2000(03)LCX0200
IN THE CEGAT, COURT NO. II, NEW DELHI
Ms. Jyoti Balasundaram, Member (J) and Shri V.K. Agrawal, Member (T)
COMMISSIONER OF C. EX., DELHI-III
Versus
B.H.P. ENGINEERS
Final Order No. 381/2000-B, dated 13-3-2000 in Appeal No. 2810/98-B
CASE QUOTED
Shrike Construction Pvt. Ltd. v. Commissioner — 1997(09)LCX0088 Eq 1997 (095) ELT 0644 (Tribunal)
— Relied on [Paras 3, 4]
DEPARTMENTAL CLARIFICATION QUOTED
Circular No. 16/89, dated 19-4-1989. [Para 3]
Advocated By: Shri Jagdish Singh, JDR, for the Appellant.
Shri D. Dave, Advocate, for the Respondents.
[Order per: V.K. Agrawal, Member (T)]. - The issue involved in this appeal preferred by Revenue is whether central excise duty is chargeable on the goods manufactured and cleared by the respondents M/s. B.H.P. Engineers as parts of conveyor or as conveyor itself.
2. Shri Jagdish Singh, learned D.R., submitted that the respondents had cleared various parts of conveyors during the period August, 1992 to March, 1994 under various gate passes over a period of time showing the goods as part-shipment of the conveyor and the duty liability was discharged at the rate applicable to conveyors instead of paying higher duty applicable to parts of conveyors; that the parts of conveyors are specifically covered under Heading 84.31 of the Schedule to the Central Excise Tariff Act; that the respondent did not follow the procedure as prescribed in Ministry's instruction No. 261/26AA/16/82 CEX-8, dated 25-2-1983 wherein it was provided that when the machinery unit consisting of several consignments which cannot be transported in assembled shape and goods have to be cleared in parts the manufacturer is required to pay excise duty on whole of the machinery when the first consignment was removed from the factory; that this procedure had not been followed by the respondents and as such clearances made by them are to be treated as clearances of parts of conveyors. He further mentioned that RG-1 register maintained by the respondents indicated the quantity manufactured on various dates; that it is, therefore, evident that RG-1 register was maintained in respect of parts/part consignment only and the full conveyor was never entered in the statutory register. He, therefore, contended that the demand for differential duty is rightly demandable from the respondents.
3. Opposing the department's contention Shri D. Dave, learned Advocate, submitted that the respondents had manufactured and cleared only conveyors on payment of duty; that their customers had placed orders for conveyors only and the classification list filed by them were all approved by the competent authority; that they had maintained a register prescribed for the purpose in proforma as per Annexure 56 in which contract entered with prospective buyers for purchase of conveyor have been specifically referred to; that the conveyor though cleared under different gate passes could be easily co-related to any one product namely conveyors because in the gate passes it was specifically declared that the clearance was as part shipment. He further submitted that conveyors were huge in size and cannot be transported in assembled conditions for want of transport facility, and accordingly, instead of clearing unassembled conveyor at one go, they cleared them in different consignments under different gate passes merely to facilitate their easier installation. He also mentioned that Rule 2 of the Interpretative Rules clearly provides that any reference in a heading to goods shall be taken to include reference to those goods incomplete or unfinsihed provided that the incomplete or unfinished goods had a character of complete or finished goods. It shall also be taken to include a reference to those goods completed or finished, removed unassembled or disassembled. The Explanatory note of H.S.N. below Interpretative Rule 2 clearly provides that when the goods are transported in unassembled state for convenience of transport, they are classified as being a machine in question and not in any separate heading for parts. Learned Advocate also referred to the Board's circular No. 16/89 dated 19-4-1989 wherein it was clarified that if together the parts and components of lifts can be regarded as lifts in unassembled condition, disassembled condition or having the essential character of lifts they would be assessed under Heading 84.28 otherwise such parts and components would be assessed under sub-heading 84.31. Finally, he submitted that even the Asstt. Commissioner in the adjudication order has accepted the fact that the conveyors were cleared by them in parts. He also relied upon the decision in the case of M/s. Shrike Construction Pvt. Ltd. v. CCE, Pune, 1997(09)LCX0088 Eq 1997 (095) ELT 0644 (T) wherein it was held that the assessee had cleared the cranes and not the parts of the cranes as in the gate passes the description of the goods were given as first part of the consignment and the second part of the consignment.
4. We have considered the submissions of both the sides. It has not been disputed by the department that the order received by the respondents were for conveyors and in pursuance of those purchase orders they have supplied the conveyors to their customers in different consignments for the purpose of convenience of transportation. This fact was dearly observed by the Appellate Authority in the impugned order as it is mentioned therein that “adjudicating authority in his order has stated in very clear terms that the subject clearances were made to fulfil the orders of the customer which were for complete conveyor and that the goods cleared by the appellants were conveyors." The Explanatory Note of H.S.N. provides that for convenience of transport many machine and apparatus are transported in an unassembled set. Although, in fact, the goods are then a collection of parts, they are classified as being a machine in question and not in any separate heading for parts. The same principle applies to an incomplete machine having the features of complete machine presented unassembled. Taking into consideration the Explanatory Note of H.S.N. the Board's circular in respect of lifts and the Tribunal's decision in the case of M/s. Shrike Construction Equipments Pvt. Ltd. referred to above, there appear to be no reason to interfere with the impugned order. We also agree with the Commissioner (Appeals) that non-observance of procedure prescribed in Ministry's letter dated 10-3-1983 cannot result in changing the classification of the goods in dispute. We accordingly reject the appeal filed by the Revenue.
_______
Equivalent 2000 (119) ELT 599 (Tribunal)