2019 (5) TMI 1563 - AT - Central Excise

Tribunal affirms dairy machinery classification under Notification 6/2006-CE, rejects Revenue appeal

The Tribunal upheld the Commissioner's decision regarding the classification of 'Bulk Milk Cooler' (BMC) as 'Dairy Machinery' for claiming exemption under ... Classification of goods - Bulk Milk Cooler - whether classified under chapter heading No. 84342000 as “Dairy Machinery”? - Benefit of N/N. 6/2006-CE dated 1.3.2006 - HELD THAT:- Applying the guidelines prescribed by the CBE&C in its Circular No. 583/20/2001-CX dated 20.8.2001, the learned Commissioner came to the conclusion that the demand is not sustainable and accordingly dropped the proceedings. The Revenue filed the present appeal on the basis of a subsequent visit by the officers to the premises of one of the customers of the respondent, where the BMC has been installed. There is no justification in impugning the order of the learned Commissioner, who recorded the finding on the basis of allegation leveled in the show-cause notice, that the respondent had manufactured BMC at their premises; ascertained the factual position by deputing the jurisdictional Assistant Commissioner to the factory of the respondent. In our view subsequent visit at the customer’s site, in no manner can establish that the BMC was manufactured by the respondent at their factory and cleared thereafter in knocked down condition to the customer’s premises for commissioning and installation. Appeal dismissed - decided against Revenue. Issues:Classification of goods under Central Excise Tariff Act, 1985; Allegation of manufacturing and clearance of goods; Application of exemption under Notification No. 6/2006-CE; Reliability of jurisdictional Assistant Commissioner's report; Justification of Revenue's appeal based on subsequent visit to customer's site.Analysis:1. Classification of Goods:The appeal was against the Order-in-Original passed by the Commissioner of Central Excise & Customs regarding the classification of 'Bulk Milk Cooler' (BMC) by the respondent under Chapter heading No. 84342000 as 'Dairy Machinery' for claiming exemption under Notification No. 6/2006-CE. The Revenue alleged that the BMC should be classified under Heading 84186990, leading to a demand for differential duty. The Commissioner dropped the proceedings, which was the basis of the Revenue's appeal.2. Allegation of Manufacturing and Clearance:The Revenue argued that the respondent had registered for manufacturing BMC and later claimed duty exemption, implying that the BMC was manufactured by them. However, the respondent contended that they procured various BMC components locally or imported, stored them, and cleared them as such to customers for installation. The installation and commissioning were done by independent third parties under customer supervision, indicating a trading activity rather than manufacturing.3. Application of Exemption under Notification No. 6/2006-CE:The respondent claimed exemption under Notification No. 6/2006-CE for the BMC components cleared in knocked down condition. The Commissioner, after considering a report from the jurisdictional Assistant Commissioner and relevant guidelines, concluded that the demand for duty was not sustainable and dropped the proceedings. The appeal challenged this conclusion.4. Reliability of Jurisdictional Assistant Commissioner's Report:The Assistant Commissioner's report confirmed that the respondent procured BMC components and cleared them as such to customers for installation. The report, along with guidelines from Circular No. 583/20/2001-CX, formed the basis for the Commissioner's decision. The Revenue's appeal, based on a subsequent visit to a customer's site, aimed to question the reliability of the initial report.5. Justification of Revenue's Appeal Based on Subsequent Visit:The Revenue's appeal relied on a visit to a customer's site where the BMC was installed to challenge the Commissioner's finding that the BMC was not manufactured by the respondent at their premises. The Tribunal, however, held that the subsequent visit did not establish manufacturing at the respondent's factory and upheld the Commissioner's decision, dismissing the Revenue's appeal and disposing of the cross-objection.In conclusion, the Tribunal upheld the Commissioner's decision based on the evidence and findings regarding the procurement and clearance of BMC components by the respondent, rejecting the Revenue's appeal challenging the classification and duty exemption claimed by the respondent.