Customs, Excise and Gold Tribunal - Bangalore
Vst Tillers And Tractors Ltd. vs Commr. Of C. Ex. on 9 May, 2005
ORDER T.K. Jayaraman, Member (T)
1. Appeal Nos. E/30, 36, 37, 521/04 : These appeals are against OIO Nos. dated 29-10-2003 and 29-4-2004, passed by the Commissioner of Central Excise, Bangalore-I Commissionerate.
2. In the impugned orders the adjudicating authority has held that the appellants had misdeclared the pedestrian controlled tractors manufactured by them as power tillers. Accordingly, he demanded duty and imposed penalty under Section 11AC of the Central Excise Act, 1944. He has also imposed penalty under erstwhile Rule 173Q and Rule 110 of the CE Rules, 1944. Interest under Section 11AB has been demanded. Penalties have been imposed on the Sri V.P. Mahendra, Managing Director of M/s. VST Tillers and Tractors Ltd. and Sri S. Mahesh, Sr. Manager under Rule 209A of the Central Excise Act. The details of duties and penalties are detailed in the tabular column below.
S. No. Appellants OIO No. Duty Penalty
1. M/s. VST OIO No. Rs. 26,90,85,555/- 1. Rs. 26,90,85,555/-
Tillers 19/2003, 2. Rs. 2,90,00,000/-
Tractors Ltd. dated 31-10-2003 Under Rule 173Q
and Rule 210
of CE Rules
2. Sri V.P. OIO No. -nil- Rs. 30,00,000/-
Mahendra, 19/2003, dated
Managing 31-10-2003
Director
3. Sri S. Mahesh, -do- -nil- Rs. 20,00,000/-
Sr. Manager
4. M/s. VST OIO No. Rs. 2,12,22,640/- 1. Rs. 2,12,22,640/-
Tillers 6/2004, along with interest 2. Rs. 20,00,000/-
Tractors Ltd. dated 30-4-2004
3. Sri K.S. Ravi Shankar, learned Advocate appeared for the appellants and Sri M. Chandrasekharan Sr. Advocate along with Sri Manish Pushkama, learned Advocate appeared for the Revenue.
4. The short point to be decided is whether the "Power Tillers" manufactured by the appellants is classifiable under 8432.00 of the Central Excise Tariff Act, 1985 as claimed by the appellants or under CH 87.01 as contended by the Revenue.
5. The learned advocate for the appellants urged the following points.
(i) It is well known in commercial parlance that Power Tillers are different from Tractors. The appellants manufacture both the items.
(ii) The appellants obtained an industrial license for the manufacture of diesel engine power tiller on 6th April, 1966 from the Ministry of Industries. Further, they obtained separate license for the manufacture of other products.,
(iii) The learned Advocate referred to the definition of Tractor in the Central Excise Tariff and also standard technical books.
(iv) He referred to the definition of Tractor in the CH 87 of the Tariff. Chapter note 2 of CH 87 reads as follows: "For the purposes of the Chapter, Tractors' means vehicles constructed essentially for hauling or pushing another vehicle, appliance or load, whether or not they contain subsidiary provision for the transport, in connection with the main use of the tractor, of tools, seeds, fertilizers or other goods."
(v) The McGraw Hill of Scientific and Technical term define Tractor' as "an automotive vehicle having four wheels or a caterpillar tread used for pulling agricultural or construction implements."
(vi) The Hamylin Encyclopedia defines 'Tractor' as four-wheeled or tracked, self-powered machine designed to pull or push heavy implements over rough terrain. It is commonly used in agriculture, construction, and industry. The Tractor replaced draught animals in every phase of modern agriculture.
(vii) From the above definitions it is very clear that the essential function of Tractor is hauling or pushing another vehicle.
(viii) In the UP. Co-op Federation Ltd. v. UOI , the Hon'ble High Court of Delhi, held that mechanically Tractors and Tillers are two different entities and are known as such in commercial parlance. Power Tiller is not a Tractor.
