TaxTMI 
TaxTMI 
2017 (9) TMI 921
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....nstallation. After installation the lifts come in its existence as immovable property. In both the cases, the appellants entered into contract for complete installation of the lifts on lump sum basis. 2. The main issue in dispute in these proceedings is if the set of parts/components manufactured and cleared by them from the factory for the purpose of installation in one or more consignments would be classifiable under Heading 84.28 as lift/lifting machinery or as parts under heading 84.31 of the Central Excise Tariff Act, 1985. The matter was earlier decided by the Tribunal in the case of BBL vide order reported in 2014 (309) ELT 129. In the case of Otis Elevation Company (India) Ltd, the issue was decided by the order reported in 2007 (208) ELT 114. In both the cases, the goods manufactured and cleared by the appellant from their factory in one or more consignments were held to be classifiable under Chapter heading 8431 of the Central Excise Tariff Act, 1085. Both the appellants approached Hon'ble Apex Court in appeal. Hon'ble Apex Court vide order reported in 2015 (324) ELT 238 (SC) remanded the matter back to the Tribunal observing as follows: - 4. Learned counsel for the....
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....ading No.8431.00 with the language of sub-heading No.8476.91, which simply states 'parts of machines of sub-Heading No.8476.11'. The contrast in the language, according to them, makes it clear that the parts spoken of in the latter entry could well be parts of a machine itself, as opposed to sub-heading No.8431.00, where the parts have to be suitable for use only with the machinery that is already installed. 7. Learned counsel for the Revenue submitted that on what was argued, the decision of the authorities below as well as the Tribunal in both the appeals were absolutely correct and did not need any further review by this Court. He also stated that if this Court were to permit the assessee to turn around at this juncture and argue something new which had not been argued before the Commissioner or the Tribunal, he would be put to a disadvantage and would not be able to give any effective reply. 8. Since we are of the opinion that this is an important question that needs to be determined having reasonably wide ramifications, we would allow the assessees to raise these points on a remand made to the Tribunal in both these cases. This we do also having regard to the fact that t....
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....e the same as Section 50 of the 1996 Act." 3.2 It was argued that the Hon'ble Supreme Court in case of Dozco Vs. Doosan Infracore Co. Ltd. (2011 6 SCC 179), while interpreting a clause of an arbitration agreement held that "a bracket cannot be allowed to "control the main clause." Therefore It cannot curtail or limit the scope of terms employed outside the bracket, as is being done by the Revenue. 3.3 The Written Submissions contested the argument of revenue that the goods when installed are immovable property and are not excisable goods and that there can be no performance, by the component parts, of the function of lifting men and material unless the components that installed as immovable property in the building and therefore the components cannot be made liable to duty. It has been argued that Section Note 4 of Section XVI only requires machines consisting of individual components intended to contribute together to a clearly defined function. The said Section Note does not require the individual components or machines to be installed as contended by the Revenue. Section Note 4 does not contemplate or include an installation. It has been argued that the contention of reven....
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.... is an example of lifting machinery falling under heading 84.28 and it is not the only kind of lifting machinery covered by heading 84.28. The machinery manufactured by the Appellant is lifting machinery. What is manufactured by the Appellants in both the cases is a combination of machines consisting of individual components. When these are cleared for the purposes of the erection of a lift, these machines/combination of machines consisting of individual components are connected to each other by wires and cables and are intended to contribute together to a clearly defined function covered by one of the headings in chapter 84, namely heading 84.28. When cleared as parts for the purposes of replacement or repair they cannot fall under heading 84.28 as they are not cleared as a combination of machines intending to contribute together to a clearly defined function. 3.6 It has been argued that there is no dispute that parts of heading 84.28 are specifically covered by heading 84.31 and that with reference to clearance of parts, Section Note 2 (a) would apply. However in the present case, what the Appellants cleared for the purposes of a complete contract are not parts but a combination....
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....tinent to note that Professor Menon was not cross-examined by the Department. The Department with whom the onus lies has also not produced any evidence other than a bald statement across the bar with nothing to substantiate it, namely, that 'all parts must be cleared together and that only the essential character of a lift would come into existence/ that without a lift cage counterweights the essential character of a lift cannot be attained'. It is submitted that Professor Menon is an independent person and his affidavit cannot be rejected on the ground that he has not considered the Lift Rules. In any event, there is nothing in the ISI specifications or the Lift Rules which contradict what has been stated by him. 3.10 It has been argued that in the schematic diagram which is annexed to the Appellants' appeal, all the parts manufactured by the Appellants cannot be shown as many of the parts are incorporated within other parts. The parts manufactured by the Appellant are not 14 but were 27 machines and/or sub-assemblies. The said affidavit also lists the various parts which go into the manufacture of these 27 machines/sub-assemblies and gives it the essential character ....
