Composite water pump sets: diesel engine treated as integral part, securing exemption for power-driven pumps.

A power-driven water pump set fitted with a diesel engine was treated as an integrated composite machine, because the goods were declared as a complete pump set and not as separate pump and engine units. Relying on the Board's circular and Note 3 of Section XVI of the Central Excise Tariff, the composite machine was classified by its principal function under Heading 84.13. On that basis, it was held to fall within the exemption for power-driven pumps primarily designed for handling water. The exemption was therefore sustained and the Revenue's challenge failed.

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Issues: Whether a power-driven water pump set comprising a diesel engine is entitled to the benefit of Notification No. 10/2006-C.E. when the engine is treated as an integral part of the pump set.

Analysis: The goods were declared as a complete water pump set and were not shown to have been imported as separate pump and engine units. The Board's circular recognised that an I.C. engine may be treated as an integral part of a power-driven pump and relied on Note 3 of Section XVI of the Central Excise Tariff to treat a composite machine according to its principal function. On that basis, the pump set was regarded as classifiable under Heading 84.13 and eligible for the exemption intended for power-driven pumps primarily designed for handling water.

Conclusion: The exemption was rightly allowed and the Revenue's challenge failed.

Final Conclusion: The orders granting exemption were sustained and the Revenue's appeals were rejected.

Ratio Decidendi: A diesel engine can be treated as an integral part of a power-driven pump set, and a composite pump set is classified by its principal function for the purpose of the exemption notification.

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