1988 (7) TMI 303 - AT - Central Excise

Tribunal reclassifies special components for machinery based on design specifications, emphasizing functional role.

The Tribunal allowed the appeal, classifying special components manufactured as per buyer's specifications for use in machinery under Central Excise ... Classification Issues: Classification of special components manufactured as per buyer's specifications under Central Excise Tariff Item 52 or Item 68.In this case, the appellants argued that certain special components manufactured as per the specifications of the buyer, M/s. B.E.M.L., K.G.F., for use in mining and project machinery should be classified under the residuary Item No. 68 CET. The department, however, contended that these components, although manufactured as per buyer's specifications, are ultimately used as fasteners and should be assessed under Tariff Item 52. The Collector (Appeals) upheld the classification under Tariff Item 52 based on the absence of evidence regarding the specific functions of the parts beyond fastening. The Tribunal noted the absence of evidence explaining the essential functions of the components and emphasized that the burden of proof lies with the department to establish a different classification resulting in a higher duty rate. The Tribunal rejected the department's argument that a specific entry should always be preferred over a general entry for classification purposes.The Tribunal also referenced previous decisions involving classification of nuts and bolts used as fasteners, emphasizing that in cases where the products had other functional utilities beyond fastening, classification under Tariff Item 52 was deemed appropriate. However, in the present case, where the components were specifically manufactured as parts of machinery as per buyer's specifications, the Tribunal found that classification under Tariff Item 68 was more suitable. The Tribunal distinguished this case from previous cases where the products were not manufactured as per buyer's specifications for use in specific machinery.Furthermore, the Tribunal cited the decision in a previous case where goods manufactured as per specific design and function were classified based on their role in the machinery they were intended for. The Tribunal highlighted the importance of considering the design and specifications of the items in determining their classification. The Tribunal also referenced a High Court decision where products specifically manufactured for assembly in motor cycles were considered integral parts of the machinery rather than mere bolts and nuts. Based on these precedents, the Tribunal concluded that the special components in question should be classified as component parts of projects and mining machinery under Central Excise Tariff Item 68, overturning the lower authority's classification under Tariff Item 52.In light of the above analysis, the Tribunal allowed the appeal and ordered the classification of the special components as per the appellants' claim under Central Excise Tariff Item 68.