Custom, Excise & Service Tax Tribunal
Beml Ltd vs Mysore on 3 May, 2024
E/22403/2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL
BANGALORE
REGIONAL BENCH - COURT NO. 1
Central Excise Appeal No. 22403 of 2014
(Arising out of Order-in-Original No. MYS-EXCUS-000-COM-015-13-
14 dated 17.03.2014 passed by the Commissioner of Central Excise,
Mysore.)
M/s. BEML Ltd
Mysore Complex, Appellant(s)
Belavadi Post,
Mysore - 570 018.
VERSUS
The Commissioner of Central
Excise
S1 & S2, Vinaya Marga, Respondent(s)
Siddhartha Nagar,
Mysore - 570 011.
APPEARANCE:
S/Shri Ravi Raghavendra, Md. Ibrahim, Tushar Sharma, Advocate for
the Appellant
Shri H. Jayathirtha, Authorised Representative for the Respondent
CORAM: HON'BLE DR. D.M. MISRA, MEMBER (JUDICIAL)
HON'BLE MRS. R. BHAGYA DEVI, MEMBER
(TECHNICAL)
Final Order No. 20366 /2024
DATE OF HEARING: 23.11.2023
DATE OF DECISION: 03.05.2024
PER : R. BHAGYA DEVI
The appellants, M/s. BEML Ltd., are Public Sector
Undertaking engaged in the manufacture of dumpers, earth
movers and other equipment falling under Chapters 84 and 87 of
the Central Excise Tariff Act (CETA), 1985. This appeal is filed
against the Order-in-Original dated 17.03.2014 and the issue
relates to levy of National Calamity Contingent Duty (NCCD) on
dumper chassis allegedly being manufactured and captively
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consumed during the manufacture of dumpers which are cleared
by the appellant. During the period from 01.04.2006 to
31.03.2013, 13 show cause notices were issued against the
appellant alleging that the appellant had manufactured chassis
and captively consumed them in the manufacture of dumpers.
The second issue was whether NCCD is exempted for captively
consumed goods under the Notification No.67/1995 dated
16.03.1995. The Commissioner held that the chassis fitted with
engines are classifiable under Chapter Heading 8706 0043 of the
CETA and these emerge during the course of manufacture of
dumpers by the appellant. He also held that the appellant is not
eligible for the benefit of the exemption under the Notification
No.67/1995 dated 16.03.1995 and therefore, the duty was
confirmed along with interest. Assailing the above order, the
appellant is in appeal before us.
2. The learned counsel submits that based on DGCEI
investigation; a notice dated 25.4.2006 was issued to the
Appellants alleging that "Chassis" classifiable under Chapter Sub-
Heading 8706.49 emerges during the course of manufacture of
dumpers which is liable to NCCD. The Learned Commissioner
vide Order dated 31.1.2007 held that the chassis does not come
into existence as a separate identifiable commodity and what
comes out of the continuous process of manufacture is dumper;
that NCCD is also not payable since chassis is exempt under
Notification No.67/1995-CE dated 16.3.1995. The said order was
further upheld by the Hon'ble Tribunal vide Final order
No.1466/2009 dated 8.12.2009. Revenue challenged the order
before the Hon'ble High Court and the Hon'ble High Court vide
Order dated 15.9.2010 dismissed the appeal as not maintainable
under Section 35G of the CETA, 1944 and granted liberty to
approach the Hon'ble Supreme Court under Section 35L of the
Act. The Revenue preferred appeal to the Supreme Court, which
was dismissed vide Order dated 29.7.2013 on the ground of
delay and the question of law was kept open. Hence, the
present 13 show cause notices for the period 01.04.2006 to
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31.03.2013 issued by the respondents were decided vide the
impugned order. The learned counsel submits that the issue
involved in the present appeal relates to demand of NCCD on the
chassis emerging during the manufacture of dumpers by denying
the exemption from payment of NCCD under Notification
No.67/1995-CE dated 16.3.95. This issue is settled by the
decision of this Hon'ble Tribunal in the appellant's own case
reported in CCE, Mysore versus BEML: 2010 (261) ELT 596
(Tri-BANG), wherein the Tribunal has upheld the earlier order
of the Commissioner which held that chassis did not come into
existence and also held that they are eligible for the benefit of
the Notification No.67/1995-CE dated 16.3.95.