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.... counterweight, the cabin, the rails, the buffer and the ropes are merely fabricated items of iron and steel, wood and aluminium. The counterweight consists of a frame in which steel bars are fed depending upon the weight and size of the cabin and the number of persons the cabin would carry. Neither is the counterweight nor lifting machinery, nor does its absence render the machinery manufactured by the Appellants as items which do not have the essential character of a life. Similarly, the cabin is fabricated in accordance with the size of the shaft and the number of persons required. The cabin can be fabricated from aluminium, wood, laminate and can even have marble and granite finishing. It is to be borne in mind that what was manufactured by the Appellants only had to have the essential character of lift. It is necessarily incomplete or unfinished and therefore does not have to have every part. If the contention is that every part must be included than the 1st part of Rule 2 (a) of the Rules of Interpretation would be rendered nugatory. 3.13 It has been argued that Section Note 4 of section XVI also makes it clear that where the machine (including a combination of machines) con....
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....ch set of parts being set to the buyer separately." In paragraph 17 the Tribunal came to the conclusion that: "It is therefore clear that such parts would be, classifiable as a complete machine if it can be established that the parts are removed as such, so as to constitute a complete machine, even if they are not parts removed and unassembled together." 3.15 It has been argued that this is also the view of the Tribunal in Vishwa Industrial Company Private Limited 1999 (107) E.L.T. 774 (T) and Vinar Systems Ltd 2001 (131) E.L.T. 578 (T). It has been argued that in all these cases Rule 2 (a) was considered and in each case, it was held that though the various unassembled/ disassembled items were cleared separately and not "presented together" made no difference. In all these judgements the Tribunal took into consideration the practical reality of manufacturing such machines. In the present case also, no lift can be manufactured in a building at one time. A lift cannot be cleared from factory. The practical reality requires various items of machinery to be cleared to site only at the time of usage so as to prevent deterioration of the machinery and theft. 3.16 It has been argued ....
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....unfinished have character, which is sufficient to distinguish them, firstly as belonging to the genus motor vehicle, secondly as belonging to the sub-genus motor vehicles for the transport of persons..." 3.21 It has been argued that the machinery manufactured by the Appellants belongs to the genus of lifting machinery. Further, just like in the present case, it was contended that the goods were too incomplete to have the essential character of unassembled motor vehicles. In the present case like in the Australian case the Revenue did not support his contention by reference to any authority, but pointed to various parts which were lacking to complete the motor vehicle. This contention was rejected by the Australian Administrative Tribunal and they held at page 116 that: "In interpreting the classification it may be noted, firstly, that the paragraph refers to unassembled motor vehicles. Therefore we are not concerned with goods in a driveable condition. Secondly, interpretative Rule 2 (1) (a) requires us to read the paragraph is referring to goods that are in and unfinished or incomplete state. Thirdly, there are authorities which show that a unit may be regarded as a motor vehicl....
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.... argued that all the items of machinery manufactured by the Appellants, when assembled together are an assembly of parts so far advanced that it already has the main essential features of the complete lifting machinery. If 84.28 covers lifts, then the assembly referred to in the aforesaid HSN Explanatory Note would mean the assembly of all items such as those manufactured by the Appellant at site in order to create the lift. Any other interpretation would render 84.28 totally otiose and nugatory as no lift or escalator or conveyor or teleferics can be manufactured or is manufactured in a factory. All such items are erected at site. All such items require goods to be sent to site in a piecemeal fashion. 3.25 It has been argued that there is no dispute that lifting or handling machines are based on pulleys, winches or jacking systems. However, it is not necessary that large static structural steel work should be included. In fact, it would be impossible to include such huge amounts of static structural steel work required for constructing skyscrapers. The amount of static structural steel work that is required would depend upon the height of the building. It has been argued that the....
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....es shall apply for recovery of deficiency in or refund of excess duty. Copies of the bond, bank guarantees, communication dated 16/10/2001, 17/9/2001 and 15/10/2001 and the price list were enclosed with earlier written submissions. 4 Learned senior Counsel for Otis also argued in detail and later summarized the arguments in the shape of written submissions consisting of following arguments. 4.1 The issue under the present proceedings pertains the period 01.03.1987 to 28.02.1995. It has been argued that the Appellant is engaged in the supply, erection, installation of lifts as well as repair and maintenance of lifts and for this purpose and they manufactures various components of the lifting machinery. The Appellant makes the following two types of supplies: i) Supply towards a contract for the supply, erection and installation of lifts wherein the Appellant is obligated to fulfil the intent of the contract viz. to supply, install, erect and commission a functional lift in either a residential or commercial building. (Which supplies are classified under Chapter Heading 84.28 of the Tariff). ii) Supply towards contract for repair and maintenance of existing lifts wherein along w....
