Classification of iron and steel castings - Central Excise - 32/89

Classification of iron and steel castings Circular No. 32/89 Dated 30-6-1989 [From F. No. 224/6/89-CX.6] Government of India Ministry of Finance (Department of Revenue) New Delhi Subject : Classification of iron and steel castings. Certain doubts have been expressed regarding : (i) Classification of products obtained by castings (ii) The Scope of sub-heading 7307 (prior to 1-3-1988 of the CET). (iii) The validity of Board's Circular 1/87 (F. No. 139/48/86-CX.4, dated 18-2-1987 and the need to amend and modify it. The matter has been examined. Under the old CET (prior to 1-8-1985) there was two stage levy as castings under TI 25 and on final machining as finished machine part under TI 68. This position has been upheld by the Hon'ble Supreme Court in the case of M/s. TISCO v. Union of India - 1988 (35) E.L.T - 685. In the subsequent period upto 27-2-1986 the position of two stage under T.I. 25(16) and 68 continued. After the introduction of new CET, the chapters on metals were not aligned with HSN during the period 28-2-1986 to 29-2-1988 and continued to be based on the earlier T.I. 25 of the old tariff. Therefore the scope of heading 7307 - "castings of iron steel not elsewhere specified in chapter 72" - is not identical with that of 73.25 of the HSN. Further in view of the difference in headings the HSN explanatory Notes could not be simply directly invoked to interpret the CETA, 1985 as has been held by Gujarat High Court in the case of Ms. Echjay Industries. In view of this Board decided that no amendment or alteration is required to Board's F. No. 139/48/86-CX.4, dated 18-2-1987 clarifying the scope of 'castings' under heading 7307 as covering all castings of iron steel which have not been subjected to any other process except (a) removal of runners and risers (b) surface cleaning and removal of surface defects (c) chippings, filing or grinding to remove excess material (d) anealing and stress relieving (e) proof machining and (f) surface coating. As regards the period from 1-3-1988 there was no generic heading of casting and the metal chapters were fully aligned with HSN. It was observed that heading 7325 HSN has a restricted scope covering only such cast articles covered by Sec. XV as had not been specified in other headings of Chapter 72 73, together with semi-finished articles having essential character of finished articles which are to be treated as finished articles by virtue of Rule 2 (a) of the Rules of interpretation. Castings for other articles like machine parts falling under Chapter 84, 85, 86, 87 etc. would not be covered by Chapter 73 in view of section note 1(f), (g), (h) to Section XV, as also HSN explanatory Notes for heading 73.25 at page 1037. Such castings as they emerge from the moulds or after fettling etc. would be appropriately regarded as semi-finished articles having the essential character of the finished machine parts or as a blank for machine parts which by application of Rule 2(a) of the rules of interpretation would be classified, under chapters 84, 85, 86, 87 etc. After alignment of CETA with HSN, this position would also prevail under CETA, 85 w.e.f. 1-3-1988. Further, the Board has observed that the implications of the change were not fully perceived and may not have been applied in practice till issue of Notification 223/88, dated 23-6-1988, accordingly the practice of assessment during 1-3-1988 to 22-6-1988 is required to be ascertained. This is being done separately.