2025-VIL-298-CESTAT-CHE-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise – Classification of Fuel Filter assembly, Water Pump Assembly, Cylinder Head Sub-Assembly and Cylinder liner stud Assembly which are sub-assemblies and components of High Horse Power locomotives for Railways, Sole or Principal Use Test - Respondent had classified these products under Chapter Subheading (CSH) 8607.99.90 of the erstwhile Central Excise Tariff Act, 1985 and was discharging appropriate duty liability. However, after the issuance of Exemption Notification No. 12/2016-CE dated 01.03.2016, the Respondent started discharging duty liability on the products at 6% - Demand of differential duty covering the period from 01.03.2016 to 30.06.2017, alleging that the products were not classifiable under CSH 8607.99.90 but under appropriate headings of Chapter 84 or other Chapters - Whether the products manufactured and supplied by the Respondent are rightly classifiable under CSH 8607 of CETA - HELD - the Supreme Court's judgment in the case of M/s. Westinghouse Saxby Farmer Ltd. laid down the 'sole or principal use' test for classification. The products were designed and solely for use in Railways/Railway Locomotives and therefore, the exclusion under Note 2(e) of Section XVII of CETA would not apply, and the classification under CSH 8607 is appropriate in view of Note 3 of Section XVII and Rule 3(a) of the General Rules for Tariff Interpretation - the products sought to be reclassified are engine parts as against signalling equipment in the other case but in both the cases, it remains an undisputed fact that they are designed and solely for use in Railways / Railway Locomotives. It is never the case of the Department that the subject goods have any independent marketability. Therefore, the ratio of judgment of the Hon'ble Supreme Court in M/s. Westinghouse Saxby Farmer Ltd. case would apply squarely to the facts of this case – The impugned order is affirmed and the Department’s appeal is dismissed - Whether the demand for differential duty under extended period of limitation under Section 11A(4) of the erstwhile Central Excise Act, 1944 is sustainable - HELD - the Respondent had consistently classified the products under CSH 8607 and disclosed the same in the returns filed, and there was no positive act on the part of the Respondent to deliberately adopt a wrong classification - mere wrong classification or availing of benefit of a notification cannot lead to the conclusion that there was suppression or misstatement to justify invoking the extended period of limitation.
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