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....: a) Machine and Motor b) Controller c) Governor d) Safety e) Rails f) Signal Fixtures It has been argued that the Affidavit of Mr. M. Balasubramaniam has not been controverted by the Department. The Ld. counsel produced summary of their RT 12 returns to assert that they were manufacturing parts listed in the affidavit of Mr. M. Balasubramaniam. 4.5 Ld. Counsel relied on following Statutory Provisions Rule 1 of the Interpretative Rules Section Note 2 of Section XVI (as applicable during the relevant period) Section Note 4 of Section XVI Section Note 5 of Section XVI HSN Explanatory Notes - Section Note 2 4.6 Ld. Counsel argued that while classification is generally to be done on the basis of nature of the goods at the point of time of clearance, there are specific instances where either the Chapter Notes or Section Notes mandate the classification to be done on some alternate basis which is statutorily mandated. For example i. Under Section Note 2(b) of Section XVI, parts suitable for use solely or principally with a particular kind of machine or with a number of machines of the same heading are to be classified with the machines of that kind. ii. Under Section No....
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....factory gate as these cannot be constructed within the factory and removed. Ld. Counsel argued that if each clearance of a component or a part made in respect of contracts for a supply and installation of nuclear reactor (Heading 84.01), steam generating boilers (Heading 84.02) or steam turbines (84.06) were to be treated as a clearance of parts for the purposes of classification, there would be very limited or almost no instances wherein any goods could possibly be classified under the Chapter Heading of the complete machinery. This is where the principle under Note 4 of Section XVI comes into play, which provides for the classification of individual parts and components of a machine consistent with the clearly defined function of that machine. Ld. Counsel argued that there are specific Chapter Headings for machines having clearly defined function. If the classification of such machines would directly fall under the relevant Chapter Heading, there would be no requirement of Section Note 4 of Chapter XVI for the purpose of the classification of machine per se. In such a scenario, Section Note 4 would be rendered redundant. 4.9 Ld. Counsel argued that in the context of Note 4 of Se....
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....epair and maintenance of existing lifts. ii) Manufacture and supply of individual parts and components for use in erection of a lift in pursuance of a contract for supply of parts and components. iii) Manufacture and supply of the parts and components for erection of a lift in pursuance of a contract for supply and erection of a lift. Ld. Counsel argued that in case of the first and second category of supply, wherein individual parts and components are supplied for repair and maintenance of existing lifts or for use in erection of a lift in pursuance of contract for supply of parts, it may be argued that the individual parts cannot contribute to the entire function of lifting. However, the third category of supply (i.e. the supply made by the Appellant in the instant case) is entirely distinct from the first two categories on the following two counts: i) All the essential parts and components of a lifting machinery / lift are supplied ii) Such supply is made in pursuance of a contract for supply and erection of a complete lift In this case, he argued that, as per the contract, the obligation of the Appellant is to supply and erect complete lifts. Therefore, all the pursuant a....
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....er 84 and Chapter 85 (other than those specified) are to be classified. as per their respective headings. However, in terms of Section Note 4, where all the parts of a machine contribute to the clearly defined function, the classification of the parts (as a whole) must be consistent with the intended function of the machine. Therefore, when it comes to the classification of parts, it is essential that the qualifying test prescribed under Section Note 4 must be applied. In such a scenario, if Section Note 2(a) is applied in preference to Section Note 4, and consequently all the parts contributing to the clearly defined function of a machine are classified as per their respective headings, Section Note 4 would be rendered otiose and redundant. Ld. Counsel relied on following case law regarding interpretation of Interpretative Rule 2(a) - Vishwa Industrial Co. (P) Ltd. Vs. CCE, Calcutta - II [1999 (107) ELT 774 (Tribunal)] - CCE Vs. BHP Engineers [2000 (119) ELT 599 (Tribunal)] - Vinar Systems Ltd. Vs. Commissioner of Customs, Calcutta-II [2001 (131) ELT 578 (Tri-Kolkata)] - Flat Products Equipments (l) Ltd. Vs. CCE, Mumbai-III [2000 (115) ELT 629 (Tribunal)] - Shrike Const....
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.... 1958 to contend the parts and components manufactured and supplied by the Appellant in unassembled form do not have the essential character of lift or lifting machinery. His argument being i) The Explanatory Notes in the HSN referred by the Respondent merely illustrate certain complex lifting machine and the parts and components thereof. The said Explanatory Notes cannot be read so as to infer that parts such as cables and passenger cage are essential to all the lifting machineries. ii) Merely because certain parts have been defined under the Maharashtra Lift Rules, it cannot be said that all such parts are essential to form a lifting machinery. Instead, one must resort to the definition of lifting machinery under the National Building Code to determine the essential parts of lifting machinery. He asserted that the Appellant manufactures all the parts and components covered under the definition of lifting machine in the National Building Code. 4.16 Ld. Counsel argued that the two terms 'lifts' and 'lifting machine' are different. He argued that a lift constitutes of a 'lifting machinery' along with a platform or cage the direction or movement of which is restric....
