2017 (5) TMI 457 - AT - Central Excise

Classification of goods - C.I. Castings - The assessee classified the items under Chapter 84 as parts of machines chargeable to duty at 13%. The department on the other hand entertained the view that the goods are nothing but CI castings and classifiable under 7325.10 of the Central Excise Tariff Act chargeable to 15% excise duty - whether they are to be classifiable as casting under Chapter 73 or as parts of machines under Chapter 84? - Held that - CBEC Circular dated 1.7.96 clarified that castings coming out of the castings moulds up to the stage of proof machining and requiring further machining before being used as machine parts would be appropriately classifiable under Chapter 73. However, those castings which do not require any machining after their emergence from casting moulds viz. Precision castings and/or are, as such, ready to be used as machine parts would be regarded as articles having essential character of machine parts and would be classified under Chapters 84, 85, 86, 87, etc. It is not disputed that the goods in the assessee s case have undergone machining processes beyond the stage of proof machining. Consequently, the right classification would be under parts of machines under Chapter 84. Appeal dismissed - decided against Revenue.

Summary

Issues:
Classification of goods under Chapter 84 as parts of machines chargeable to 13% duty versus classification under 7325.10 of the Central Excise Tariff Act chargeable to 15% excise duty.

Comprehensive Analysis:
The appeal was filed against an order passed by the Commissioner (Appeals) regarding the classification of goods manufactured by the assessee, who is engaged in the manufacture of C.I. Castings. The dispute revolved around whether the goods should be classified under Chapter 84 as parts of machines chargeable to 13% duty, as classified by the assessee, or under 7325.10 of the Central Excise Tariff Act chargeable to 15% excise duty, as contended by the department. The original authority confirmed the duty demanded under Chapter 73, but the Commissioner (A) approved the classification under Chapter 84, leading to the Revenue filing this appeal.

During the hearing, the learned AR for the Revenue argued that the goods manufactured by the assessee were not fully finished parts of machines and required further machining processes before being used as machine parts. He relied on a Tribunal decision regarding forged blanks to support the classification under Chapter 7325. On the other hand, the advocate for the respondent-assessee argued that the goods had undergone various machining processes beyond proof machining and should be classified as parts of machines under Chapter 84. He referenced a Circular issued by the CBEC and relied on case laws such as Shivaji Works and Ashoka Iron Works to support his argument.

The main issue was whether the goods should be classified as castings under Chapter 73 or as parts of machines under Chapter 84. The CBEC Circular from 1996, cited by the assessee, clarified that castings requiring further machining after emerging from casting molds should be classified under Chapter 73, while those ready to be used as machine parts should be classified under Chapters 84, 85, 86, or 87. The Tribunal's decisions in the cases of Shivaji Works and Ashoka Iron Works supported the assessee's argument that goods undergoing machining processes beyond proof machining should be classified as parts of machines under Chapter 84. The Tribunal upheld the impugned order, dismissing the Revenue's appeal based on the classification of the goods as parts of machines under Chapter 84.

In conclusion, the judgment resolved the classification dispute by determining that the goods manufactured by the assessee, which had undergone machining processes beyond proof machining, were rightly classified as parts of machines under Chapter 84. The decision was supported by the CBEC Circular and previous Tribunal decisions, leading to the dismissal of the Revenue's appeal.