Prima facie tariff classification of mounted equipment on a chassis supported partial pre-deposit waiver and stay of recovery.

Mounted equipment fixed on a motor vehicle chassis was held prima facie classifiable under Heading 87.05 rather than Heading 84.25, because the relevant activity was the mounting of specific-purpose goods on a chassis and not treatment as general mobile machinery. The HSN notes could not override the nature of the manufacturing process. On that classification view, the assessee obtained partial waiver of pre-deposit and stay of recovery for the duty relatable to the launching mechanism and the corresponding penalty, while deposit was directed for the balance duty and related penalty.

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Issues: Whether the "Launching Mechanism", mounted on a motor vehicle chassis, was prima facie classifiable under Heading 87.05 rather than Heading 84.25 of the Central Excise Tariff, and whether, on that basis, waiver of pre-deposit and stay of recovery should be granted for the corresponding duty and penalty amounts.

Analysis: The item was found to have been mounted on a chassis supplied by another entity and then directly supplied to the Defence. The dispute turned on whether the activity performed was merely mounting of specific-purpose equipment on a vehicular chassis, which is contemplated in Chapter 87, or whether the goods could be treated as mobile equipment under Chapter 84. The HSN notes could not be used to override the nature of the manufacturing activity. On a prima facie view, the item was more appropriately classifiable under Heading 87.05, and the duty demanded on the differential value of the chassis did not call for immediate pre-deposit. The balance duty relating to the other items was directed to be deposited, with consequential stay of recovery of the penalty on compliance.

Conclusion: The assessee was granted partial relief by way of waiver of pre-deposit and stay of recovery for the duty relatable to the launching mechanism and the corresponding penalty, while deposit was required for the balance amount concerning the other items.

Ratio Decidendi: Where the essential process is mounting equipment on a motor vehicle chassis, the resulting goods are prima facie to be assessed under the tariff entry governing such vehicular mounting rather than a general machinery heading, and interim relief may follow on that classification view.

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