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....on stage or adduced reasons and evidences against the statement in the affidavit. He argued that in a situation where the expert is not cross-examined despite being offered for cross examination by the assessee, the opinion of the expert cannot ignored. Ld. counsel argued that even an officer or employee of the assessee would also be considered as an expert and the opinion given by such employee must be relied upon. Ld. Counsel relied on the decision of three member Bench of the Hon'ble Supreme Court in the case of Hindustan Ferodo Ltd. Vs. CCE [1997 (89) ELT 16 (SC)] wherein the affidavit of an employee of the assessee was held as reliable. Ld. Counsel distinguished the decision in the of Novopan India Ltd. Vs. CCE [1994 (73) ELT 769 (SC)] on following grounds. i) The affidavit of the technical expert was not supported by any technical literature. ii) The technical expert was associated with the assessee for a long period of time. iii) that the person did not witness the process of manufacture Ld. counsel argued that there is no finding which suggest that Mr. M. Balasubramaniam was not aware of the process or did not have adequate knowledge on the subject. The affidavit of....
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....8 84.14 8414.91 -Parts and accessories - of goods covered by sub-heading no. 8414.10 84.31 8431.00 Parts suitable for use solely or principally with the machinery of heading nos. 84.25 to 84.30 84.48 8448.00 Auxiliary machinery for use with machines of heading no.84.44, 84.45, 84.46 or 84.47 (for example, dobbies, jacquards, automatic stop motions, shuttle changing mechanisms); parts and accessories suitable for use solely_ or principally with the machines of this heading or heading no. 84.44, 84.452 84.46 or 84.47 (for example, spindles and spindle flyers, card clothing, combs, extruding nipples, shuttles, healds and heald-frames, hosiery needles) 84.66 8466.00 Parts and accessories suitable for use solely or principally with the machines of headings nos. 84.56 to 84.65, including work or tool holders, self-opening die heads dividing heads and other special attachments for machine-tools; tool holders for any type of tool for working in the hand 84.73 8473.00 Parts and accessories (other than covers, carrying cases and the like) suitable for use solely or principally with the machinery of heading nos. 84.69 to 84.72 84.76 8476.91 Parts of machines of....
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....atory Notes of HSN on Parts under headings 84.28, 84.29 & 84.30 respectively at wherein the expression used is 'parts of the machines of this heading are classified in heading 84.31'. 5.2 Ld. special counsel argued that as per Section Note 2(a), the parts which are specifically included in any particular heading are to be classified in that specific heading. In the present case, as the parts suitable for use solely or principally with the machinery described in heading No.84.28 were specifically covered by heading No. 84.31, they were classifiable under such specific heading i.e. 84.31 by virtue of Section Note 2 (a) of Section XVI of the Tariff. Once the parts are classifiable in terms of Section Note 2(a), there is no need to take the help of Section Note 2 (b) or Section Note 2(c) for their classification. Ld. special counsel placed reliance on the decision of the Tribunal in the case of Buckau Wolf India Ltd. V/s. CCE, Madras - 1997 (96) ELT 172 (T) holding that parts of the machines of heading 84.28 are classifiable under heading 84.31. This decision has been subsequently followed by another Bench of the Tribunal in the case of Pioneer Electric Furnace Mfrs v/s, CCE, ....
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....he HSN explanatory note further states that "lifts are usually operated by winch cable, or by rams worked by water, air or oil. They are used for raising or lowering a passenger cage or gods platform between vertical guide bars, and are generally fitted with counter-balance weights. The control, stopping, safety, etc. equipment, whether or not electrical, is also classified in this heading provided it is presented with the lift itself. The heading also includes manually operated lifts". 5.6 Ld. special counsel argued that from the HSN explanatory notes it is clear that the primary components of a lift are - (1) winch and cable, (2) passenger cage or goods platform, (3) vertical guide bars, (4) counter-balance weights, and (5) control, stopping and safety equipment. From the schematic diagram submitted, it is clear that the appellant does not supply winch and cable, passenger cage or goods platform, vertical guide bars and counter-balance weights. What the appellant has supplied comes under the category of control, stopping and safety equipment consisting of electric motor, brake assembly, hoisting motor and machine unit, speed governor and weighted pulley and the controller. In ad....
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....use solely or principally with the above machinery, are classified under Heading 84.31. Thus from the tariff description itself, it is clear that parts of lift machinery are classifiable under CETH 84.31 and hence there is no need to invoke any other rule for the purpose of classification. 5.10 Ld. special counsel argued that assuming without admitting that Rule 1 does not apply, then we need to see whether Rule 2(a) of the Interpretative Rules is applicable to the facts of the case as contended by the appellant. The said Rule reads as follows: "Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished' provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this Rule), presented unassembled or disassembled." Ld. special counsel pointed out that the claim of the appellant is that as presented, the items supplied by the appellant would constitute an incomplete or unfinished lift and has the esse....
