1994 (11) TMI 222 - AT - Central Excise

Classification of high voltage generators upheld under Heading 85.01

The Tribunal dismissed the Revenue's appeals, affirming that the products in dispute are high voltage generators/alternators appropriately classifiable ... Classification Issues Involved:1. Classification of electric generating sets, alternators, and IC engines under appropriate tariff headings.2. Interpretation and application of tariff headings 85.01 and 85.11 of the Central Excise Tariff Act, 1985.3. Reliance on HSN Explanatory Notes for classification.4. Validity of the Assistant Collector's order versus the Collector (Appeals)' order.5. Application of Chapter Note 2 of Chapter 85.Detailed Analysis:1. Classification of Electric Generating Sets, Alternators, and IC Engines:The respondents are manufacturers of electric generating sets, alternators, IC engines, and parts thereof. They filed classification lists claiming assessment under Heading 85.01 for alternators/generators, whereas the Revenue assessed them under Heading 85.11. The Revenue issued Show Cause Notices proposing the reclassification under Heading 85.11 and demanded differential duty under Section 11A of the Central Excises and Salt Act, 1944.2. Interpretation and Application of Tariff Headings 85.01 and 85.11:The core dispute revolves around whether the products should be classified under Heading 85.01 or 85.11. Heading 85.01 covers 'Electric motors and generators (excluding generating sets)', while Heading 85.11 includes 'Electrical ignition or starting equipment of a kind used for spark-ignition or compression-ignition internal combustion engines; generators (for example, dynamos, alternators) and cut-outs of a kind used in conjunction with such engines.' The Revenue argued that generators used in conjunction with engines should fall under Heading 85.11, interpreting the word 'and' as 'or' to support their classification.3. Reliance on HSN Explanatory Notes for Classification:The respondents supported their classification under Heading 85.01 by referring to HSN Explanatory Notes, which describe electric generators, including large generators for power stations, auxiliary generators, and various types used for supplying current for various purposes. They argued that Heading 85.01 is the appropriate classification. The Collector (Appeals) relied on the HSN Explanatory Notes and ISI specifications to classify the products under Heading 85.01, rejecting the Revenue's argument of classifying them under Heading 85.11.4. Validity of the Assistant Collector's Order versus the Collector (Appeals)' Order:The Assistant Collector had classified the products under Heading 85.11 and created a demand for differential duty. However, the Collector (Appeals) reversed this decision, holding that the products are more appropriately classifiable under Heading 85.01. The Tribunal upheld the Collector (Appeals)' decision, noting that the parts of the generators were assessed under Heading 85.03, and logically, the main equipment should be classified under Heading 85.01.5. Application of Chapter Note 2 of Chapter 85:Chapter Note 2 of Chapter 85 states, 'Headings Nos. 85.01 to 85.04 do not apply to goods described in Heading Nos. 85.11, 85.12, 85.40, 85.41 or 85.42.' The Tribunal noted that if generators/alternators were classified under Heading 85.11, Heading 85.01 would become redundant. The Tribunal emphasized that the more specific heading should be adopted and concluded that the appropriate classification for the high voltage generators/alternators is under Heading 85.01.Conclusion:The Tribunal dismissed the Revenue's appeals, affirming that the products in dispute are high voltage generators/alternators appropriately classifiable under Heading 85.01. The Tribunal found no merit in the Revenue's arguments and upheld the Collector (Appeals)' order, relying on the HSN Explanatory Notes and Chapter Note 2 of Chapter 85.