1999 (5) TMI 238 - AT - Central Excise

Summary

Issues:
Classification of Electric Transformers under Central Excise Tariff Heading 85.04 vs. 85.14 based on design and usage.

Analysis:
The appeal involved the classification of Electric Transformers manufactured by the appellants, who also produced Electric Arc Furnaces. The appellants argued that the Transformers, specially designed for operation with the Electric Arc Furnace, should be classified under Heading 85.14 per Section Note 4 of Section XVI of the Central Excise Tariff Act. However, the Collector (Appeals) classified the Transformers under Heading 85.04 as a separate product. The key contention was whether the Transformers should be classified independently under Heading 85.04 or as part of the Electric Arc Furnace under Section Note 4.

The Revenue argued that since the Transformers were cleared separately and had a distinct tariff heading, they should be classified under Heading 85.04. The Revenue emphasized Section Note 2(a) of the Tariff Act, which mandates classification under the specific heading if applicable. The Revenue cited precedents, such as the case of M/s. Buckau Wolf India Ltd., to support their argument that specific components should be classified independently under the relevant heading, not as part of a larger machinery.

The Tribunal agreed with the Revenue's arguments, stating that the Transformers were cleared as separate products and thus should be classified under Heading 85.04. Even if designed for the Electric Arc Furnace, the Transformers fell under the specific classification of Heading 85.04 per Section Note 2(a. The Tribunal referenced the H.S.N. notes and the Buckau Wolf India Ltd. case to support their decision that specific components should be classified independently under their respective headings, ruling out the application of Section Note 4.

Ultimately, the Tribunal dismissed the appellant's appeal, affirming the classification of the Transformers under Heading 85.04 and rejecting the application of Section Note 4. The decision was based on the clear guidelines in the Tariff Act and precedents emphasizing specific classification for components under separate headings.