2017 (11) TMI 436 - AT - Central Excise

Classification of goods - Aluminium casting - whether classified under CTH 8511.00 or under CTH 7601.90? - Rule 2(a) of the General Interpretative Rules - Held that - The appellant have manufactured and cleared the rough aluminium casting of stator plates. The same is not capable of being used as such. For use of the same aluminium castings in the manufacture of Magneto Assembly, the recipient of the goods has to undertake various process on this rough casting such as machining, outer dimension turning, back facing, hole drilling, hole tapping etc, thereafter it becomes finished stator plates and the same is capable of being used in the Magneto Assembly. The goods supplied by the appellant i.e. rough aluminium casting is correctly classifiable under Chapter sub heading 7601.90. Similar issue decided in the case of Commissioner of Central Excise, Mumbai-II Vs. Mukund Ltd 2004 (2) TMI 107 - CESTAT, MUMBAI , where it was held that the casting before machining has to be classified under the heading of respective metal and not as machine parts. When rough aluminium casting was manufactured and supplied by the appellant without any machining, the same will be classifiable under 7601.90 and cannot be classified as part of Magneto Assembly under Chapter 85 - appeal allowed - decided in favor of appellant.

Summary

Issues: Classification of goods under Central Excise Tariff - Interpretation of law and Tariff Act - Prospective vs. retrospective classification dispute

In this case, the issue revolved around the classification of goods under the Central Excise Tariff. The appellant, engaged in the manufacture of rough casting, had cleared goods classified under Chapter heading 8704/8714. The department contended that the goods supplied by the appellant, after undergoing various processes like machining, outer dimension turning, and hole drilling, were correctly classifiable under Chapter subheading 8511.00 as Magneto Assembly, attracting Central Excise duty. A show cause notice was issued, leading to a demand for differential duty, interest, and penalty. The Commissioner (Appeals) upheld the duty demand but reduced the penalty, stating the issue involved interpretation of law and the Tariff Act. The appellant challenged this decision before the Tribunal.

The appellant argued that they only manufactured rough castings of aluminum, which needed further processes to become finished parts capable of being used in equipment. They contended that the rough castings should be classified under Chapter 7601.90, 7611.90. The appellant provided a Chartered Engineer Certificate to support their claim. They also raised the point that any classification dispute should be raised prospectively, not retrospectively, citing relevant Supreme Court judgments. On the other hand, the Revenue supported the findings of the impugned order.

The Tribunal analyzed the submissions and found that the rough aluminum casting supplied by the appellant was correctly classifiable under Chapter subheading 7601.90. Referring to precedents, the Tribunal noted that before machining, the castings did not attain the essential characteristics of machinery parts and should be classified under Chapter 76. The Tribunal cited the case of Mukund Ltd, emphasizing that incomplete or unfinished machine parts should be classified under the metal chapters. The Tribunal concluded that the rough aluminum casting, without any machining, should be classified under 7601.90 and not as part of Magneto Assembly under Chapter 85. Consequently, the impugned order was set aside, and the appeal was allowed. The judgment was pronounced on 30/10/2017.