In the case between Commissioner of Central Excise and M/s BHEL, Supreme Court recently held that essential components of boiler classified as ‘boilers other than parts’ are taxable at the rate of 10 percentage.
Assessee, M/s BHEL Limited, a company engaged in the manufacturing activity of boiler, cleared the essential components of the boiler and considered the same into excise duty under the sub head goods other than parts at the rate of 10 percentages.
The department took a view that that essential components of the boiler would be termed under the sub head parts and the same would attract 15 percent of tax.
On appeal, both the lower authorities such as CIT(A) and Customs, Excise and Service Tax Appellate Tribunal (CESTAT) supported Assessee’s contention and confirmed the excise duty at 10 percent.
Aggrieved by the order passed by the lower authorities the Revenue carried the matter before the Apex Court.
After considering the facts and circumstances of the case, Justice Ranjan Gogoi and Justice R.Banumathi observed that “Primary Authority as well as the First Appellate Authority was perfectly justified in coming to the conclusion that the components of the boilers cleared as parts but essential to put into operation the boilers, would be classifiable under sub-heading ‘goods other than parts’ and not as claimed by the Revenue under the sub heading ‘parts’.
The Court further held that “the aforesaid two authorities concluded that such components which are essential to classify the boiler as a machine, even if transported as components, must be understood to have been transported as a complete machine. Therefore, levy of duty should be under sub-heading ‘goods other that parts’ and not under the sub head ‘parts’.” Consequently, the Court upheld the order passed by the lower authorities and dismissed the appeal filed by the Revenue.
