TMI Blog2008 (7) TMI 261X X X X Extracts X X X X X X X X Extracts X X X X ..... ue which as per their contention was a mistake of law. On 27-3-78 they have written to the range superintendent informing him that the duty liability was limited to the manufactured goods and that the boughtout items were not liable to duty and that the duty will be paid under protest on contract value. On 10-4-78 the range superintended replied that he did not agree with him and therefore full contract value should 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 va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... racter of lifts, they would be assessed under heading 8428.00." Based on this circular, the department issued a show cause notice on 3-4-91 for the period 1-9-90 to 28-2-91 stating that since the parts manufactured by them constituted only about 50-70% of the value of the machinery used in the execution of lift works contract, the machinery cleared by them cannot be considered as lift and were classifiable as parts components 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulars of commissioning and erection charges received by the petitioners from their customers does not arise at all. If there is any dispute regarding the excisability of the parts of the lifts under tariff item 84.28 or 84.31, the respondents may proceed in the matter in accordance with law as this aspect of the matter will need investigation and adjudication based on question of facts for which writ jurisdiction cannot 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. 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the goods cleared by them is lifts in unassembled dis-assembled condition having the essential character of lifts and therefore are rightly classifiable under Chapter Heading 84.31. In support thereof, they referred to the affidavit submitted by Professor A.S. Menon, B.Sc., Engineering, a Charted Engineer and Professor of Mechanical Engineering at VJTI Institute Bombay, wherein he has stated that the lifts of the type installed by 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, penalty cannot be imposed. 10. The ld. DR Shri Hitesh Shah took us to the various requirements for installation of lifts under Bombay Lift Act and other such Acts, which requires permission for installation from the competent authority after inspection by the inspector of lifts requiring several formalities to be completed to show that a lift can never be said to manufactured unless all the formalities as required under Bombay Lift 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arts manufactured leaving the bought-out items. 12. It was further submitted that goods have to be cleared in unassembled condition together and not supplied over a period of time as in terms of Rule 2(a) of General Interpretative Rules contained in Central Excise Tariff, the goods have to be assessed as presented. In support thereof, he referred to the decision of the tribunal in the case of Tata Motors Ltd. v. Commissioner - 2008 (222) 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rely because an item is mentioned in tariff, does not mean that it becomes a goods and in the present case lifts only come into existence at site when it becomes immovable property, a lift can never be manufactured. 14. Lastly reference was invited to the decision of the tribunal in the case of Kone Elevators India Ltd. reported in 2001 (138) E.L.T. 635 CT) wherein it has been held that component parts manufactured by assessee for installation of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the lift cannot be said to have the essential character but the reasoning is that they are general purpose items which can be used elsewhere. This reasoning does not appear to be correct as even the so called general purpose item are tailor-made and once made for installation of lift cannot be used elsewhere. The affidavit says that the items manufactured cannot be used in any of the products of Chapter Headings 84.25 to 84.30 and therefore cannot be classified 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so classifiable under Chapter Heading 8428. This is also not acceptable as even the affidavits submitted by them of an expert says that all the items together have the essential character of lift and the contract is also for manufacture and installation of lift only. 20. The other contention that Chapter Heading 84.31 contemplates only of those parts which are required to be used in an existing lift, does not appeal us much because all that the entry says 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. 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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