2005 (1) TMI 576 - AT - Central Excise

Tribunal rules pump parts not exempt under Notification, Gujarat HC decision cited

The Tribunal dismissed the appeals, affirming that the Column and Shaft Assembly and Discharge Head Assembly are not eligible for exemption under ... Pump - Exemption - Power driven pump Issues Involved:1. Whether the benefit of exemption under Notification No. 236/86 CE dated 3-4-1986 is available for Column and Shaft Assembly and Discharge Head Assembly manufactured by M/s. Fairbanks Morse (India) Ltd.Detailed Analysis:1. Exemption Eligibility for Column and Shaft Assembly and Discharge Head Assembly:The primary contention in these appeals is whether the Column and Shaft Assembly and Discharge Head Assembly qualify for exemption under Notification No. 236/86 CE dated 3-4-1986. The appellants manufacture vertical turbine pumps comprising bowl assembly, column and shaft assembly, and discharge head assembly. The Department issued show cause notices demanding duty on the column and shaft assembly and discharge head assembly, arguing they are accessories to the power-driven pump and not eligible for exemption. The Deputy Commissioner confirmed the demand, and the Commissioner (Appeals) upheld this decision, relying on the Gujarat High Court's ruling in Jyoti Limited v. Union of India, 1979 (4) E.L.T. (J 546) (Guj.).2. Appellants' Arguments:The appellants argued that a power-driven vertical turbine pump is a composite machine consisting of a bowl assembly, column/shaft assembly, and discharge head assembly, all essential for its function. They contended that these components collectively perform the pump's principal function of lifting water from a deep tubewell. They referenced Notes 3 and 4 to Section XVI of the Central Excise Tariff Act, which stipulate that composite machines performing a principal function should be classified under the heading of the machine performing that function. They also cited Board's Circular No. 224/58/96-CX, dated 26-6-1996, and previous Tribunal decisions supporting their view that the entire assembly should be classified under Heading 84.13 of the Central Excise Tariff.3. Respondent's Arguments:The respondent, represented by Sh. S.M. Tata, SDR, countered that the issue was settled by the Gujarat High Court in Jyoti Ltd., affirmed by the Supreme Court. The High Court had distinguished between the bowl assembly, which performs the pump's principal function, and the column and discharge head assemblies, which are stationary and merely facilitate the pump's operation. The respondent argued that Notes 3 and 4 to Section XVI do not apply, as the column and discharge head assemblies do not constitute composite machines or contribute to a clearly defined function as required by these notes.4. Tribunal's Findings:The Tribunal considered both sides' submissions and reviewed the relevant legal provisions and precedents. Heading 84.13 of the Central Excise Tariff Act applies to pumps for liquids, including power-driven pumps. The Tribunal referred to the Gujarat High Court's decision in Jyoti Ltd., which clarified that the bowl assembly, containing the impellers, performs the pump's principal function. The column and discharge head assemblies are merely accessories that facilitate the pump's operation but do not perform the essential function of building pressure in the liquid.5. Conclusion:The Tribunal concluded that the issue was settled by the Gujarat High Court and affirmed by the Supreme Court. The column and discharge head assemblies are not eligible for exemption under Notification No. 236/86 CE as they do not perform the principal function of the pump. Notes 3 and 4 to Section XVI of the Central Excise Tariff Act are not applicable in this case. Therefore, the appeals filed by the appellants were rejected.Operative Part of Order:The appeals were dismissed, and the decision was pronounced in open court on 11-1-2005.