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....ELT 421 (T). It is, therefore, submitted that the decision in Kone Elevators is a good law and that it has attained its finality. Therefore, there is no good reason for its reference to the Larger Bench, as suggested by the Id. Sr. Counsel. Ld. special counsel argued that in light of the above decisions, it is clear that application of Rule 2(a) will arise, when the parts comprising of a machine are supplied/ presented together. If they are cleared over a period of time or are not presented together, they cannot be considered as constituting the entire machine. In view of this settled legal position, it has to be held that parts of lift machinery manufactured and supplied by the appellant do not constitute an incomplete or unfinished lift nor such parts have the essential character of a lift. Therefore, they cannot be considered as a lift machinery falling under CETH 84.28. The said parts supplied can only be classified under CETH 84.31 as parts/ components of the lift machinery. Therefore, the classification of the parts under CETH 84.31 done by the adjudicating authority is correct in law and cannot be faulted. 5.11 Ld. special counsel pointed out that Excise duty liability aris....
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....- 2001 (131) ELT 578 (T), the appellant was engaged in the manufacture of Conveyors and Material Handling Equipments. As it was impossible and impracticable to clear these heavy machineries in a fully finished form, the same were cleared in SKD or CKD condition. There was, however, no dispute that the parts cleared from the appellant's factory would constitute complete Material Handling Equipments. Therefore, it was rightly held by the Tribunal that Conveyors and Material Handling Equipments cleared in SKD or CKD condition are classifiable under Chapter sub-heading 8428.00 and not under sub-heading 8431.000 The facts of this case have no application to the facts of the case on hand. Admittedly, in the case on hand, only some of the items of lifting machinery were manufactured by the appellant and not all the parts that constituted a complete lifting machinery. ii) In the case of Vishwa Industrial Coe (P) Ltd. V/s. CCE, Calcutta-II - 1999 (107) ELT 774 (T), the appellant was engaged in the manufacture of Conveyor Systems & Mill rejects Handling Systems along with some of their parts and components. It filed classification lists claiming classification of Conveyors under subhead....
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....by self-contained power, albeit unassembled motor vehicles. We are of the view that the type and quantity of work required to be done in Australia to the imported goods to form motor vehicles was consistent with the identity of the goods being unassembled motor vehicles, though unfinished vehicles. Indeed, no evidence was put to the contrary. Rather, the evidence was that the goods were regarded commercially as "CKD" motor vehicles. We are of the view that, looked at collectively, the goods were sufficiently committed to assembly into motor vehicles of the designated type and were sufficiently complete to be identified as belonging to the specified class and no other." The above conclusion was arrived at based on the evidence available. However, in the present case, many essential components of the lift are lacking and even the components supplied were not presented together but cleared over a period of time. Therefore, the ratio of the above decision does not apply. 5.14 Ld. special counsel pointed out that the show cause notice dtd. 5/4/1991 was issued by the Collector on the allegation that the appellant had mis-declared the parts & components of lifts under heading 84.28 ins....
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....s erected on site by using these manufactured items together with other bought out components and parts, such as, guide rails, wire ropes, cage, collapsible gates, etc. Ld. Commissioner (AR) argued that para K-1, K-2, L-3, O and V of the Appeal as well as scrutiny of the various Contracts for installation of lifts, submitted by the Appellant show that: a. Some components of lifts are manufactured by them and cleared to their own Offices in different cities/ towns. b. The components for one contract, for any single Lift, are cleared over a period of time, under different packing lists, under different vehicles, under different dispatch advices, under different value challans and under different duty paying gate passes. The clearances are over a period of 3 to 6 months or more. c. In any one consignment cleared to any one city/ town, at any one time, components relating to different contracts, for varying buyers, either for installation or for maintenance, are cleared together, to their Office in that city/ town. There are common clearance and transport documents. d. Hence some components/ part components of various contracts, of different customers are presented together at the ....
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....on and Maintenance/ Repair/Upgradation require the same components and technical expertise. m. Pg 423, of Contract Copies given by the Appellant, i.e. Contract no.52SE4417/A35E4417 with GNVFC, at Pg 441 speaks of Repair of existing Lift and at Pg 442 speaks of installation of new Lift. At Pg 442, it offers 3 alternatives i.e. for supply of only labour or only materials or both labour and materials. This one Contract relates to different lifts and for Repair of one and Installation of another. n. Pg. 550, of Contract Copies given by the Appellant, i.e. Contract no.52E7753 at Pg 553 and 52E7751/2 at Pg 558, with Surat Cotton Spg & Wvg Mills at Mumbai, the scope of Work speaks of extending the existing lift by some floors. It involves reinstalling the entire existing lift but the contract is for repair. o. Pg 550, of Contract Copies given by the Appellant, i.e. Contract no.52SE4949 with Railway Hospital at New Delhi, the scope of Work at Pg 454 to 462 speaks of extending the lift by one more floor. It involves reinstalling the entire existing lift but the contract is for repair. p. If the components supplied are lifting machinery then, any contract for reinstalling an entire lift....
