emphasized that not all parts of gas compressors used in water coolers automatically receive the benefit; rather, only those parts falling under the specified headings or sub-headings in Column (2) of the notification are eligible. In this case, since crankshafts, despite being used in gas compressors for water coolers, are classified under Tariff Heading 84.83, which is not included in Column (2) of the notification, the appellants were deemed ineligible for the exemption. The Tribunal's decision was based on a strict interpretation of the notification's requirements, highlighting the importance of aligning both the description and the tariff headings for a part to qualify for the exemption.

Significant Reference:

The Tribunal referenced a judgment by the Apex Court in the case of Jain Engineering Co. v. C.C., Bombay [1987 (32) E.L.T. 3] to distinguish the present case. The Apex Court ruling dealt with an exemption notification for internal combustion piston engines and their parts, where the Tariff Heading did not specifically mention parts of internal combustion engines. However, the Court held that the exemption extended to parts as well, irrespective of the Tariff Heading omission. Unlike the scenario in the present case, where the exemption under Notification No. 166/86-C.E. is intended only for parts of gas compressors falling under the specified Tariff Headings in Column (2) of the notification. The Tribunal emphasized the necessity for both the description in Column (3) and the Tariff Headings in Column (2) to align for a part to qualify for the exemption under the notification.

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