Motor vehicle parts classification under Heading 87.08 prevailed, with duty demand sustained and credit utilisation preserved.

Gears, shafts and gear-boxes were treated as parts of motor vehicles under Heading 87.08 because Note 2(e) of Section XVII excludes articles of Heading 84.83 only when they are integral parts of engines or motors; on the facts, the goods were not such integral parts. The earlier classification adopted for similar goods was followed, and the contrary view was distinguished, so the duty demand was sustainable. Credit utilisation on the duty paid was nevertheless permitted when the goods were used in further manufacture within the assessee's own unit.

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Issues: Whether gears, shafts and gear-boxes were classifiable under Heading 84.83 as claimed by the assessee or under Heading 87.08 as parts of motor vehicles, and whether the duty demand could be upheld with credit availability in the assessee's own manufacture.

Analysis: Note 2(e) of Section XVII of the Central Excise Tariff Act, 1985 excludes articles of Heading 84.83 from treatment as parts only when they constitute integral parts of engines or motors. On the facts, the goods were found not to be integral parts of engines or motors but parts of motor vehicles. The classification adopted in an earlier decision on similar goods was followed, while the contrary view was distinguished. Since the goods fell under Heading 87.08, the demand of duty was sustainable. At the same time, the assessee was permitted to utilise the duty paid on those goods as credit when used in further manufacture in its own unit.

Conclusion: The impugned goods were correctly classified under Heading 87.08 and the duty demand was upheld, with credit utilisation allowed to the assessee.

Final Conclusion: The substantive classification issue was decided in favour of revenue, while limited credit benefit was preserved for the assessee.

Ratio Decidendi: Goods falling under Heading 84.83 are excluded from motor-vehicle parts only if they constitute integral parts of engines or motors; otherwise, they may be classified as parts of motor vehicles under Heading 87.08.

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