TaxTMI 
TaxTMI 
2007 (10) TMI 487
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....how Cause Notice (SCN) dated 15-11-95 requiring the Appellant to show cause why the castings and cast articles of iron mentioned in Sl. Nos. 1 to 7 of the Classification Lists below should not be assessed under Heading 73.25 of CETA, 1985 :- Sl.No. Classification Sought to be Date of SCN List No. Effective from 1. JEW/USM/I/92-93 1-3-92 15-11-95 2. JEW/USM/I/93-94 28-2-93 15-11-95 3. JEW/USM/I/94-95 1-3-94 15-11-95 4. JEW/USM/V/94-95 1-3-94 15-11-95 5. JEW/USM/VI/94-95 1-3-94 15-11-95 6. JEW/USM/III/94-95 11-3-94 15-11-95 7. JEW/USM/IX/94-95 1-1-95 15-11-95 8. JEW/USM/VII/94-95 19-9-94 13-12-95 9. JEW/USM/VIII/94-95 7-10-94 13-12-95 1.3 Similarly another SCN dated 13-12-95 was issued asking the reason why the unmachined castings under two classifications lists at Sl. Nos. 8 and 9 of the Classification Lists mentioned above sought be classified under heading/sub-heading of Chapters 84, 85 and 87 of Central Excise Tariff Act, 1985 shall not assessed under Heading No. 73.25 of CETA, 1985. 1.4 In the aforesaid classification l....
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.... machining stage is there in the process. The castings so manufactured by the said assessee are up to the proof machining stage hence raw castings still having excess metal for machining according to the requirement in order to achieve the required size to make an essential part of a particular machinery. CEGAT Spl. Bench B1 New Delhi in its Order No. E-103 to 105/93-B, dated 20-5-93 in Shivaji Works Ltd. v. C.C.Ex., Aurangabad reported in 1994 (69) E.L.T. 674 (Tri) has held that the Heading No. 73.25 would include all castings from the stage of their emergence from the castings mould to the stage of being proof machined. Castings are commodities/articles recognized as separate articles in the trade as also in the Schedule to the Central Excise Tariff Act, '85 and are different from parts falling under Chs. 84, 85 and 87. Therefore 'castings of parts' by themselves cannot be treated as having the essential character of 'parts' so as to classify the former with the latter. Before an article must be considered to have the essential character of the parts, it must, at least, loose the character of 'castings' and must go beyond the stage of castings. Further the said assessee claimed c....
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....That Authority, following its earlier Order-in-Appeal Nos. 106-107/Cal-I/99 dated 22-11-99 in the case of the Appellant, upheld the impugned order by order dated 27-2-2004. Relevant portion of order dated 22-11-99 relied by the learned first Appellate Authority is extracted below for convenience of reading :- "On careful consideration of the submissions made, I find that castings and cast articles of iron in question come into existence as intermediate products, having characteristics of the products specified under S.H. No. 7325.10 since castings which underwent operation up to fettling stage before being stored as finished castings require further machining operations before being used as machine parts. I also note that the classification of this products is covered by the decision of the Hon'ble CEGAT reported in the case of M/s. Shivaji Works Ltd. v. CCE, Aurangabad as reported in 1994 (69) E.L.T. 674. As regards various forgings, forged articles of mild steel up to the stage of "Trim forged component on press" have come into existence in forging section having undergone processes like cutting of M.S. Rod to size, heating and forging on preumatic hammer. Before being used as....
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....binding on the Department, the Appellant relied on the judgment reported in 1996 (86) E.L.T. 449 (S.C.) and 1996 (87) E.L.T. 19 (S.C.). The ld. Counsel for Appellant submitted that the ld. Adjudicating Authority failed to give reason why he differed from Board's view when such a view was required to be followed as held in the case of Shahnaz Ayurvedics v. CCE, Noida reported in 2004 (173) E.L.T. 337. He argued that the authorities on their own cannot form opinion unless established through proper evidence as held in the decision reported in 2003 (151) E.L.T. 157 in the case of Eimco-KCP Ltd. v. CCE, Chennai. According to him, the decision in the case of Shivaji Works Ltd. v. CCE, Aurangabad reported in (1994) 69 E.L.T. 674 relied by Revenue was baseless since the impugned period involved is from 1-3-1992 to 30-6-1996. The decision in that case was relevant prior to the impugned period and has no bearing to the present appeal. On merit he argued that the forged articles manufactured by the appellant not being readily marketable that was not liable to duty following decision of the Hon'ble Supreme Court in the decision of Bhor Industries Ltd. reported in 1989 (40) E.L.T. 280. He furt....
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....ed in 2001 (127) E.L.T. 841 (Tri.-Del.), Hindustan Gas and Industries Ltd. v. CCE, Vadodara reported in 1996 (88) E.L.T. 413 (Tri.), Vishal Malleables Ltd. v. CCE, Vadodara reported in 2001 (127) E.L.T. 856 (Tri.-Del.). The ld. JDR stated that the Circular No. 23/89 (F.No. 139/7/88-CX.4) dated 28-7-89 and No. 26/89 (F.No.134/79/87-CX.4), dated 18-9-89 were superseded by Circular No. 225/59/96-CX dated 1-7-1996. Therefore, reliance placed by the Appellant on a superseded circular of 28-7-89 is no consequence. Accordingly, they are not entitled to any relief. 5.1 Heard both sides and perused the record. 5.2 What is casting and at what stage a particular goods shall be called as castings may be appreciated from the Encyclopaedia Americana, International Edition, Volume -5 which reads as under :- "Castings: Casting is the process of producing a metal object of a desired shape by pouring molten metal into a mold and allowing the metal to cool and solidify. Man has been making cast metal objects for artistic or practical purposes since very early times, when the first castings probably were made of gold or copper formed in a stone or clay mold. The earliest axes and ot....