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....e earth. w. The Appellant has filed Classification Lists and Price Lists/Valuation Annexures for components cleared under CETH 8428 and 8431. They have not filed these CLs/PLs/Annexures Contract wise. In these CLS/Pls/Annexures, they have not described any lifting machinery. For e.g.: -In the CL w.e.f 1.3.1994, for goods classified under CETH 8428, they have given description of 1077 parts with Part Number, but, there is no description of any & 'lifting machinery'. -In the CL w.e.f 1.3.1994, for goods classified under CETH 8431, they have given description of 2664 parts with Part Number. -In the Valuation Annexure Il w.e.f. 1.7.1994, for goods classified under CETH 8428 they have given description of 1077 parts with Part Number, but, there is no description of any machinery'. -In the Valuation Annexure II w.e.f. 1.7.1994, for goods classified under CETH 8431, they have given description of 2664 parts with Part Number. -The cost and assessable value given in both the PLs, for the same Part Number is the same. For e.g. At sr. no.309, on Pg. 40, S.S. Door under CETH 8428 is Part no.413DS3 and Cost is given as Rs. 3984 and A.V.as Rs. 4514. At sr. no.1363, on Pg. ....
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....lity Steel Tubes Vs CCE - 1995 (75) E.L.T. 17 (S.C.) vi) Triveni Engg & Indus Ltd. Vs CCE - 2000 (120) ELT 273 (SC) vii) T.T.G Industries Ltd Vs CCE - 2004 (164) ELT 501 (SC) Ld. Commissioner (AR) argued that there can be no 'Lift' without its installation. Hence, there can be no set of components/assemblies/items which can be considered to have the 'essential character' of lift'. If the installation 'left' is not 'goods' can a set of parts/components/assemblies/items be deemed to be a 'Lift' and charged to Central Excise Duty. Hence, installation of 'Lift' is a 'Works Contract', Installation of a 'Lift' is not 'sale of goods'. Materials/parts/components/assemblies/items supplied for installation of lift are subject to sales tax as parts/components etc and not as 'Lifts' because 'Lifts' are not 'goods'. Ld. Commissioner (AR) argued that the issue is no longer resintegra because in CCE, Vs Damodar Ropeways & Construction Co. (Pvt) Ltd. - 2003 (151) E.L.T, 3 (S.C.), a 3 Judge Bench of the Supreme Court, with respect to installations described in CETH 8428, has held that they are not 'goods' and parts/components/assemblies/items supplied for ....
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.... clears parts of 6 components viz, (i)Machine & Motor, (ii) Controller, (iii) Governor (iv) Rails (v) Signal Fixtures (vi) Safety. The bought out items which are used together with the manufactured items for construction of the lift in the case of OEL are - (i) Fly Wheel, (ii) Card Road Panels, (iii) Apron of Car, (iv) landing Door Panels, (v) Spring Buffer, (vi) Friction Sheave Pedestal Bracket, (vii) Bed Plate, (viii) Delection Pulley, (ix) U Sheave, (x) Counterweight Guide, (xi) Rail Bracket, (xii) Car Guide Rail Bracket, (xiii) Hoisting Ropes, (xiv) Supporting beams, (xv) Electrical wiring and Cables, (xvi) Main/Terminal Limit Switch, (xvii) Car Guide Shoe, (xviii) Top Channel, (xix) Lift Car, (xx) Car Sling, (xxi) Bottom Channels, (xxii) Ropes, (xxiii) Trailing Cables, (xiv) Rope Suspension Bolts, (xxv) Counterweight Guide Shoe, (xxvi) Counterweight Frame, (xxvii) Counterweight Blocks, (xxviii) Compensating Chain, (xxix) Weighted Pulley for Speed Governor, etc. These bought out parts & components are also very essential. Without these essential parts & components, construction of a complete lift is just not possible. These are the parts which are actually involved in lifting ....
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....red from the factory. In this connection, reliance is also placed on the decision of the Tribunal in the case of Wesman Engg Co Ltd Vs CCE - 2002 (150) E.L.T. 644 (T). 6.5 Ld. Commissioner (AR) argued that from the affidavit of Shri M. Balasubramanian, General Manager it is seen that it only states that the items manufactured by the appellant are essential for proper and safe functioning of the lift. It does not say that other bought out items are not required or essential for manufacture of lifts. Therefore, it does not advance the case of the appellant. Ld. Commissioner (AR) argued that the details of the contract for sale and installation of lifts by M/s OEL has been examined in detail by the Hon'ble High Court at Mumbai as reported at Otis Elevator Co. Ltd. Vs State of Maharashtra - 1969 24 STC 525 Bom. This has been relied upon by the said HC in its decision at Otis Elevator Co. Vs Supt of Central Excise - 2003 (151) ELT 499 (Bom). This analysis of the Contract is quoted with approval by the Constitution Bench of the Supreme Court in Kone Elevator India Pvt Ltd Vs State of Tamil Nadu - 2014 (304) E.L.T. 161 (S.C.). Ld. Commissioner (AR) argued that this detailed analysis ....
