Classification of Iron and steel castings - Central Excise - 01

Classification of Iron and steel castings Circular No. 1 Dated 18-2-1987 [From F. No. 139/48/86-CX.4] Government of India Ministry of Finance (Department of Revenue) New Delhi Subject : Classification of Iron and steel castings . Certain doubts have been raised as to whether iron and steel castings (which have not undergone machining) would be classifiable as castings of iron and steel, not elsewhere specified, under Chapter 72/73 (heading 73.07) or as parts of machinery under Chapter 84/85 of the Schedule to the Central Excise Tariff Act, 1985. 2. It may be recalled that prior to 28-2-1986, instructions were issued under Board's F. No. 136/2/81-CX.4, dated 27-6-1981 to the effect that if a product was subjected to only the process of making casting, it would be classifiable as casting. However, if machining or any processes other than casting were employed on such products, these would be covered under the then residuary item 68. For this purpose, scope of the words 'machining or any other process' was explained in Board's letter F. No. 139/2/81-CX.4, dated 10-11 -1981 to mean any process other than those employed for merely removing surface defects or excess material by grinding, chipping or filing which are known as fettling in the ISI terminology. In other words, it was clarified in the context of the old tariff that where only surface defects or excess material is removed by the process of grinding, chipping and filing, and no further machining is done on castings to give different form or shape to them, in such cases, the products would continue to be classified as castings. But if certain other processes (other than fettling) were carried out on castings, such as boring of holes or cutting to give a different form and such semi-finished or finished machine parts with identities different from simple casting comes into existence. Such articles were to be regarded as falling under erstwhile T.I. 68 (unless they fell under any of the specific tariff items 1-67, such as T.I. 52). 3. The doubts which have arisen in the context of the new excise tariff are mainly based on the applicability of rule 2(a) of the rules for the interpretation of the schedule to the Tariff. It may be stated that the Board, in its F. No. 114/13/86-CX.3, dated 10-2-1986, has already clarified that the important conditions to be satisfied for attracting interpretative rule 2(a) for classification of incomplete and finished articles are that the articles must have the essential character of the complete or the finished articles, which could, inter alia, be judged with reference to the functional aspect, physical identity and the degree of completion of the product. Viewed in this context, castings, in which only surface defects or excess material have been removed may not acquire a stage at which it could be said to have the essential character of the complete or finished machinery part. Further, as per interpretative rule 1, the classification shall be determined according to the terms of the headings, and in this case, there is a specific heading 73.07 covering all iron and steel castings not elsewhere specified in chapter 72 or 73. 4. Taking into account the above points, the Board is of the view that operations, such as those listed below, which do not alter the essential character of the castings, would not be enough to merit the classification of such castings as machinery parts under Chapter 84 or 85 as the case may be. (a) Removal of runners and risers. (b) Surface cleaning and removal of surface defects. (c) Chipping, filing or grinding to remove excess material. (d) Annealing and stress relieving. (e) Proof Machining. (f) Surface coating. Such castings would more appropriately be classified under heading 73.07 of the ACT.