(ix) Since the Central Excise Tariff does not define vehicles, one should take recourse to the Motor Vehicles Act, 1988, wherein the term Motor Vehicle or Vehicle are defined. As per the Motor Vehicles Act, 1988, Section 2(28) defines, 'motor vehicle' or 'vehicle' means any mechanically propelled vehicle adapted for use upon roads whether the power of propulsion is transmitted thereto from an external or internal source and includes a chassis to which a body has not been attached and a trailer, but does not include a vehicle running upon fixed rails or a vehicle of a special type adapted for use only in a factory or in any other enclosed premises or a vehicle having less than four wheels fitted with engine capacity is not exceeding [twenty-five cubic centimeters];
(x) When all the above definitions are carefully examined, it is very clear that 'Tractor' is different from 'Power Tiller'.
(xi) The learned Advocate submitted that the appellant has been classifying the Power Tiller under CH 84.32 only and the classification lists filed by the appellants were being approved by the department. Our attention was drawn to classification list No. 1/95, dated 20-12-1995. In the above-mentioned classification list the Power Tiller was classified under CH 84.32 and exempted vide Notification No. 56/95 dated 16-3-95 (SI. No. 21). This list has been approved by the Superintendent of Central Excise.
(xii) Even the Government of India issued a Circular No. 45/2001-Cus. dated 7-8-2001 clarifying that Power Tillers/Pedestrian controlled tractors/walking tractors are different from Rotary Tillers. It was further clarified that Pedestrian Tractors ought to be classified as Rotary Tillers under CTH 84.32 and not as Tractors.
(xiii) The above circular was withdrawn during the Budget of 2002-2003. Further it was clarified that Power Tillers are to be classified under 84.32.
(xiv) Our attention was also drawn to Notification No. 64/86, dated, 30-5-1986, exempting Power Tillers from Central Excise Duty. In this notification the classification of Power Tillers is mentioned as 84.32.
(xv) Even in the old Tariff a distinction was maintained between Power Tiller and Tractors.
(xvi) The CBEC Tariff Ruling No. 2/69, dated 13-3-1969 clarifies that "Agricultural tractors are distinct from the Power Tillers in the basic sense that while agricultural Tractors are covered by the generic category of motor vehicles, the Power Tillers do not come under the purview of Item No. 34 of the Central Excise Tariff and hence no Central Excise duty shall be levied on such Power Tillers under that Tariff item."
(xvii) Notification No. 177/77-C.E., dated 18-6-77 exempts Power Tiller from Excise duty. The learned Advocate maintained that right from 1969, till now the department has maintained the difference between Power Tiller and Tractor. Power Tiller was always exempted from Central Excise Duty.
(xviii) Our attention was drawn to DGFT's letter dated 14-7-99 addressed to the Ministry of Agriculture, wherein it was decided that 'Power tiller' or 'walking tractor' will fall under the category of agricultural implements (84.32). In the same letter it is stated that the guiding principle in all such classification will be that any machinery including Tractors used for agricultural activity should be classified under agricultural implements under 84.32 and those used for transport under 84.34.
(xix) In view of the above submissions there is no justification for invoking the longer period. Hence, penalties imposed are not sustainable.
(xx) It was urged that in the 2005-2006 Budget, Rotary Tillers and other Tillers have been brought under CH 84.32, thereby making legislative intent manifest.
(xxi) In the case of O.K. Play (India) Ltd. v. CCE it has been held that "HSN Explanatory Notes provide a safe guide for interpretation of an entry, but equal importance to be given to Rules of Interpretation of Excise Tariff, functional utility, design, shape and predominant usage have also got to be taken into account while determining classification of an item."
(xxii) In the case of CCE v. Alcobex Metals it has been held that "Once the notice is issued under the proviso for larger period, it cannot be treated as a notice under main Section 11A for shorter period of six months.
6. Sri M. Chandrasekaran learned Senior Counsel along with Sri Manish Pushkarna, Advocate adduced the following arguments :
(i) The adjudicating authority has relied on the Chapter Note 2 of Chapter 87 and the definition of Pedestrian Controlled Tractor in the HSN to arrive at a conclusion that the impugned goods are Pedestrian Controlled Tractor classifiable under CH. 87.01.
(ii) Adjudicating authority has carefully examined the various functions of the impugned goods and concluded that they are Pedestrian Controlled Tractor.