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....31.00. 6.7 Ld. Commissioner (AR) argued that the argument put forth by the appellant is that CETH 84.31 covers "parts suitable for use solely or principally with the machinery of Headings 84.25 to 84.30" and the word 'with' used indicates that the lift machinery is already in existence and the parts to be used with that machinery are sought to be classified under the said heading and not parts of lift machinery. He argued that this is not correct, because: a) All that the entry says is that these parts must be suitable for the use solely or principally with the machinery of headings 84.25 to 84.30, meaning thereby that other general purpose parts will not be classifiable under heading 84.31. b) Parts are to be classified as per Section Note 2 to Section XVI of the CETA 1985. This Note itself uses the terms 'Parts' and 'Parts... suitable for use solely or principally with' to mean 'parts of machines' in Note 2(a) and 2(b) respectively. In case the goods are specifically mentioned in any chapter heading, they are to be classified in that chapter heading. In case the are not so mentioned, such parts are to be classified in the chapter heading alongwith the m....
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...., pulleys and pulley blocks, clutches and shaft couplings (heading 84.83). (7) Gaskets and similar joints of heading 84.84. (8) Electric motors of heading 85.01. (9) Electrical transformers and other machines and apparatus of heading 85.04. (10) Electric heating resistors (heading 85.16). (11) Electrical capacitors (heading 85.32). (12) Electrical apparatus for switching, protecting, etc., electrical circuits (switches, fuses, junction boxes, etc.) (headings 85.35 and 85.36). (13) Boards, panels, consoles, desks, cabinets and other apparatus for electric control or the distribution of electricity (heading 85.37). (14) Lamps of heading 85.39. (15) Valves and tubes of heading 85.40 and diodes, transistors, etc., of heading 85.41. (16) Electrical carbons (e.g., arc lamp carbons, carbon electrodes and carbon brushes) (heading 85.45). (17) Insulators of any material (heading 85.46). (18) Insulating fittings for electrical machines, etc, of heading 85.47. 85.47. Ld. Commissioner (AR) argued that other parts which are recognisable as such, but are not suitable for use solely or principally with a particular machine or class of machine (i.e., which may be common to a number o....
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....pecifically included in any Chapter heading they shall be classified therein only. Whether the goods are described in the said heading as 'Parts' or as 'Parts suitable for use solely or principally with machinery of heading'. Ld. Commissioner (AR) argued that In J.B.A. Printing Inks Vs CCE - 2000 (115) E.L.T. 24 (S.C.), a 3 Judge Bench of the Apex Court was concerned with the meaning to be put on the phrase 'Parts suitable for use solely or principally with', and came to the conclusion that such entry includes components of machines. It said: '7. Tariff Entry 84.09 covers "parts suitable for use solely or princpally with the engines of Heading No.84.07 or Heading No.84.08". Entry 84.08 covers "compression ignition internal combustion piston engines (diesel or semi diesel engines)". The argument on behalf of the appellants is that radiator assemblies are not parts of internal combustion engines but accessories thereof and this had been accepted by the respondents earlier. It is difficult to accept this latter argument and the argument that an internal combustion engine can function without a cooling device. lit cannot do so. If, then, the cooking device is water based, ....
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....f the meanings of the word "with" (which accords here with the context) is "part of the same whole". In other words, the phrases "parts of machinery" and "parts suitable for use with the machinery" convey the same meaning. 6.7 Ld. Commissioner (AR) argued that Note 4 to Section XVI, the said note states that "where a machine (including a combination of machines) consists of individual components (whether separate or interconnected by piping; by transmission devices, by electric cables or by other devices) intended to contribute together to a clearly defined function covered by one of the headings of Chapter 84 or 85, then the whole falls to be classified in the heading appropriate to that function." EISN EXPLANATORY NOTES TO SECTION NOTE 4 (VII) FUNCTIONAL UNITS are as follows (VII) FUNCTIONAL UNITS (Section Note 4) This applies when a machine (including a combination of machines) consists of separate components which are intended to contribute together to a clearly defined function covered by one of the headings in Chapter 84 or, more frequently, Chapter 85. The whole then falls to be classified in the heading appropriate to that function, whether the various components (for ....
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....been supplied in a single consignment but in several consignments over a period of time. He relied on HSN explanatory notes pertaining to 84.28 to assert that the said heading covers lifting or handling machines usually based on pulley, winch or jacking systems and often including large proportions of static structural steel work, etc. These static structural elements (e.g. pylons specialized for teleferics, etc.) are classified in this heading when they are presented as parts of a more or less complete handling machine. Ld. Commissioner (AR) pointed out that the HSN explanatory note to 84.28 states that "lifts are usually operated by winch and cable, or by rams worked by water, air or oil. They are used for raising or lowering a passenger cage or goods platform between vertical guide bars, and are generally fitted with counter-balance weights. The control, stopping, safety, etc. equipment, whether or not electrical, is also classified in this heading provided it is presented with the lift itself. The heading also includes manually operated lifts". The HSN explanatory note to 84.31 also states that, 'The headingincludes : (2)Drums for winches or capstans; crane jibs; trolleys, ....
