1991 (1) TMI 263 - AT - Central Excise

Summary

Issues Involved:
1. Classification of steel forgings under the Central Excise Tariff.
2. Applicability of exemption notifications.
3. Impact of the Board's circulars and Supreme Court judgments on classification.
4. Concession by the Revenue in specific appeals.

Detailed Analysis:

1. Classification of Steel Forgings under the Central Excise Tariff:
The primary issue revolves around the classification of steel forgings (drop forgings) for automobile industries. The appellants argued that these goods were previously classified under Tariff Item 25(8) of the Central Excise Tariff before 1-3-1986 and subsequently under heading 72.08. The description under both tariffs was consistent: "Pieces roughly shaped by rolling or forging of iron and steel, not elsewhere specified."

2. Applicability of Exemption Notifications:
The appellants had been availing benefits under Exemption Notification No. 208/83-C.E., dated 1st August 1983, and Notification No. 31/76-C.E., dated 28th February 1976. However, a Board clarification dated 4-6-1987, later withdrawn on 18th September 1989, questioned the classification of these forgings and forged products. The appellants contended that the classification should remain under heading 72.08, as supported by the Supreme Court's decision in TISCO v. Union of India (1988 (35) E.L.T. 605).

3. Impact of the Board's Circulars and Supreme Court Judgments on Classification:
The Board's circular dated 18th September 1989, clarified that forgings subjected to processes up to and including proof machining should be classified as "pieces roughly shaped" under the old Tariff Item 25 and heading 7208 from 28-2-1986. This was based on the Supreme Court's judgment in TISCO v. Union of India, which emphasized that the removal of excess material during machining and polishing was incidental to the manufacturing process. The circular also indicated that from 1-3-1988, the classification should align with HSN Explanatory Notes, considering forgings as semi-finished articles under Rule 2A of the Rules of Interpretation.

4. Concession by the Revenue in Specific Appeals:
The Revenue, represented by Shri R.M. Ramchandani, conceded in appeal No. E/1259/88-B1 based on the Collector's instructions, which acknowledged the Board's circular and the Supreme Court judgment. Consequently, the Revenue did not press appeal No. E/3783/88. For appeal No. E/1348/88-B1, the Revenue left the decision to the discretion of the Bench, noting the similarity in facts.

Conclusion:
The Tribunal, after considering both sides and reviewing the relevant circulars and Supreme Court judgments, concluded that the appeals filed by the assessee should be allowed, and the appeal filed by the Revenue should be dismissed. The Revenue authorities were directed to give consequential effect to this order, ensuring that the classification of the disputed goods aligns with the established legal precedents and circulars.