1999 (8) TMI 369 - AT - Central Excise

Summary

Issues: Classification of manufactured Biris under Tariff sub-heading 2404.31 based on the use of machines in the baking process.

Detailed Analysis:

1. Allegation by Revenue and Show Cause Notice:
- The Revenue alleged that the biris were manufactured using machines for baking, warranting classification under Tariff sub-heading 2404.31 with a higher duty rate. A demand for differential duty was made for a specific period.

2. Order-in-Original:
- The adjudicating authority dropped the show cause notice, emphasizing that the biris were handmade without the use of machines in the manufacturing process. The heaters and exhaust fans used for baking were not considered machines, as per the definition provided.

3. Lower Appellate Authority Decision:
- The lower appellate authority reversed the Order-in-Original, stating that the heaters and exhaust fans constituted machines under Chapter Note 5 of the Central Excise Tariff Act, leading to the classification under Tariff sub-heading 2404.31.

4. Appellant's Argument:
- The appellant contended that the definition of "machine" in Chapter Note 5 applied only to Chapter 16 of the Tariff, not Chapter 24. They argued that the fans were not used in the direct manufacture of biris, hence should not affect the classification.

5. Tribunal's Decision:
- The Tribunal agreed with the adjudicating authority that the exhaust fans were not directly involved in the manufacturing process of biris but were used for ancillary purposes. As the fans did not play a direct role in the manufacturing process, the correct classification was under Tariff sub-heading 2404.39, not 2404.31.

6. Conclusion:
- The Tribunal set aside the lower appellate authority's decision, allowing the appeal and providing consequential relief to the appellants. The classification of biris under Tariff sub-heading 2404.31 was deemed incorrect, with the correct classification being under Tariff sub-heading 2404.39 based on the absence of direct machine involvement in the manufacturing process.