TaxTMI 
TaxTMI 
2008 (7) TMI 261
X X X X Extracts X X X X
X X X X Extracts X X X X
....ould be taken for the purpose of assessable value and duty should be paid accordingly. In March, 1980 they filed a revised classification list classifying the manufactured items only under erstwhile Tariff item 68. 2. In November 1981 as per their say, after coming to know of the Government of India's order in the case of Otis Elevator Company reported in 1981 (8) E.L.T. 720 (G.O.I.) wherein it was held that lifts erected and installed at site could not be considered as goods and hence could not be assessed under tariff item 68; They requested the Assistant Collector vide their letter dated 10-11-81 to give an early decision in the matter to the effect that they were liable to pay excise duty only on the machinery manufactured by them and not on the total contract value. The Assistant Collector visited their factory on 10-6-82 and satisfied himself that they were liable to pay excise duty only on the machinery manufactured by them and gave decision in that respect and since then they have been paying excise duty on components of lifts machinery manufactured by them under erstwhile tariff item 68. 3. From 1-3-86 a new tariff was introduced based on HSN and as per their underst....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ponents under Chapter Heading 8431 and accordingly demanded duty amounting to Rs. 9,16,724/- and also proposed imposition of penalty under Rule 173Q. Immediately thereafter on 5-4-91 another notice was issued invoking extended period from April, 86 to August, 1990 demanding duty amounting to Rs. 31,80,707.24. Thereafter 9 periodical show cause notices were issued and all the show cause notices together demanded a duty of Rs. 1,75,42,276.84. All these show cause notices were adjudicated by the Commissioner by his impugned order, wherein he confirmed the duty liability of Rs. 1,75,42,277.00 and imposed an equivalent amount of penalty under Rule 173Q. 5. At the outset, the ld. Advocate for the appellants Shri Shroff admitted that in similar matter in respect of lifts manufactured by M/s. Otis Elevator the Tribunal has in its decision reported in 2007 (208) E.L.T. 114 (T) decided against them by holding that such components manufactured cannot be said to have the essential character of lift and were classifiable under Chapter Heading 8431 as against 8428 claimed by them. It is his prayer that the matter should be referred to the Larger Bench as the decision was based on wrong apprec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....not be allowed to be invoked." (iii) The findings were based on the fact that what was cleared from the factory was parts and not complete lifts and also the fact that these parts were cleared over a period of time and not together in unassembled or dis-assemble condition, ignoring the Interpretative Rules. (iv) Another factor taken into account was that while determining the essential character, it has to be seen as to what has been cleared was having an essential character of a part or essential character of a complete machine. Since what was cleared was having essential character of a part, it has to be classified as a part. (v) This decision incorrectly distinguishes the decision of the Tribunal in the case of Flat Products Equipments - 2000 (115) E.L.T. 629, Vinar Systems Limited v. Commissioner - 2001 (131) E.L.T. 578 and Vishwa Industrial Co. Pvt. Ltd. - 1999 (107) E.L.T. 774 in all of which it has been held that incomplete goods having essential character of the finished goods are also to be classified in the heading in which finished goods are classified. 6. The ld. Advocates invited attention to the decision of the tribunal in the case of Flat Products Equipme....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the appellants are predominantly installed for vertical transportation of human beings and M/s. Bharat Bijlee manufactures essential parts of this kind of lifts and also undertakes the installation and maintenance of lifts. He has enumerated 30 items, which were being manufactured by the appellants and were essential and critically important for proper and safe functioning of a lift. The affidavit describes the function or special purpose of each assembly manufactured by the appellants, which is designed as per the requirements of the customer. These items are designed for use in lift installation and cannot be used in any of the products of headings 84.25 to 84.30 of the Central Excise Tariff Act. The bought-out items are general purpose items which only enhance the safety aspects of function as direction or transmission devices. The bought-out items mainly comprise of structural parts such as wooden or m.s. car panels, door panels, collapsible gates, steel guide rails, interconnecting steel wire and electrical cable etc. The affidavit says that the various items of lift machinery listed in annexure A to the affidavit together have the essential character of lifts. None of the sa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t Act, 1939 and others have been gone through. He also took us to the diagram of lift over view filed as exhibit A to the appeal which shows that only six or seven items like machine unit, e.m. brake assembly, hoisting motor, controller, shaft information assembly, car road drive mechanism, car push button box, position indicator and