2023 (5) TMI 298 - AT - Central Excise

Tribunal rules in favor of appellant on excisable product classification

M/s. Mak Controls and Systems (P) Ltd. Unit – I Versus Commissioner of GST & Central Excise, Coimbatore

M/s. Mak Controls and Systems (P) Ltd. Unit – I Versus Commissioner of GST & Central Excise, Coimbatore - TMI Issues Involved:1. Whether the product 'alternators' manufactured at Unit - I is a distinct excisable product.2. Whether the alternator in question is classifiable under CETH No. 8501 or 8803 / 8710 of the Schedule to CETA.3. Whether Unit - I is eligible for the exemptions claimed by the appellant.4. Whether the method adopted for determining the assessable value is correct.5. Whether the extended period for issue of show cause notice is invokable in this case.Summary of Judgment:Issue 1: Excisability of 'Alternators'The Tribunal found that the alternators manufactured at Unit I were not distinct excisable products. The alternators were considered semi-finished and not marketable until further processing and testing at Unit II. The Tribunal emphasized that Rule 2(a) of the General Rules for Interpretation of the Schedule to the CETA, 1985, should not be invoked before determining whether the goods are marketable. The appeal succeeded on this issue, and the monetary demands and penalties were set aside.Issue 2: Classification of AlternatorsThe Tribunal held that if the alternators were found to be manufactured at Unit I, they would fall under CETH 8501.00 up to 27.2.2005 and under CETH 85016100 / 85016200 with effect from 28.2.2005, as decided in the impugned order. The Tribunal rejected the appellant's claim for classification under CETH 8803/8710, stating that the classification should be based on the specific description in the tariff heading and not on the end use.Issue 3: Eligibility for ExemptionsThe Tribunal agreed with the impugned order that the appellant was not eligible for exemption under Notification 67/95-CE dated 16.3.1995, as the alternators were not consumed within the same factory and the final products did not suffer duty. The Tribunal also noted that the appellant had not followed the job-work procedure under Notification 214/86 dated 25.3.1986 but considered this a procedural issue and took a sympathetic view due to the finding that no manufacture was involved.Issue 4: Method for Determining Assessable ValueThe Tribunal agreed with the appellant that if the alternators were to be valued for Central Excise duty assessment, the value should be determined based on the data pertaining to Unit I and not Unit II, as per Rule 8 of the Central Excise Valuation Rules 2000.Issue 5: Extended Period for Show Cause NoticeThe Tribunal found that this issue would have been relevant only if a demand for duty was involved. Since the core issue of whether the alternators were exigible to duty was decided in favor of the appellant, the question of invoking the extended period for the show cause notice lost relevance.ConclusionThe impugned order was modified, and the appeal was allowed with consequential relief as per law. The Tribunal clarified that the discussions on other points were only for disposing of all issues raised in the appeal and would have been operational if the appellant had failed on the core issue of exigibility of alternators.