(iii) The Adjudicating authority has found that Tilling is only one of the many applications of the impugned goods. The Tilling equipment namely, Rotorvator is easily detachable when it is required for applications other than Tilling. The Rotorvator is mounted on the tractor with the means of the coupling device. When it is used for transportation the maximum speed achievable is 10-12 KMPH.
(iv) The Senior Counsel referred to the correspondence of the appellants and also the Power Tillers manufacturer Association to the Government of India regarding the classification of Power Tillers for import policy. In all their correspondence, they wanted to classify the Power Tiller under 87.01 and not under 84.32. In view of this Senior Counsel urged that the appellants were knowing that the impugned goods are rightly classifiable under 87.01, however, they suppressed this fact from the Central Excise Authorities and classified the item under 84.32. This is a very clear-cut case of suppression of facts with intent to evade payment of duty. Hence, the longer period is rightly applicable.
7. We have gone through the records of the case carefully. The Adjudicating Authority in para 44 of the OIO dated 31-10-2003 has stated that "the arguments put forth by the noticees with regard to the history of the classification of Power Tillers is of no consequence to the case on hand, as the classification of the so called Power Tiller in question are to be done in accordance with the Central Excise Tariff Act, 1985 as it existed at the relevant point of time".
8. Relying on the Chapter Note 2 of Chapter 87 and also the definition of Pedestrian controlled Tractors in the HSN he has come to the conclusion that the impugned goods are rightly classifiable under CH 87.01. We are afraid, that such an approach may not serve the cause of justice. In our view, a decision should be arrived at by taking into account the history of the classification of the impugned goods in India, the functional utility and predominant usage of the impugned goods and also the established practice in the matter. The above factors cannot be brushed aside while attempting to reverse an age-old practice. From the literature it is seen that following are the functions of a Power Tiller, as given in the Trade literature of the appellant.
1. Dry Tilling
2. Wet Puddling
3. Cultivating
4. Ploughing
5. Deweeding
6. Ridging
7. Water pumping
8. Transportation.
9. The definition of Tractor' as per Chapter Note 2 of Chapter 87 is as follows.
For the purposes of the Chapter, 'Tractors' means vehicles constructed essentially for hauling or pushing another vehicle, appliance or load, whether or not they contain subsidiary provision for the transport, in connection with the main use of the tractor, of tools, seeds, fertilizers or other goods.
10. From the above definition it is clear that the essential function of the Tractor is pulling or hauling. In this particular case the essential function of Power Tiller is not pulling or hauling. Even the function of transport is also subsidiary. In the commercial parlance Power Tiller is different from a Tractor. The ISI has got different standards for Power Tiller and Tractor. The Power Tillers are small agricultural machineries, and are used by small and marginal farmers for tilling, puddling, furrowing etc. These Power Tillers are hand controlled with 2 wheels instead of 4 wheels like a Tractor. As far as the history of classification of Power Tiller in our country is concerned it was never classified as Tractor. In fact, Tractors were classified along with other automobiles falling under Item 34A. In 1975, when Tariff Entry No. 68 was introduced Power Tillers attracted duty under this Classification. By Notification 177/77-C.E., dated 18-6-77, the Government exempted Power Tillers falling under Tariff Entry No. 68, from the payment of Central Excise duty. Hence it is very clear even from 1975 onwards the Government of India made distinction between Tractor and Power Tiller. When the Central Excise Tariff Act, 1985 was introduced, Notification No. 64/86-C.E., dated 10-2-1986 was issued. Under this Notification Power Tillers falling under CH 84.32 was exempted from Central Excise duty payment. Even in the Budget of 1996 the entire Tariff Heading No. 84.32 continued to be exempted under the Central Excise Tariff at nil rate of duty. The Tyres and Tubes for the Power Tillers falling under CH 84.32, were specifically exempted under Notification 8/96-C.E., dated 23-7-96.
