1997 (2) TMI 318 - AT - Central Excise

Summary

Issues:
Manufacture and clearance of "Geared Motor" under Tariff Item No. 30 during the production of Traverser under Tariff Item 68. Demand for duty for the period 1982-83 to 1984-85. Imposition of penalty by Deputy Collector. Interpretation of Explanation III of the Sub-Tariff Item regarding "geared motors." Relevance of Board's Circulars and advices in determining the classification of the contraption mounted on the traverser platform.

Analysis:
The case involved the manufacturing of Traverser, a railway material handling equipment, and the alleged production and clearance of "Geared Motor" during the manufacturing process. The show cause notice accused the assessee of manufacturing and clearing "Geared Motor" falling under Tariff Item No. 30 alongside the Traverser. The Deputy Collector confirmed the duty demand and imposed a penalty, a decision upheld by the Collector, leading to the appeal before the Appellate Tribunal.

During the proceedings, the assessee argued that the contraption mounted on the traverser platform, consisting of a motor, gear box, brake, and brakedrum type coupling, did not constitute a "Geared Motor." The assessee contended that although the combination of a motor and gear box performed similar functions to a geared motor, it did not meet the specific criteria of a geared motor as commonly understood in the market. On the other hand, the Revenue relied on Explanation III of the Sub-Tariff Item, which stated that "geared motors" include motors equipped with gears or gear boxes, emphasizing the functional aspect rather than physical integration.

The Appellate Tribunal analyzed the evidence, including the process undertaken by the assessee, schematic diagrams, and relevant Board Circulars and advices. The Tribunal noted that while the contraption on the traverser platform may function similarly to a geared motor, it did not meet the standard definition of a geared motor based on market understanding and tariff advices. The Tribunal found that the lower authorities failed to establish that the contraption could be classified as geared motors under the tariff. Consequently, the Tribunal allowed the appeal, set aside the Collector's order, and directed consequential relief, if any, in favor of the appellants.