The Chennai Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that 6% excise duty is payable on railway diesel locomotives.
The bench of P. Dinesha (Judicial Member) and Vasa Seshagiri Rao (Technical Member) has observed that parts of railway diesel locomotive are more appropriately classifiable under CETH 86079100.
The Appellant/assessee is in the business of manufacturing and supplying of goods to Indian Railways and other major customers, had classified certain electrical machinery parts and accessories manufactured and cleared to railways attracting 5% duty under Chapter 86 of Central Excise Tariff Act, 1985 (CETA) whereas the Department alleged that such parts merit classification under respective Chapters 84 or 85, as per section note 2(f) of Section XVII of CETA.
The excise duty on railway parts under HSN 8607 was reduced to 6% from 12.5% w.e.f. 01.03.2016 as per Notification No. 12/2016-CE dated 01.03.2016 whereas all other railway parts which were classifiable under Chapter 84 or 85 continued to attract 12.5%.
Consequent to completion of investigation, a Show Cause Notice was issued to the Appellant seeking to reclassify the goods under Chapter 84 instead of under 8607 of CETA and to demand differential duty of Rs.2,18,29,679/- for the period 01.04.2016 to 30.06.2017 in terms of Section 11A(4) of Central Excise Act, 1944 read with Section 174(2) of CGST Act, 2017, along with interest under Section 11AA and to impose penalty under Section 11A(2).
The order has confirmed all the proposals put forth in the SCN.
The tribunal held that parts of railway diesel locomotives are more appropriately classifiable under CETH 86079100.Hence the issue regarding classification is decided in favour of the Appellant.
Case Details
Case Title: M/s. Shakthi Tech Manufacturing India Pvt. Ltd. Versus Commissioner of GST and Central Excise
Case No.: Excise Appeal No. 40219 of 2022
Date: 02.01.2025
Counsel For Appellant: S. Durairaj
Counsel For Respondent: N. Satyanarayanan
