2006 (6) TMI 368 - AT - Central Excise

Shafts reclassified as parts of Power Tiller, not transmission shafts. Expert analysis supports Tribunal decision.

The Tribunal ruled in favor of the appellants, classifying the 'Shafts' under entry 84.32 of the Central Excise Tariff Act, 1985, as parts of the Power ... Classification Issues: Correct classification of 'Shafts' under the Central Excise Tariff Act, 1985.Analysis:The appeals revolve around the classification of 'Shafts' manufactured by the appellants under entries 84.83 and 84.32 of the Central Excise Tariff Act, 1985. The dispute arises from the impugned orders classifying the items under 84.83, while the appellants argue for classification under 84.32 as parts of the Power Tiller. The main contention is whether the shafts transmit power, as transmission shafts fall under Heading 84.83. The Chartered Accountant for the appellants argued that the shafts do not transmit power, citing a technical report from Professors of R.V. College of Engineering. The report concluded that the shafts, except for the Side Clutch Shaft, do not transmit power and are custom-made for V.S.T. Power Tillers. The Chartered Accountant emphasized that the lower authority erred in ignoring the technical report, as per the principle established in BPL Pharmaceuticals v. Collector of Central Excise. The Chartered Accountant also distinguished previous cases where shafts were classified as transmission shafts, as in this case, it is explicitly claimed that the shafts do not transmit power.Moreover, the Additional Commissioner's decision to classify the shafts as parts of a gear box was contested by the appellants, as it was beyond the scope of the show cause notice. The appellants argued that the show cause notice did not allege that the items were parts of a gear box, and the Additional Commissioner's extension of the scope was impermissible. On the other hand, the Revenue reiterated the lower authorities' orders, maintaining the classification under 84.83.After careful examination of the case records and an inspection of the factory and items, the Professors of R.V. College of Engineering concluded that the shafts, except for the Side Clutch Shaft, do not transmit power and are stationary machine elements. The report emphasized that these shafts are custom-made for V.S.T. Power Tillers and are essential for the gear box assembly. The Tribunal concurred with this analysis, ruling that the shafts do not transmit power and are correctly classified under 84.32 as parts of the Power Tiller. Consequently, the appeals were allowed with consequential relief, overturning the impugned Orders-in-Appeal.