Tribunal affirms duty classification for cement machinery parts under HSN. Revenue appeal rejected.

The Tribunal upheld the Order-in-Appeal in a case concerning the classification of parts and components of cement making machinery under HSN. It was determined that duty paid on the complete machinery cleared in semi-knocked down or completely knocked down condition, as per the contract for supply of the whole machinery, was appropriate. The Revenue's appeal was rejected, affirming the legality of the Commissioner (Appeals)'s decision.

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Issues:
Classification of parts and components of cement making machinery under HSN; Duty payable on parts or complete machinery; Validity of demand confirmed by Assistant Collector; Contractual obligations and supply of machinery in knocked down condition.

Analysis:
The appeal filed by the Revenue challenges the Order-in-Appeal allowing the appeal by the assessee, focusing on the classification of parts and components of cement making machinery. The Revenue argues that despite parts being sent individually, they should be classified under respective heading as per Note 2(a) of Section XVI of HSN. The Revenue contends that only fabricated parts are manufactured and cleared, not the entire machinery, hence duty should be paid on parts at 15% ad valorem. The Revenue also highlights that at no point of time the complete machinery is available with the manufacturer. The Commissioner (Appeals) had referred to the case of TISCO v. UOI, emphasizing the assembly of crane at site in a complete manner before transportation in knocked down condition. The Revenue insists that the entire machinery should have been manufactured first and then cleared in semi-knocked down or completely knocked down condition to be accepted. They argue against the fabrication of materials at the site, as in the present case, raw materials are purchased, parts manufactured, and cleared for erection at the site. The Revenue prays for setting aside the Order-in-Appeal and restoration of the Order-in-Original.

The Respondents, on the other hand, argue that the contract with M/s. Cochin Cements Limited was for the supply of complete cement making machinery, spread over a period of time in part consignments. They maintain that duty should be charged only as cement making machinery when all parts constitute a complete machinery when assembled at the site. They cite the decision in the case of TISCO v. UOI to support their argument that duty should be charged on the complete item of machinery cleared in knocked down condition. They also refer to the Board's clarification on the dutiability of items assembled at the site, emphasizing that if parts together can be regarded as a complete equipment in un-assembled/disassembled condition, they should be considered as such. The Respondents stress that since duty has been paid on the complete machinery, no additional duty should be levied on the parts.

The Tribunal, after considering the arguments from both sides, concludes that if duty has been paid on the complete machinery cleared in semi-knocked down or completely knocked down condition, and there is a contract for the supply of the whole machinery, duty at the appropriate rate has been duly paid. Therefore, the Tribunal upholds the Order-in-Appeal, finding no infirmity in the decision. The Revenue's appeal is rejected, confirming the legality and propriety of the Commissioner (Appeals)'s order.

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