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....leared from the factory of the petitioner, the customers concerned have to undertake various processes such as groove cutting, grinding, combering etc. This would also be evident from the said certificate of the Bhilai Steel Plant." 5.4 While interpreting the classification, the Court further in Paras 29, 30, 31 and 32 held as under :- 29. Item No. 25 of the First Schedule to the said Act covers, inter alia, iron cast in any shape or size. Similarly Item No. 26AA of the First Schedule to the said Act covers all steel castings. There is absolutely no restriction whatsoever in the said Item Nos. 25 and 26AA that the castings in order to be covered by the said items, must not be subjected to any process or that they should be rough castings as they came out of the mould. If a product is iron castings the same would be covered by the Item No. 25 alone and if a product is still castings the same would be covered by the Item No. 26AA alone. The fact that such castings is capable of being used as a machine part does not alter its basic character as castings Item Nos. 25 and 26AA do not provide that castings which can be used as machine parts would not be castings under the....
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....inct products as cast. Whether one casts a machine part, pipe, man-hole cover or railway sleeper, it is the castings that counts. The already cast material cannot become a different and distinct material by finishing or machining. Accordingly the castings do not cease to be so by machining or finishing to goods different from that cast comes into existence. Item No. 68 of the First Schedule accordingly does not and cannot have any application. The said products are classifiable only under Item No. 25 or Item No. 26AA as the case may be and there can be no question of the same being again covered after machining by Item No. 68 which is a residuary item. 31. The view I have taken is supported by the decision of the Patna High Court in the case of Tata Yodogwa Limited v. The Assistant Collector of Central Excise reported in 1983 E.L.T. 17. There the question before the Patna High Court was whether the steel castings are liable to duty under Item 26AA(V) of Central Excise Tariff or under Item 68. Patna High Court was of the view that merely because some machining or polishing is being done on the products, the basic character of such products as castings does not alter. It was ....
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....llary to have been completed. According to the petitioners it manufacture goods according to the specifications and designs of individual customers and what is excisable is when the goods is finished after completion of all processes according to those specifications and designs. It is in evidence that the petitioners for the purpose of castings of molten steel pours it into moulds of different types depending upon individual customer's ultimate requirements as per its drawing, designs and specifications. It is not the case of the respondents that the molten steel is poured into one particular type of moulds and from these castings thereafter rolls of different designs, drawing and specifications according to customers' order are manufactured. Had that been the case, perhaps duty would have been payable when the castings was taken out of the mould. In this case the whole process from the start to the finish must be held to be 'manufactured' within the meaning of the Act. At no stage the goods become anything other than an item to be classified under Item to be classified under Item 26AA(V). Since there is no difficulty in this case for classifying the goods in question, the respond....
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....astings having essential characteristics of the complete/finished machine parts. As such, I concur with the order recorded by my learned Sister upholding the classification of the impugned goods as casting, under Heading 7325.90 and rejecting the department's appeal." 5.6 Tribunal in its decision in Jagriti Industries v. CCE, Aurangabad reported in 2004 (167) E.L.T. 442 has held that the casting will remain classifiable under the specific heading of the Tariff as casting and will not be classified as machine parts unless and until these have been machined. Para 4 and 5 of the reported decision which deals such an issue is reproduced as under for convenience of reading :- "4. We have considered the submissions of both the sides. As far as the application of Rule 2(a) of the Rules for Interpretation of the Schedule to the Central Excise Tariff Act is concerned it has been held by the Tribunal in the case of Shivaji Works Ltd. v. CCE, Aurangabad, 1994 (69) E.L.T. 674 (Tribunal) that "Rule 2(a) does not permit us to conclude that when an article squarely falls under a particular Tariff Heading it can be made to fall under another Heading by invoking the concept of essen....
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....f its contention that the Appellants had cleared the machine parts in the guise of castings. It appears that no investigation from the customers whom the goods have been sold to by the Appellants had been made by the Revenue. We find substantial force in the submissions of the learned Advocate that on the basis of single invoice the Department cannot come to the conclusion that the Appellants had cleared the machine parts only in the guise of castings. The burden is cast upon the Revenue to substantiate the allegation made by them adducing the sufficient evidence. The Revenue cannot put the initial burden on the Appellants, as has been done by the Collector in the impugned order, to produce a concrete evidence to show that they had not supplied machinery parts under the guise of castings. The burden as observed earlier is on the Department to show that the Appellants had cleared the machine parts only in the guise of castings. For want of material/evidence we hold that the Revenue has not succeeded in establishing that the Appellants had cleared the machine parts in the guise of casting. We accordingly allow all the appeals without going into the question of time limit." 5.7&ems....