Central excise duty exemption granted to forgings and forged products of parts and accessories of cycles and cycle rickshaws - Regarding - Central Excise - 13/88

Central excise duty exemption granted to forgings and forged products of parts and accessories of cycles and cycle rickshaws - Regarding Circular No. 13/88 Dated 18-5-1988 [From F. No. 139/16/88-CX.4] Government of India Ministry of Finance (Department of Revenue) New Delhi Subject : Central excise duty exemption granted to forgings and forged products of parts and accessories of cycles and cycle rickshaws - Regarding. Attention is invited to notification No. 137/88-Central Excises, dated the 4th April, 1988 which amends notification No. 62/86-Central Excises, dated the 10th February, 1986, so as to wholly exempt excise duty on forgings and forged products of iron and steel falling within Chapter 73, if used in the manufacture of exempted parts and accessories of cycles and cycle-rickshaws. Where such use is elsewhere than in the factory of production of such forgings and forged products, the exemption is subject to the observance of Chapter X procedure. 2. Manufacturers of such forgings and forged products have made a representation pointing out difficulties faced by them in observing the Chapter X procedure. It has been stated that such forgings and forged products are specially shaped, designed and clearly identifiably and these are ultimately used as parts and assessories of cycles and cycle-rickshaws. It has, therefore, been requested that the condition with regard to observance of Chapter X procedure may be removed, as such forgings and forged products cannot be used for any purpose other than in the manufacture of parts and accessories of cycles and cycle-rickshaws. 3. The matter has been examined by the Board. In terms of the provisions of rule 2(a) of the Interpretative Rules of the Central Excise Tariff, the scope of any heading which refers to a particular article is extended so as to cover not only the complete article but also that article incomplete or unfinished, provided that, as presented, it has the essential character of the finished or complete article. In terms of the Explanatory Notes to the Harmonised System (HS), the provisions of this rule also apply to 'blanks' unless these are specified in a particular heading. The term 'blank' has been defined in the HS as an article, not ready for direct use, having an approximate shape or outline of the finished article or part, and which can only be used, other than in exceptional cases, for completion into the finished article or part. Semi-manufactures not yet having the essential shape of the finished articles (such as is generally the case with bars, discs, tubes, etc.) are not regarded as blanks. The Board is, therefore, of the view that in case forgings and forged products of iron and steel have acquired the essential character of parts and accessories of cycles and cycle-rickshaws by virtue of their having the approximate shape or outline of the finished part or accessories, these could be classified as parts and accessories of cycles and cycle-rickshaws. 4. Specified parts and accessories of cycles and cycle-rickshaws are wholly unconditionally exempt from payment of excise duty (vide S. No. 1 of the Table of Notification No. 62/86-C.E., dated 10-2-1986 as amended). Therefore, in case such forgings and forged products of iron and steel have acquired the essential character of parts and accessories of cycles and cycle-rickshaws so as to merit their classification under the heading which refers to finished parts and accessories, these could be treated as unconditionally exempt from the whole of the excise duty leviable thereon, without having to follow the Chapter X procedure. It is only in those cases where the forgings and forged products of iron and steel have not yet acquired the essential character of the finished parts, and where these are not recognisable and identifiable incomplete or unfinished parts and accessories of cycle and cycle-rickshaws, that the Chapter X procedure would be required to be followed so as to ensure that such forgings and forged products are used in the manufacture of parts and accessories of cycles and cycle-rickshaws and not for any other purpose. 5. In view of the above, the Board has desired that the lower field formations may be suitably advised to ensure that the conditions relating to observance of Chapter X procedure prescribed in the notification No. 62/86-C.E., dated 10-2-1986, as amended, needs to be enforced only in the latter type of cases indicated in para 4 above, where the forgings and forged products of iron and steel have not yet acquired essential shape and character of the finished parts and accessories of cycles and cycle-rickshaws. It may also please be ensured that decision in the question as to whether an individual product comes in the category of incomplete or unfinished parts/accessories (including blanks) of cycles and cycle rickshaws having the essential character of the complete or finished article, or in the category of forgings and forged, products which have not yet acquired the essential shape and character of the finished parts/accessories, are taken at a level not below the rank of an Assistant Collector.