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....t from the affidavit filed by the Appellant it is apparent that the lift car/cage was not manufactured by the appellant nor the ropes/cables for pulling the lift or the guide rail or the counterweights which regulate the movement of the lift and therefore the items manufactured and supplied by the appellant do not constitute lift in an unfinished or incomplete form having the essential character of a lift. 6.9 Ld. Commissioner (AR) argued that from the ISI standards, it is seen that the essential components of a lift consist of - (i) lift guide rails and guide shoes, (ii) lift car frame and car, (iii) counter weight and suspension, (iv) safety gears and governors, (v) lift retiring cam, (vi) lift doors and locking devices and contacts, (vii) lift machines and brakes, (viii) lift wire ropes, (ix) controller and operating devices for lift's movements. Ld. Commissioner (AR) argued that the ISI specifications also match well with the HSN explanatory notes as to what constitutes a lift. Out of these nine main components, the appellant has not manufactured and supplied lift guide rails, lift car frame, car, counter weights and suspension, lift doors, locking devices and lift wire ro....
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.... for the functioning of the lift and for which standards have been laid down, have not been manufactured and supplied by the Appellant. Therefore, from the Maharashtra/Bombay Lift Rules, 1958, itself, it can be seen that what has been supplied by the appellant does not constitute a lift either in an incomplete form nor does it have the essential character of a lift. They are only components and parts of a lift. Ld. Commissioner (AR) argued that the contention of the appellant that what they have supplied is a lift in incomplete form having essential character of the lift totally fails. 6.10 Ld. Commissioner (AR) argued that the concept of essential character can also be seen from certain examples. A motor vehicle chassis may be capable of auto-movement. But it can not carry a passenger or goods without the body and therefore, a motor vehicle chassis cannot be classified as a motor vehicle. Ld. Commissioner (AR) argued that tariff itself recognizes this fact and has provided a separate heading for automobile chassis. Let us consider another example. Ld. Commissioner (AR) argued that on the same logic, the prime mover, safety gear and over speed governor by themselves do not have th....
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.... the notes suffice to clarify the scope of a heading, then it must be construed according to the other following provisions contained in the Rules. Rule 1 gives primacy to the Section and Chapter Notes along with terms of headings. They should be first applied. If no clear picture emerges then only can one resort to the subsequent rules." As per the description of Heading 84.28 the said heading covers machinery for lifting, handing, loading or unloading machinery. Parts, which are suitable for use solely or principally with the above machinery, are classified under Heading 84.31. Thus from the tariff description itself, it is clear that parts of lift machinery are classifiable under CETH 84.31 and there is no need to invoke any other rule for the purpose of classification. 6.12.1 Ld. Commissioner (AR) argued that Rule2(a) reads as follows : "Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished', provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or....
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....since the appellants-assessees do not, in fact, manufacture every single component that goes into a lift, neither Note No.4 of Section 16 nor interpretative Note 2(a) would apply, since what has been cleared is only certain parts of the complete lift. It was concurrently found by the authorities that the Revenue's case was made out, and that the component parts manufactured by the assessees would fall within sub-heading No.8431.00. 6. Learned counsel for the assessees, however, raised for the first time before us a new argument. According to them, what they, in fact, manufactured was lifting machinery as being something apart from and different from a complete lift or elevator. This being the case, according to them, Note 4 of Chapter 16 would cover their case as individual components manufactured under one contract are intended to contribute together to a clearly defined function covered by subheading No.8428.00, viz., lifting machinery. This being the case, according to them, Note 4 of Chapter 16, if correctly applied, would necessarily lead to the conclusion that the components manufactured by them would fall only under subheading No.8428.00 and not sub-heading No.8431.00. ....
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....onsideration of defense of the appellants that the goods cleared by them have been tested only with reference to the product 'LIFT' but not with reference to the description 'LIFTING MACHINERY' appearing in the tariff heading 84.28. It has been argued that the goods manufactured by then can be considered to be 'lifting machinery' and then the same would be classifiable under the heading 84.28. While detailed arguments were made nothing was brought on record to show that the items manufactured by them, are together capable of functioning as a machine. 7.1 The tariff heading 84.28 and 84.31 read as under Heading No. Sub-heading Description Rate of duty 84.28 8428.00 Other lifting, handling, loading or unloading machinery (for example, lifts, escalators, conveyors, teleferics 15% 84.31 8431.00 Parts suitable for use solely or principally with the machinery of Heading Nos. 84.25 to 84.30 20% It is apparent that the heading 84.28 covers lifting machinery, handling machinery, loading or unloading machinery. The heading 84.28 gives specific examples of such machinery as lifts, escalators, conveyors, teleferics. The argument of the appellants is that t....