1998 (6) TMI 563 - AT - Central Excise

Tribunal classifies Ground Power Unit as aircraft part, grants duty exemption

MAK CONTROLS Versus COMMISSIONER OF CENTRAL EXCISE, COIMBATORE

The Tribunal classified the Ground Power Unit (GPU) used with aircraft under Tariff Heading 88.03 as a part of the aircraft, granting duty exemption under ... - Issues Involved:1. Classification of Ground Power Unit (GPU) for aircraft use.2. Eligibility for duty exemption under Notification No. 65/93-CX.Summary:Issue 1: Classification of Ground Power Unit (GPU) for aircraft useThe primary issue in the appeal concerns the classification of the Ground Power Unit (GPU) used with aircraft. The assessee claims classification under Tariff Heading (T.H.) 88.03, which covers 'Parts of goods of Heading No. 88.01 or 88.02,' read with Notification No. 65/93-CX, dated 28-2-1993. The lower authority, however, classified the GPU under T.H. 85.02, which pertains to 'Electric generating sets and rotary convertors.'The appellants argued that the GPU is not commercially known as a generating set and is exclusively used for aircraft, thus qualifying as a part of the aircraft under T.H. 88.03. They cited various notifications and definitions, including Notification No. 11/97 and the Import Trade Policy definition of 'part,' to support their claim. The appellants also referenced Section Notes XVII and judicial precedents to argue that the GPU should be classified based on its exclusive use with aircraft.The department contended that the GPU generates electricity like other generating sets and is used for servicing aircraft, thus not qualifying as a part of the aircraft. They cited various certificates and expert opinions stating that the GPU is used for servicing aircraft, not as an integral part.The Tribunal observed that the GPU is designed exclusively for aircraft use and performs functions necessary for aircraft operation on the ground. The Tribunal concluded that the GPU, due to its exclusive use and specialized nature, qualifies as a part of the aircraft under T.H. 88.03.Issue 2: Eligibility for duty exemption under Notification No. 65/93-CXThe Tribunal examined whether the GPU qualifies for duty exemption under Notification No. 65/93-CX, which exempts parts of aircraft from excise duty. The Tribunal noted that the GPU keeps the aircraft functional on the ground, similar to the inbuilt power unit used when the aircraft is in the air. The Tribunal concluded that the GPU, being an essential part of the aircraft's operation, qualifies for the duty exemption under Notification No. 65/93-CX.In the majority order, the Tribunal held that the GPU is classifiable under sub-heading 8803 as a part of an aircraft and is eligible for the duty exemption under Notification No. 65/93-CX. The appeal was allowed, and the impugned order was set aside.Separate Judgment: Member (J) dissented, arguing that the GPU is used for servicing the aircraft and cannot be considered a part of the aircraft. He concluded that the GPU does not qualify for the duty exemption under Notification No. 65/93-CX.Final Order: The majority order prevailed, and the appeal was allowed, classifying the GPU under sub-heading 8803 and granting the duty exemption under Notification No. 65/93-CX.