CCE Vs. ACC MACHINERY CO. LTD.

JUDGEMENT

(1.) THE respondents are manufacturers of cement -making and cement -handling machinery. They entered into a contract with a customer for designing, manufacturing, supplying, erecting and commissioning plant and machinery at the customer's site. As the plant and machinery weighed about 300 MTs, it was not possible for them to clear it as a single consignment. They cleared parts of the plant and machinery by classifying them under SH 8417.10, 8474.10 and 8428.00 and paying duty at the rate of 10%. The department took the view that, as the parts were despatched separately, they should be classified under the respective sub -headings viz. 8417.90, 8474.90 and 8431.00 respectively in terms of Note 2(a) to Section XVI of the HSN. The rate of duty applicable to these tariff entries was 15%. Hence a show -cause notice was issued demanding differential duty of Rs. 8,13,340/ - from the appellants for the period 1.12.1995 to 31.3.1996. The Asstt. Commissioner of Central Excise confirmed this demand, but the Commissioner (Appeals) vacated it. Hence the present appeal of the Revenue.

(2.) AFTER examining the records and hearing both sides, we note that the lower appellate authority found that the clearances made by the respondents were as part of a turn -key project. This finding has not been contested by the department in the present appeal. As the respondents could not dispatch the machinery of enormous size and weight in a single consignment, they had to clear it in parts from time to time. In the circumstances, it was not correct to ask them to pay duty on each part at the rate applicable to it as if it were not a part of the machinery covered by turn -key contract which was entered into between the respondents and their customer for the sale of cement -making machinery and not for the sale of parts of cement -making machinery. Hence we uphold the finding of the lower appellate authority that the respondents were clearing cement -making machinery piece -meal and hence the parts cleared by them had to be assessed not as "parts" but as "complete machinery in CKD condition" in terms of Rule 2(a) of the Interpretative Rules. The Commissioner of Central Excise (Appeals), Coimbatore passed a similar order Order -in -Appeal No. 263/93 (CBE) in the case of the same assessee. That order was also upheld by this bench as reported in CCE Coimbatore v. ACC Machinery Co. Ltd. 2004 (165) ELT 2001 (Tri -Chennai). The respondent's case also is supported by the Tribunal's decision in Vishwa Industrial Co. (P) Ltd. v. CCE Calcutta , wherein a conveyor system supplied by the assessee to their customer under a turn -key contract was classified under SH 8428.00 by treating piece -meal clearance made by the assessee as clearance of conveyor system in SKD/CKD condition.

(3.) IN the result, the Revenue's appeal gets dismissed.