11. Vide Notification 3/2001, Power Tillers and parts thereof falling under Heading No. 84.32 of Central Excise Tariff Act carries nil rate of duty. However, in the context of representation made by the Power Tiller manufacturers Association and also the appellants with regard to the import of Power Tillers in the guise of Rotary Tillers, the CBEC issued a Customs Circular No. 45/2001 dated 7-8-2001 clarifying that Pedestrian Controlled Tractors/Power Tillers should be classified under CH No. 87.01 and not under 84.32. Consequent to the above circular, the Central Excise field establishments initiated proceedings against the Power Tiller manufacturers for payment of applicable Central Excise duty @16%. However, the above-mentioned circular was withdrawn by the Government during the Budget of 2002-03. In fact, the Government has clarified that the Power Tillers are to be classified under Heading 84.32 in the above Budget circular.
12. Thus it is seen that the established practice in our country is to classify Power Tiller under 84.32 and not under 87.01, in spite of the requirement under HSN that it should be classified under 87.01 as Pedestrian Controlled Tractor. In a statement given before the Excise Authorities, Shri Sivaramakrishnan, Senior Manager of M/s. VST Tillers and Tractors Limited has given the comparison between Tractors and Power Tillers and' also Rotary Tillers and Power Tillers. In order to appreciate the issue at hand we are extracting the same.
COMPARISON BETWEEN TRACTORS AND POWER TILLERS Similarities :-
(1) All the agricultural operations for soil preparation, like tilling ploughing, cultivating, furrowing step be equally done by both Tractors and Power Tillers.
(2) Other operations like Transportation, pumping water, spraying etc., also can be carried out both by Power Tillers and Tractors. However the Power Tiller, since it is small in size and powered by Diesel Engines of less than 12 to 13 HP's the output of work will be very much less than that of Tractor, For Eg. Tractor can transport over 10 Tons of material whereas Power Tiller can Transport only one ton of material.
Dissimilarities between Tractor and Power Tiller:-
(1) Tractor have 4 wheel Drive whereas Power Tiller have only 2 wheels (2) Tractors can be driven by sitting on the tractor whereas Power Tiller has to be driven by a Operator walking behind the Power Tiller (3) Tractor is having a Conventional Steering whereas Power Tillers doesn't have Conventional Steering.
(4) Tractors have Hydraulic Power for lifting for Agricultural Implements like Rotary attachment etc., whereas power Tillers do not have hydraulic Power and lifting and attaching has to be done manually, (5) The Tractors have Self Starting function whereas Tiller have to be generally manually Hand-Cranked to start the engine.
(6) Tractors fall under Motor Vehicles Act and therefore it has to be registered under this Act and the person who drives the Tractor should have a Valid License, whereas Power Tillers do not come under Motor Vehicles Act and hence Registration and driving license is not required to operate for Power Tiller.
(7) Tractors can transport material of higher capacity and at high speed over 40 to 50 kmph whereas Power Tiller maximum speed is only around 15 kmph. Hence they are meant for transporting material of produce, to and from the field on the village Roads and not suitable for use on the Highway.
(8) Tractors have Power takeoff drive from the transmission. It can be used for operating number of other attachments/implements and Universal joints are used for this. Whereas Power Tillers do not have such a Power takeoff arrangements and universal joint cannot be used.
(9) In view of above differences only, we have 2 separate Indian Standards specifications. The IS specification for Tractor is IS 5994 and IS specification for Power Tillers is IS 9935.
(10) In short the Power Tiller is basically and essentially a machine for agricultural operations like Rice Transplanters, Harvesters, Combine Harvesters, Lawn Movers etc. All these agricultural and horticultural machinery's are classified under Central Excise Chapter Heading No. 84.332/84.33 only. Whereas Tractors are multipurpose vehicles essentially for hauling, pushing other vehicles like Trailors, Rotary Tillers, Cultivators etc. (11) The maximum engine horse Power fitted to Power Tiller is around 12-13 HP only. Whereas all Tractors are filled with much higher horse Power Engines generally more than 25 HP.
(12) Power Tillers are fitted with Single Cylinder, horizontal engines, whereas Tractors are fitted with Multi-cylinder Vertical engines.
Just because, both Power Tillers and Tractors are capable of similar agricultural operations, we cannot group them in the same category. It will be appreciated that we cannot group a "Powered-Cycle" and a Motor Vehicle though both are used for conveyance; we cannot similarly compare "Power Tiller" which is nothing but a "Powered Bullock" with 'Tractor'.