2.1 The learned Counsel referring to the process of
manufacture submits that the Appellants procure steel plates
which are cut and welded in their fabrication shop to obtain a
heavy skeletal structure called Frame. This Frame consists of
mono or twin directional structures called the horse collar and a
heavy-duty tube structure called torque tube. Once the main
frame is fabricated at the fabrication shop, it is shifted to the
assembly area with the help of a movable trolley where
aggregates such as Rear Axle, Rear Suspension, Front
Suspension, the IC Engine coupled with the transmission
assembly are mounted and the initial electric wiring is also
completed. This would complete Stage I of the manufacturing
process. At this stage, the sub-assembly is incapable of being
moved around. Further aggregates like Hoist Cylinder, Hydraulic
Tank, Hydraulic Piping, Hydraulic Valves, Cooler lines, Fender
Structures, air system piping, bare cabin and Diesel fuel tank are
attached. Thereafter, the front rear brake lines, orbitrol system
which is the hydraulic part essential for coupling the steering
assembly is also fixed. This would complete assembly Stage-II.
At this stage also, the subassembly is incapable of being moved
around. The other aggregates like center deck, emergency
steering system, gang lubrication and exhaust system are
installed on the frame along with four roll-out tyres. The
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emergency steering system is nothing but a high-capacity motor
which will generate an increased power to enable the dumper to
move out of the slush. This emergency motor is designed to get
burnt after 45-seconds of use and it is meant as a purely
emergency measure and has got nothing to do with the main
steering system. This would complete assembly Stage III & IV.
At this stage also, the assembly of parts would not be in a stage
of mobility. In the final stage of manufacturing, the Appellants
install the body on the Frame and fit the belly guards which
protect the engine and transmission from damage. An important
aspect of completion takes place when the bare cabin which was
fixed earlier is furnished with the necessary fitments required to
move the dumper. These important fitments are gadgets which
control the hydraulic system, electrical system and pneumatic
systems of the dumpers. The gadgets so installed at this stage
also include the pedals, a steering column and the steering
wheel. The diesel tanks and the hydraulic tanks are filled with
the oil and gas which are charged to a particular level and only
thereafter the brakes which are always in locked position
because of the weight and size of the dumper get released
enabling the dumper to move. This is because a dumper having
a capacity of 35 Tons would normally weigh 30 Tons and as a
measure of safety, the design of the dumper ensures that the
dumper can be moved only after it is fully finished and no
movement is technically possible before this stage. The
Appellants submit that the entire manufacture of dumpers is a
continuous process beginning with the Frame and ending with
the fully finished dumper. It is submitted that the entire
operations which result in the emergence of the fully finished
dumper is an integral and continuous process and there is no
intermediate stage at which an item called chassis which is
capable of movement comes into existence. In this regard, the
Appellants place reliance on the documents viz Master Process
control sheets, affidavit, photographs, technical write-up, etc.,;
placed on record, which establish that the manufacture of
dumper undertaken by them is an integrated process and that
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there is no intermediate stage at which the dumper can be
driven away. It is stated that most of the operations of the
dumper is hydraulically controlled including the braking system
which are incomplete at assembly stage IV. Only at assembly
stage V, does the hydraulic system gets completed with the
furnishing of the cabin and the charging of the hydraulic fluid
and gas. Without the completion of these critical operations, the
entity dumper at stage IV which weighs approximately 22 tons
(for a 35-ton model) is completely immovable as the brakes
which are installed at the earlier stage are always kept in a
locked position owing to the sheer size of the equipment.
2.2 It is submitted that as per HSN Explanatory Notes, good
falling under Chapter Heading 87.06 are motor vehicles without
bodies. The HSN Explanatory Notes indicate that for an item to
fall under Chapter Heading 87.06, the said item should have a)
Engines, b) Transmission, c) Steering gear; and d) Axles.
The HSN Explanatory Notes also state that the item that is
classifiable under Chapter Heading 87.06 may have bonnets,
windscreens, mudguards, running-boards and dashboards
(whether or not equipped with instruments). Chassis also remain
classified here whether or not fitted with tyres, carburettors or
batteries or other electrical equipment. The relevant Note 3 to
Chapter 87 of the CETA, Chapter Heading and HSN Explanatory
Notes are reproduced herein under:
Note -3 to Chapter 87 read as under:
"3. Heading No. 87.06 shall include chassis, whether or
not filled with a cab"
Chapter Heading 87.06 read as under:-
"Chassis fitted with engines, for the motor vehicles of
heading Nos.87.01 to 87.05"
HSN Explanatory Notes to Chapter 87.06 reads as
under:
"This heading covers the chassis-frames or the
combined chassis-body frame work for the motor vehicles
of headings 87.01 to 87.05 fitted with their engines and
with their transmission and steering gear and axles (with
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or without wheels). That is to say, goods of this heading
are motor vehicles without bodies.
