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of <h1>Tribunal Upholds Denial of Concessional Duty Rate for Drafting Machine Parts</h1> The Tribunal upheld the lower Appellate authority's decision, denying the concessional rate of duty under Notification No. 71/86 for parts of drafting ... Drafting machines - Parts thereof Issues Involved:1. Eligibility of 'stands' used in drafting machines for concessional rate of duty under Notification No. 71/86-C.E.2. Classification of parts of drafting machines under the Central Excise Tariff.3. Applicability of exemption notifications to parts and accessories of drafting machines.4. Interpretation of Chapter Note 2 of Chapter 90 of the Central Excise Tariff Act.5. Validity of duty demands on parts of drafting machines.Detailed Analysis:1. Eligibility of 'stands' for Concessional Rate of Duty:The primary issue in these appeals is whether 'stands' used in the manufacture of drafting machines qualify for a concessional rate of duty under Notification No. 71/86-C.E., dated 10-2-1986. The notification provides a concessional rate of duty for Drawing & Mathematical Instruments but does not explicitly mention parts thereof. The appellants argued that the stands, being an integral part of the drafting machines, should be eligible for the concessional rate. However, the lower Appellate authority held that the notification only exempts drawing and mathematical instruments and does not extend to parts thereof. The Tribunal confirmed this view, stating that the clear language of the notification does not support the inclusion of parts for concessional duty.2. Classification of Parts of Drafting Machines:The appellants manufacture drafting machines and parts thereof, which are captively consumed. The Assistant Collector classified parts of drafting machines under sub-heading 9033.00 of the Central Excise Tariff and confirmed the duty demand. The lower Appellate authority upheld this classification, stating that parts of drafting machines do not fall under Heading 90.17, which covers drawing and mathematical instruments. The Tribunal agreed, emphasizing that the classification of the stand under Heading 9017.00 does not automatically result in the extension of the benefit of the notification.3. Applicability of Exemption Notifications:The appellants contended that the exemption under Notification No. 71/86 should apply to the stands as they are an integral part of the drafting machines. They cited the Bombay High Court judgment in Nibs v. Union of India, where the department did not distinguish between instruments and parts while levying duty. However, the Tribunal found this reliance misplaced, as the facts of the Nibs case were distinguishable. The Tribunal also noted that the Supreme Court judgment in Jain Engineering Company v. Collector of Customs, which dealt with a different notification, was not applicable to the present case.4. Interpretation of Chapter Note 2 of Chapter 90:Chapter Note 2 of Chapter 90 of the Central Excise Tariff Act plays a crucial role in determining the classification of parts and accessories. The lower Appellate authority, in light of Note 2(b), confirmed the classification of drafting machines and parts under sub-heading 9017.00 but denied the benefit of the notification to parts. The Tribunal upheld this interpretation, stating that the notification's benefit is limited to drawing and mathematical instruments and does not extend to parts.5. Validity of Duty Demands:The appellants argued that the duty demand on stands, even when the drafting machine is cleared as a whole, was unsubstantiated. The Tribunal rejected this contention, noting that the appellants' classification lists, effective from 1-3-1986, had been approved by the jurisdictional Assistant Collector. The appellants had been clearing drafting machines without payment of duty but were paying duty on parts when cleared separately. The Tribunal found no provision under the law to treat any part of a machine separately when the machine is cleared as a whole and to recover duty on such parts.Conclusion:The Tribunal confirmed the lower Appellate authority's order, denying the benefit of Notification No. 71/86 to parts of drafting machines, including stands. The classification of parts under sub-heading 9033.00 was upheld, and the appellants' appeals were rejected. The Tribunal emphasized that the notification's language is clear and does not extend to parts of drawing and mathematical instruments. The duty demands on parts of drafting machines were found to be valid and substantiated.
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