COMPARISON BETWEEN ROTARY TILLER AND POWER TILLER Rotary Tiller is only an attachment which can be attached to Tractor for tilling the field; it does not have self-priming power whereas Power Tillers are complete Agricultural machinery, which have its own power to do the tilling of land by itself.
13. The Hon'ble Supreme Court in the case of O.K. Play (India) Ltd. v. CCE , has been held that:
7. In the case of A. Nagaraju Brothers v. State of Andhra Pradesh , it has been held by this Court that no one single universal test can be applied for correct classification. There cannot be a static parameter for correct classification.
8. Further, the scheme of the Central Excise Tariff is based on Harmonized System of Nomenclature (for short "HSN") and the explanatory notes thereto. Therefore, HSN along with the explanatory notes provide a safe guide for interpretation of an Entry.
9. Further, equal importance is required to be given to the Rules of Interpretation of the Excise Tariff. Under Rule 3(a), it is provided that the heading which provides a specific description shall be preferred to a heading having a more general description. For example, in the case of "toys" referred to in the HSN Heading and the Tariff Heading, the description refers to reduced size model of an Article used by adults. This test helps us to understand the difference between "toys" and "furniture".
10. Lastly, it is important to bear in mind that functional utility, design, shape and predominant usage have also got to be taken into account while determining the classification of an item.
14. From the above, it is very clear that the Government of India has always been classifying Power Tiller under CH 84.32 and not under CH 87.01. Even the Delhi High Court distinguished between Tractors and Power Tillers and held that Power Tiller is not a Tractor. In all the exemption Notifications given to Power Tiller, the classification is mentioned as 84.32. Moreover in 2002-03 Budget the Government of India has clarified that Power Tiller are to be classified under 84.32. In our view, the legal maxim 'contemporanea expositio et optima et fortissima in lege' (Contemporaneous exposition is the best and strongest in the law. A statute is best explained by following the construction put upon it by judges who lived at the time it was made, or soon after) [Black's Law Dictionary] is very relevant for this case. All along the judiciary and the CBEC have been holding that Power Tiller is classifiable under 84.32 in spite of the HSN. The DGFT also decided that Power Tillers or walking tractor will fall under 84.32. They have observed that "the guiding principle in all such classification will be that any machinery, including Tractors used for agricultural activity should be classified under agricultural implements under 84.32 and those used for transport shoidd be under 84.34." The essential function of Power Tiller is not transport as seen from the literature available. Another point to be noted is Power Tiller Manufacturers Association's representations to the Government of India with regard to the import policy of Pedestrian Controlled Tractor cannot be held against them, as they have not been relied on in the Show Cause Notice. The adjudicating authority has gone strictly by the HSN and classified the item under 87.01. In our view, in a situation like this the totality of facts and circumstances has to be applied. There is also no merit in invoking the longer period, as there is absolutely no suppression of facts. The appellants have been filing the classification list and declaration and the department was very well aware of the activities of the appellants. We hold that the impugned goods, namely, Power Tillers manufactured by the appellants are classifiable under 84.32 during the relevant period. The OlOs has no merit and hence we allow the appeals with consequential relief. E/425/2004 - M/s. Kerala Agro Machinery Corporation Ltd.
15. The case of the Revenue is that whether the appellant is liable to pay differential duty on the following grounds :-
(a) The items cleared by the appellants for 'Pedestrian Controlled Tractor' to which a tilling equipment to be attached.
(b) During the course of manufacture of power tillers, there emerged an item, i.e. 'Pedestrian Controlled Tractor' on which duty ought to have been paid by classifying it under Heading 8701.00 of the Schedule to the CETA, 1985.
16. The adjudicating authority held that the pedestrian controlled tractor classifiable under Heading No. 87.01 emerges in the assessee's factory during the course of manufacture of power tillers on the following grounds :-
(i) Power Tiller manufactured is actually a Pedestrian Controlled Tractor on which tilling equipment is mounted and it is a multi-utility vehicle.
