2015 (4) TMI 1314 - AT - Central Excise

Tribunal rules in favor of respondent, classifying boxes under Heading 8403, rejecting Department's argument.

The Tribunal ruled in favor of the respondent, classifying the boxes as parts meant for electrical motors under Heading 8403. The Department's argument ... Classification of goods - terminal box - PSTB Arrangement Tri-furcating box - neutral terminal box and sealing box - classifiable under Heading 8501 or under Heading 8403 - HELD THAT:- Headings 8535 and 8536 covers “electrical apparatus for switching or protecting electric circuit or for making connections to or in electric circuits”. Heading 8537 covers “Board, panels, consoles, desks, cabinets, and other basis equipped with two or more apparatus of Heading 8535 or 8536 for electric control or distribution of electricity - the goods, in question, are used for providing support to the cables and segregation of the cables and also providing the space for filling the insulating material to avoid short circuits and that these items are meant for use with electric motors. Since, there is no evidence produced to refute this contention, there is no merit in the Revenue’s appeal - appeal dismissed. Issues: Classification of terminal box, PSTB Arrangement Tri-furcating box, neutral terminal box, and sealing box supplied by respondent to BHEL under Heading 8403 or 8538.In this case, the dispute revolves around the classification of various boxes supplied by the respondent to BHEL. The respondent argues that these items, being 'parts suitable for use solely and principally with the electrical motors of Heading 8501,' should be classified under Heading 8403. However, the Department contends that these items should be classified under Heading 8538 as 'parts suitable for use solely or principally with apparatus of Heading 8535, 8536, or 8537.' The Assistant Commissioner initially classified the goods under Heading 8538, imposing duty demands and penalties. Upon appeal, the Commissioner (Appeals) ruled in favor of the respondent, classifying the goods as parts meant for electrical motors. The Department appealed this decision, leading to a Cross Objection by the respondent.The arguments presented by both sides focus on the nature and use of the goods in question. The Department asserts that the items are cabinets/boxes not fitted with other equipment and are not solely or principally usable as part of electric motors, advocating for classification under Heading 8538. They argue that Heading 85.38 should prevail over Heading 85.03 due to the description and use of the goods. Additionally, they cite Note 2 of Section XVI of the Central Excise Tariff Act to support their classification under Heading 85.38. On the other hand, the respondent's counsel argues that the goods are mild steel boxes used as part of electric motors, providing support, cable segregation, and space for insulating material. They emphasize that the items are exclusively used with electric motors and cannot function as parts for electric circuitry, as they lack contacts.The Tribunal's analysis delves into the relevant tariff headings. Heading 8503 covers parts for machines of Heading 8501 or 8502, which include electric motors and generators. In contrast, Heading 8538 pertains to parts for apparatus of Heading 8535, 8536, or 8537, which involve electrical apparatus for switching or protecting electric circuits. The Tribunal notes that the Department failed to demonstrate how the goods in question align with the apparatus covered by Heading 8535, 8536, or 8537. In contrast, the respondent's argument that the goods are intended for use with electric motors, providing support and cable segregation without contacts for circuitry, remains unrefuted. As there is no evidence to contradict this claim, the Tribunal dismisses the Revenue's appeal, upholding the classification under Heading 8403 for the goods in question. The Cross Objection filed by the respondent is also disposed of accordingly.