landing push button box were being manufactured by the appellants. The other items like fly wheel, controller (24), card road pan els, apron of car, landing door panels, spring buffer, friction sheave pedestal bracket, bed plate, deflection pully, u sheave, speed governor, counter weight guide, grail bracket, car guide rail bracket, hoisting ropes, guide rail for car, guide rail, main limit switch, car guide shoe, top channel, lift car, car sling, bottom channels, ropes, trailing cables, rope suspension bolts, counter weight guide shoe, counter weight frame, counter weight blocks, compensating chain, weighted pully for speed governor etc. were bought-out items and were not manufactured and have not been considered as parts of lifts for the purpose of discharging duty as lifts. It was his submission that in absence of such vital parts, a lift can never ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....22) E.L.T. 289 (para 6) 13. Reference was also invited to the HSN explanatory notes to heading 8428 which states as under: "the heading covers lifting or handling machines usually based on pully, winch or jacking systems and often including large proportions of a static structural steel work etc. These static structural elements are classified in this heading when they are presented as parts of more or less complete handling machine. The above shows that the static structural elements like pully, winch or jacking systems and other structural steel works are also parts of lifts. Similarly, these explanatory notes says 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 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." This also shows that winch and cable and counter balance weights etc. are essential parts of lifts and without them the goods cannot be said to have essential ch....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f lifts will be classifiable under Chapter Heading 8431 and not as lifts under Chapter Heading 8428 as lift come into existence at site when it becomes an immovable property. The decision describes the various stages which have to be undergone for installing a lift and it was concluded that the lifts come into existence only at site as an immovable property. The revenue's contention that the parts cleared in CKD and SKD condition attain the essential character of the lifts as the major work done at the site is only civil work relating to construction was negated and not accepted holding that if such a contention is accepted, then Chapter Heading 84.28, which specifically provides for lifts will become redundant, as lift can never be cleared, by a factory in the form in which the Commissioner (Appeals) understood, i.e. which comes into existence only at site. 15. In view of above it was submitted that the very submission which are being advanced by appellants in the present case were advanced by the department in the Kone Elevator case cited supra and were found unacceptable. Therefore, a different view cannot be taken now. 16. On limitation, he reiterated the findings of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sified under Chapter Headings 84.31. However, this affidavit forgets that for spare parts these very parts have been admitted to be classifiable under Chapter Heading 84.31 meaning thereby that they can be used in any of the products of heading 84.25 to 84.30. This is without going in to other contentions, whether in terms of Interpretative Rule 2(a) the goods were required to be presented together or could have been cleared over a period of time. 18. The view expressed above also find support by HSN explanatory note referred to by ld. DR in which steel structural items, pullies, counter weights etc. have been considered to be essential items of lifts. Besides, it is a settled position of law in Central Excise that the goods are to be assessed in the form in which they are cleared. Therefore, once the goods which were cleared were only parts and not a complete lift, the same have to be assessed as parts only. If this would not have been so, then any manufacturer would divide the manufacturing activity and pay the duty at the stage when the goods attain the essential character and further, value addition process may not be charged to duty. This view was also expressed by Member (....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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. 21. We also note that submissions raised by the appellants now were more or less the same as were argued before the tribunal in the case of Otis Elevator and Kone Elevator cited supra and we do not find any reason to differ with the finding arrived therein along with the findings stated above. 22. One of the submissions made by Shri Shroff was that in this case the assessments were provisional on account of valuation as value is being determined on the basis of cost of production method and therefore the demands can not be confirmed unless the assessments are finalized. We are unable to agree with this contention as assessments were provisional on account of valuation and not on account of classification. In such cases demands can be raised even if assessments are provisional on some other account as held by the Larger Bench of the tribunal in the case of L.D. Textiles reported in 2005 (190) E.L.T. 174 (T-L.B). 23. In view of this we hold that the goods manufactured by the appel....