(ii) Tilling equipment (blades) is fixed at the last stage of manufacturing activity (in the making of the Power Tiller)
(iii) The tilling equipment cannot be considered as an integrated or integral unit of the Power Tiller as it is not permanently fixed and is easily detachable.
(iv) The rotovator/tilling blades are fitted in such a way as to remove them very easily and to use the system (tractor portion) for other purposes viz. for attaching different implements for ploughing, levelling, ridging etc. and for attaching trailers and pumping water etc.
(v) The product which is emerging has the characteristics of Pedestrian Controlled Tractor as given in the HSN explanatory notes and opined by the Asst. Professor of Mechanical Workshops, REC, Chatamangalam.
(vi) With the intention of evading duty, the assessee deliberately and fraudulently had suppressed the fact from the department that a tractor classifiable under Chapter Heading 87.01 emerges during the course of manufacture of the power tiller.
17. He also relied on the expert opinion of Dr. N. Ramachandran, Asst. Professor in-charge of Mechanical Workshops, Regional Engineering College, Calicut. The adjudicating authority in the impugned Order No. 2/2004, dated 25-3-2004 confirmed the demand of Rs. 14,02,28,699/- covered in show cause notice dated 12-3-2003 and Rs. 3,41,15,872/- covered in SCN dated 24-1-2004 under proviso to Section 11A(1) of the Central Excise Act, 1944. He imposed equal penalty under Section 11 AC of the Act on the appellants. Further he demanded interest under Section 11AB of the Central Excise Act, 1944.
18. Shri A.K.J. Nambiar, learned Advocate appeared for the appellants and Smt. Shobha L. Chary, learned JCDR for the Revenue.
19. The learned Advocate adduced the following points :-
(1) A tractor is a vehicle which is constructed essentially for hauling or pushing another vehicle/appliance whereas a power tiller is an agricultural machine which ensures a power take off from the engine to the blade shaft so that the agricultural implement/appliance attached to the prime mover are power driven and not merely hauled or pushed.
(2) The I.C. Engine is fitted onto a power tiller framework where the blade shaft and the rotary shaft are connected by means of a chain and sprocket arrangement, it cannot be said that on the engine being fitted what comes into existence is a pedestrian controlled tractor. This is because a tractor is a vehicle essentially designed for hauling or pushing another appliance/load whereas a power tiller, on account of the chain and sprocket arrangement, ensures a power take off from the prime mover to the blade shaft.
(3) The deposition of the witness relied upon by the department - Dr. N. Ramachandran - itself makes it clear that there is no tracting unit built into the tilling unit. He explained during cross-examination that a tracting unit means a system whereby something is dragged by the machine that is manufactured. The witness also deposed during cross-examination that at no stage before the engine is fitted does a vehicle emerge that can be used for hauling. It is therefore clear that a Pedestrian Controlled Tractor does not emerge at any stage before the clearance of a power tiller.
(4) Note 7 to Chapter 84 states that a machine which is used for more than one purpose is, for the purposes of classification, to be treated as if its principal purpose were its sole purpose. Thus the Power Tiller, which is designed and manufactured principally for the purposes of agriculture, is correctly classifiable under Heading 8432, which deals with Agricultural Machinery. It is also settled principle in classification matters that classification of an item must depend upon the description, purpose and use of goods.
. Also even if an alternative classification is also possible for the power tiller, it is well settled that when two views are possible, the one in favour of the assessee would guide the classification .
(5) According to HSN Explanatory Notes, Heading 8701 does not cover the propelling bases of machines referred to, for example, in Headings 84.25, 84.26, 84.29, 84.30 and 84.32, in which the propelling base, the operating controls, the working tools and their actuating equipment are specially designed for fitting together to form an integral mechanical unit.
(6) The department is well aware that the appellant has been manufacturing power tillers for the last three decades and the process of manufacture of power tillers has not changed in all these years. The appellant's company has been availing various exemption Notifications beginning with Notification No. 64/86-C.E., dated 10-2-1986, which exempted power tillers falling under Heading 8432 from the duty leviable under the CETA, In these circumstances, there is no justification to suddenly demand differential duly on the ground that a pedestrian controlled tractor emerges during the course of manufacture of a power tiller, when no such demand was ever made in the past. There is also no justification for invoking the larger period of limitation against the appellants. In view of the above, there is no justification for imposition of penalty and demanding interest.
