2015 (10) TMI 1045 - SC - Central Excise

Classification of goods - Whether persons like the assessees, in these cases, who manufacture lifting machinery , which machinery, it is argued, is the essential part which actually brings up and brings down an elevator/lift, is liable to be classified under Chapter sub-heading No. 8428.00 or 8431.00 - Held that - Note 4 of Chapter 16 would cover their case as individual components manufactured under one contract are intended to contribute together to a clearly defined function covered by sub-heading No. 8428.00, viz., lifting machinery. This being the case, according to them, Note 4 of Chapter 16, if correctly applied, would necessarily lead to the conclusion that the components manufactured by them would fall only under sub-heading No. 8428.00 and not sub-heading No. 8431.00. They also made another submission for the first time before us. They said, in any event, sub-heading No. 8431.00, which refers to parts suitable for use solely or principally with the machinery of sub-heading No. 8428.00, would only refer to parts that were used after a complete lift was already set up and not before. They contrasted the language of sub-heading No. 8431.00 with the language of sub-heading No. 8476.91, which simply states parts of machines of sub-Heading No. 8476.11 . The contrast in the language, according to them, makes it clear that the parts spoken of in the latter entry could well be parts of a machine itself, as opposed to sub-heading No. 8431.00, where the parts have to be suitable for use only with the machinery that is already installed. Having regard to the fact that the new pleas raised before us are questions of law which need to be answered on the same set of facts, and no new or additional facts need to be pleaded in order that the assessees make out their case. This being the case, we, therefore, set aside both the Tribunals judgments in the two appeals before us and remand these cases for a fresh hearing before the Tribunal allowing both sides to take up all points which arise on the facts of these appeals. - Appeal disposed of.

Summary

Issues: Classification of lifting machinery components under Chapter sub-heading No. 8428.00 or 8431.00

The judgment deals with the classification of components of lifting machinery under Chapter sub-heading No. 8428.00 or 8431.00. The central question is whether the components manufactured by the assessees, which form an essential part of elevators or lifts, should be classified under sub-heading No. 8428.00 or 8431.00.

The assessees argue that despite producing components separately, these are cleared under a single contract number and eventually constitute a complete elevator or lift. On the other hand, the Revenue contends that these parts are suitable for use with machinery under Chapter Heading No. 84.28 and should be classified under sub-heading No. 8431.00.

The appeals focus on the duty rates applicable for the period in question, with differences between sub-heading No. 8428.00 and 8431.00. The assessees argue that what is sold is a complete lift, not immovable property, and should fall under sub-heading No. 8428.00. However, authorities found that the components fall under sub-heading No. 8431.00 as they do not manufacture every single lift component.

The assessees raised a new argument, claiming they manufacture lifting machinery distinct from a complete lift, invoking Note 4 of Chapter 16. They argue that components contribute to a defined function covered by sub-heading No. 8428.00. They also contend that sub-heading No. 8431.00 refers to parts used after a lift is set up, unlike sub-heading No. 8476.91, which can be parts of a machine itself.

The Revenue opposes the new arguments, stating that the decisions of the lower authorities were correct and did not require further review. However, the Supreme Court allows the assessees to raise these points on a remand to the Tribunal in both cases, considering the importance of the issue and its wide implications.

The Court sets aside the Tribunal's judgments and remands the cases for a fresh hearing, allowing both sides to address all relevant points arising from the facts presented in the appeals. The Tribunal is instructed to expedite the disposal of these matters within six months from the date of communication of the order.