2014 (9) TMI 481 - HC - Central Excise

Components of Vertical Turbine Pump Not Eligible for Excise Duty Exemption Under Heading 84.13

M/s Fair Banks Morse India Ltd. Versus Union of India And Others

The court held that the column and shaft assembly and discharge head assembly of a vertical turbine pump do not qualify as machines but rather as ... Power driven pump - Exemption under Rule 8(i) of the Central Excise Tariff Rules - contravention of the provisions of Rule 173-C and 173-F - whether the column and shaft assembly and discharge head assembly is liable for payment of excise duty or whether these components are entitled for exemption being a composite machine to the power driven pump - Held that:- A perusal of the entry indicates that 'deep tube-well turbine pumps' comes under the description 'power driven pumps designed for handling water', for which the rate of duty is nil, meaning thereby that it is exempted from payment of central excise duty. bowl assembly performs the principal function of lifting the water. The other two components, namely, the column and shaft assembly and discharge head assembly enables the bowl assembly to perform as a vertical turbine pump by lifting the water from the deep tube-well. The function of a pump is to lift the water from one point to another. By a rotating action of the shaft and the impeller, a mechanical energy is converted into kinetic energy and water is forced out by a pressure from the pump itself. This rotating action in the bowl assembly is done when an electrical energy is supplied to the bowl assembly. The column and shaft assembly and the discharge head assembly merely enables the water to pass out from the bowl assembly to the surface. The discharge head and the column and shaft assembly merely keeps the bowl assembly suspended at the appropriate depth so that water could be forced out. What is driven by the power is the parts of the bowl assembly. The column and shaft assembly and discharge head assembly remains stationary and are therefore accessories and not 'machine'. In a vertical turbine pump, energy is supplied by electricity. The electric motor converts the electrical energy into a mechanical energy which is injected through the parts of the bowl assembly, namely, the vanes of the impellers which converts the mechanical energy into kinetic energy making the water move up under pressure built by the impellers. bowl assembly performs the function of a power driven pump and that the column and shaft assembly as well as the discharge head assembly does not perform the function of a power driven pump. At best, the column and shaft assembly as well as the discharge head assembly only contribute to the effectiveness of the bowl assembly, which by itself is not sufficient to claim exemption as a machine under entry 84.13. - Decided against assessee. Issues Involved:1. Maintainability of the writ petition and appeal.2. Classification of column and shaft assembly and discharge head assembly for excise duty exemption.3. Interpretation of composite machines under Note 3 and 4 of Section XVI of the Central Excise Tariff Act.4. Applicability of Central Board of Excise and Customs circular dated 26.6.1996.Issue-wise Detailed Analysis:1. Maintainability of the Writ Petition and Appeal:The respondents raised a preliminary objection regarding the maintainability of the writ petition and appeal under Section 35L(b) of the Central Excise Act, 1944, arguing that only the Supreme Court has jurisdiction over issues related to the determination and chargeability of duty rates. The court overruled this objection, noting that the petitions were admitted in 2005 and affidavits had been exchanged. The court referenced the Supreme Court's principles in Dhampur Sugar Mills Ltd. vs. Union of India, 2000 (122)ELT 333, to support the maintainability of the petitions.2. Classification of Column and Shaft Assembly and Discharge Head Assembly:The petitioner argued that the vertical turbine pump consists of three assemblies-bowl assembly, column and shaft assembly, and discharge head assembly-which together perform the function of lifting water. The petitioner contended that these assemblies, when combined, should be classified under heading 84.13 of the Central Excise Tariff Act and be eligible for exemption from excise duty. However, the court found that the column and shaft assembly and discharge head assembly do not perform the principal function of a pump and are therefore not eligible for exemption under notification No.155/86.3. Interpretation of Composite Machines under Note 3 and 4 of Section XVI:The petitioner relied on Note 3 and 4 of Section XVI, which state that composite machines consisting of two or more machines fitted together should be classified as the machine performing the principal function. The court examined these notes and concluded that the column and shaft assembly and discharge head assembly are not machines but accessories. The court emphasized that the bowl assembly performs the principal function of lifting water, driven by electrical energy, while the other assemblies merely facilitate this function and remain stationary.4. Applicability of Central Board of Excise and Customs Circular dated 26.6.1996:The petitioner cited the circular, which clarifies that composite machines should be classified under the heading of the machine performing the principal function. The court acknowledged the circular but determined that it does not apply in this case because the column and shaft assembly and discharge head assembly do not qualify as machines under Note 5, which defines a machine as equipment that performs a particular kind of work using energy.Conclusion:The court concluded that the bowl assembly alone performs the function of a power-driven pump and that the column and shaft assembly and discharge head assembly are accessories, not machines. Therefore, these components do not qualify for excise duty exemption under heading 84.13. The writ petition and appeal were dismissed, and any interim orders were vacated.