20. In the course of hearing before the Tribunal, the learned Advocate informed the Bench that on the same issue for a subsequent period for the unit of the appellants at Athani, Emakulam Dist, the Commissioner of Central Excise and Customs, Cochin Commissionerate, has passed an order dropping the proceedings against the appellants. After a detailed study of the manufacturing process, he held that the goods manufactured by M/s. KAMCO, Athani are Power Tillers falling under Heading 8432.00 except tillers cleared without rotary units. The findings recorded in Para 36 of the Order-in-Original No. 21/2005, dated 31-3-2005 are reproduced below :-
36. From the process of manufacture of Power Tiller, I do not find an intermediate product called Pedestrian Controlled Tractor (PCT) classifiable under Heading No. 87.01 as emerging, which can be marketed as such for other purposes. What I found is that rotary unit of the tiller can be detached if specifically required and there can also be a tiller without rotary unit, -such tiller without rotary units cannot be used for agricultural purposes. These units are chargeable to duty as they do not fall under Heading No. 8432. These units can be used for various purposes depending on the accessories attached to it. The fact that the assessee is packing tilling blades separately do not confirm that the goods cleared are PCT with tilling blades packed separately. Though the tilling blades are packed separately, the rotary units are still attached to the unit, which is the integral part of Power Tiller. So only when the tiller is cleared without rotary unit, it is a different item, which do not merit classification under Heading No. 8432.00. So from the records and on spot study I have come to the conclusion that the goods manufactured by M/s. KAMCO, Athani are Power Tillers falling under Heading No. 8432.00 except tillers cleared without rotary units. The tillers cleared without rotary units are not classifiable under Chapter 84.
21. The learned JCDR urged that in view of the Explanatory Notes, the definition of the 'Tractor' in the Tariff and also the fact that the item manufactured by the appellants are required to take registration under Motor Vehicles Act, the same should be classified under 87.01. She said that the Order-in-Original No. 21/2005, dated 31-3-2005 passed by the Commissioner of Central Excise & Customs, Cochin Commissionerate is not a very sound order.
22. We have gone through the rival contentions. The Revenue is not very clear on the issue as seen from the show cause notice. In certain places in the Show Cause Notice, it is alleged that a Pedestrian Controlled Tractor emerged during the course of manufacturing Power Tillers. In certain other places it is alleged that the Power Tillers manufactured by the assessee is actually a Pedestrian Controlled Tractor on which the tilling equipment is mounted. The same contention is seen in the Order-in-Original. The department makes two statements :-
(1) Pedestrian Controlled Tractor classifiable under Heading 87.01 emerges in the assessee's factory during the course of manufacture of power tillers.
(2) The second statement is that the Power Tillers manufactured, is actually a Pedestrian Controlled Tractor on which tilling equipment is mounted and it is multi utility vehicle.
23. Both the above statements cannot simultaneously be true. We have discussed elaborately the reason for classifying the power tillers under Heading 84.32 of the CETA, 1985 in the appeal related to M/s. VST Tillers & Tractors. The same findings hold good here also. Moreover, the Revenue in this case has relied on an expert opinion of Dr. N. Ramachandran, Assistant Professor in-charge of Mechanical Workshops, Regional Engineering College, Calicut. We reproduce an extract of his cross-examination :-
Qn. 9. What do you understand by the term hauling? Ans. Lifting sand and throwing to the side.
Qn. 10. If I said that hauling means pulling other objects would that be correct according to you?
Ans. No.
24. After going through the above record, we are not inclined to give much credence to his opinion. Moreover, on the same issue, the Commissioner of Central Excise & Customs, Cochin has taken a different stand after revisiting the factory. Moreover, there is absolutely no evidence for suppression of facts by the Appellants. Hence, the longer period is not invocable. Under these circumstances, we do not find any merit in the impugned order. Therefore, we allow the appeal with consequential relief.
(Pronounced in open Court on 9-5-2005)