2002 (4) TMI 442 - AT - Central Excise

Summary

Issues Involved:
1. Classification of caterpillar wheel loaders.
2. Eligibility for exemption under Notification No. 20/99-Cus (Sl. No. 250).
3. Whether the appeal should be rejected or remanded to the original authority.

Detailed Analysis:

1. Classification of Caterpillar Wheel Loaders:

The primary issue revolves around the classification of two caterpillar wheel loaders imported by the appellants. The Customs authorities classified these loaders under Customs Chapter Heading 8429.59 as machinery and mechanical appliances, arguing that they are not eligible for exemption under Notification No. 20/99. The appellants contended that these loaders were part of a dredging system and should be classified under Customs Tariff Chapter Heading 89, which pertains to ships, boats, and floating structures.

The Customs authorities emphasized that the wheel loaders are independent, heavy machinery, weighing 15 tonnes each, and are self-propelled. They argued that these loaders are versatile earth-moving machines and cannot be classified based on their use in dredging operations alone. The Tribunal agreed with this view, stating that specific use-based classification should be avoided unless explicitly provided for in the tax law.

2. Eligibility for Exemption under Notification No. 20/99-Cus (Sl. No. 250):

The eligibility for exemption under Notification No. 20/99 depends on the classification of the goods under Customs Tariff Chapter Heading 89. The Tribunal noted that Chapter Heading 89 covers only ships, boats, and floating structures, and wheel loaders do not fall under this category. The Tribunal also referred to the HSN Explanatory Notes, which clarify that auxiliary equipment fitted with vessels does not include wheel loaders, as they are separate machinery.

The appellants presented affidavits and expert opinions stating that the wheel loaders were integral to the dredging system and essential for its operation. However, the Tribunal found that these loaders, being separately leased and capable of independent movement, could not be considered auxiliary equipment fitted on vessels. Thus, the exemption under Notification No. 20/99 was denied.

3. Whether the Appeal Should Be Rejected or Remanded to the Original Authority:

The Tribunal was divided on whether the appeal should be rejected or remanded. One member (Technical) agreed with the Customs authorities' classification and denial of exemption, confirming the impugned order and rejecting the appeal. The other member (Judicial) argued that the matter should be remanded to the original authority for reconsideration, given the expert opinions and affidavits provided by the appellants.

The third member (Judicial), called upon to resolve the difference, agreed with the Technical member's view. He emphasized the importance of the HSN Notes and the specific classification of machinery under Chapter Heading 84. He concluded that the wheel loaders could not be classified under Chapter Heading 89 and upheld the denial of exemption.

Majority Order:

In terms of the majority order, the Tribunal confirmed the classification of the caterpillar wheel loaders under Customs Tariff Chapter Heading 84 and upheld the denial of exemption under Notification No. 20/99. Consequently, the appeal was rejected.