2016 (5) TMI 448 - SC - Central Excise

Classification - Whether the steel fabricated structures manufactured by the assessee in its factory and subsequently cleared in unassembled condition to the customer s site and erected there would merit classification as parts of boilers under chapter sub heading 8402.90 of the Central Excise Tariff Act, 1985 - Held that - Department itself has come out with the clarification that those structural components which are to be used as parts of Boiler System would be classifiable as parts of Boiler only under Heading 8402 of the Tariff. This clarification, thus, vindicates the stand which was taken by the assessee throughout by rightly classifying the parts of the boilers under Chapter sub heading 8402.90 of the Central Excise Tariff Act, 1985. Therefore, the impugned order is set aside. - Decided in favour of appellant

Summary

Issues:
Classification of steel fabricated structures under Central Excise Tariff Act, 1985.

Analysis:
The case involved the classification of steel fabricated structures manufactured by the appellant as parts of boilers under chapter subheading 8402.90 of the Central Excise Tariff Act, 1985. The appellant, a manufacturer of machinery and parts for marketing pulp, paper, and steel fabricated structures, had treated these structures as part of boilers, attracting 13% E.D. However, the authorities issued show cause notices directing the appellant to explain why a differential duty should not be demanded for misclassification. The Commissioner confirmed the demand, which was upheld by the CESTAT, leading to the appeal before the Supreme Court.

The Department issued a clarification on April 2, 2012, stating that structural components used as part of a Boiler System should be classified as parts of a boiler under Heading 8402 of the Tariff. The clarification emphasized that these components are considered inputs for the generation of electricity and steam, not for laying foundations or supporting capital goods. This clarification supported the appellant's position of correctly classifying the boiler parts under Chapter subheading 8402.90 of the Central Excise Tariff Act, 1985.

Considering the Department's clarification and the appellant's consistent classification, the Supreme Court allowed the appeal, setting aside the orders of the CESTAT and the Commissioner (Appeals). The Court held that the structural components manufactured by the appellant and used as parts of a Boiler System should indeed be classified under Heading 8402 of the Tariff. As a result, the differential duty demanded from the appellant was not justified, and no costs were awarded in the matter.