2000 (7) TMI 817 - AT - Central Excise

Issues Involved:
1. Classification of "filtering element" under the Central Excise Tariff Act.
2. Whether the filtering element should be classified as "filtering or purifying machinery and apparatus" under Heading 8421.10 or as "parts" under Heading 8421.90.

Issue-wise Detailed Analysis:

1. Classification of "filtering element" under the Central Excise Tariff Act:
The primary issue revolves around the correct classification of the "filtering element" under the Central Excise Tariff Act. The appellants argue that the filtering element should be classified as a complete filtering machinery under Heading 8421.10, which includes "all goods other than parts." In contrast, the department contends that the filtering element is a part of the filtering assembly and should be classified under Heading 8421.90, which pertains to "parts."

2. Whether the filtering element should be classified as "filtering or purifying machinery and apparatus" under Heading 8421.10 or as "parts" under Heading 8421.90:
The appellants argue that the filtering element performs the complete function of filtering and should be considered a complete machine under Heading 8421.10. They reference Chapter Notes 4 and 5 of Chapter XVI, which state that a machine consisting of individual components contributing to a clearly defined function should be classified under the heading appropriate to that function.

The department, represented by the SDR, argues that the filtering element is a part of the dual filter assembly and is cleared captively within the factory for the manufacture of the dual filter assembly. The department's view is supported by the show cause notice and the catalogue, which describe the filtering element as a part of the filter assembly. The department maintains that the filtering element should be classified under Heading 8421.90 as parts, attracting a duty of 15% ad valorem.

The Commissioner and the Assistant Commissioner held that the filtering element is a part of the filter assembly and should be classified under Heading 8421.90. They reasoned that the filter element cannot function independently without the housing and other components of the filter assembly. The Assistant Commissioner further noted that interpretative rules cited by the assessee are not relevant to this case, as they pertain to incomplete or unfinished goods, not finished goods like the filter element.

Separate Judgments Delivered:

Majority Judgment:
The majority judgment, delivered by Justice K.K. Usha and supported by Member (J), concluded that the filter element is a part of the filtering apparatus and should be classified under Heading 8421.90. The judgment emphasized that the filter element does not function independently and requires the housing and other components of the filter assembly to perform its function. The judgment also referenced HSN Explanatory Notes, which indicate that parts performing the primary function of filtering in different types of filters are treated as parts of the filtering apparatus. Therefore, the filter element cannot be considered a complete filtering machinery or apparatus.

Dissenting Judgment:
Member (T) delivered a dissenting judgment, arguing that the filter element should be classified as a complete filtering apparatus under Heading 8421.10. The judgment emphasized that the filter element performs the function of filtering diesel and is adequate in itself for that purpose. The judgment also noted that the filter assembly is only an arrangement for bringing diesel to the filtering element and evacuating it for delivery to the engine. Therefore, the filter element should be classified as a complete apparatus.

Final Decision:
In terms of the majority order, the item "filtering element" is required to be classified as "part" under Chapter sub-heading No. 8421.90 of the Central Excise Tariff Act. The classification adopted by the lower authority was confirmed, and the appeal was dismissed.

Conclusion:
The judgment concluded that the filtering element should be classified under Heading 8421.90 as parts of the filtering apparatus, as it does not function independently and requires other components of the filter assembly to perform its function. The appeal was dismissed, and the classification adopted by the lower authority was confirmed.

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