The chassis classified in this heading may,
however, be filled with bonnets, windscreens, mudguards,
running-boards and dashboards (whether or not equipped
with instruments). Chassis also remain classified here
whether or not fitted with tyres, carburettors or batteries
or other electrical equipment. However, if the article is a
complete or substantially complete tractor or other
vehicle it is not covered by this heading.
The heading also excludes:
a) Chassis fitted with engines and cabs, whether or not
the cab is complete (e.g. without seat) (headings
87.02 to 87.04) (see Note 3 to this Chapter)
b) Chassis not fitted with engines, whether or not
equipped with various mechanical parts (heading
87.08)."
It is evident from the process of manufacture of Dumper as
enumerated in paragraphs supra that the entity that emerges at
Assembly Stage IV does not have the steering column and
steering wheel fixed in it. Thus, up to this stage, the entity that
emerges does not satisfy the conditions set-out in the HSN
Explanatory Notes to Chapter Heading 87.06. At Assembly stage
V, the following operations are undertaken.
a) Fixing of battery box
b) Installation of body with the help of pins and hoist
cylinders
c) Installation of rock ejector box and belly guards
d) Installation of steering column and steering wheel
e) Furnishing of cabin including fitment of gadgets etc.
f) Filling up of diesel and hydraulic fluid and gas.
2.3 The learned Counsel submits that it is evident from the
above that in the process of manufacture of dumpers undertaken
by the Appellants, steering column and steering wheel are
installed after placement of the body. This is because, the
fitment of the steering column and the steering wheel is part of
the cabin furnishing activity and which involves the process of
checking the functioning of the various controls including that of
the body. The functioning of the body and the related controls
can be ascertained only if the steering column and steering
wheel is fixed after the body is installed. Such a procedure is
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also in consonance with the sequence set out in the process
control sheet. It is submitted that the burden is entirely on the
Revenue to show that the entity that emerges at Assembly stage
IV satisfies the conditions set out in HSN Explanatory Notes i.e.,
the said entity, apart from being fitted with engine, is also fitted
with transmission and steering column and steering wheel. This
burden has to be discharged by the Revenue for each and every
'Chassis' that is captively consumed in the manufacture of
dumpers. It is submitted that in the present case, there is no
material evidence whatsoever led by the Revenue to
demonstrate that the installation of the body take place only
after installation of the steering column and steering wheel. On
the contrary, the Ld. Commissioner has gone back on the
statements recorded in 2006 by the DGCEI which has already
been considered by the erstwhile Commissioner in the OIO No.
2/2007. There is absolutely no new evidence whatsoever
including fresh statements which has been recorded to come to
this conclusion. This being the case, the issue is settled by the
findings in Order-in-Original No. 2/2007 which has further
upheld by this Hon'ble Tribunal and has attained finality and
thus, the impugned order is liable to be set aside.
2.4 The learned Counsel further places reliance on the affidavit
of Shri. M.V. Rajashekar explaining the sequential operation
undertaken at the factory, which clearly shows that the steering
column and the steering wheel are fitted only after the body is
installed. He also places reliance on the decision of the Hon'ble
Tribunal in the case of Mahindra & Mahindra Ltd Vs CCE,
Bombay reported in 1999 (109) E.L.T 739 wherein the scope
of the term Chassis has been considered at length and has also
analyzed the scope and application of tariff entry, as also what
has to be considered as chassis in trade parlance. The Tribunal
has held, by relying on several technical and affidavit produced
by Mahindra & Mahindra Ltd, that for an item to be considered
as Chassis, it should necessarily comprise of the following:
(i) Front Suspension
(ii) Steering mechanism
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(iii) Radiator
(iv) Engine clutch and gear box
(v) Propeller shaft
(vi) Rear springs to which is attached the rear axle
(vii) Road wheels
(viii) Shock absorbers, fuel tank, petrol and hydraulic pipes,
brake shafts and cables, and, of course, some means of
mounting these components.
2.5 In view of the above, the Appellants, therefore, submit
that the entity emerging at Assembly stage IV cannot be
considered as a 'Chassis' classifiable under Chapter Heading
87.06 of the Central Excise Tariff. It is submitted that on
completion of assembly stage IV, the product emerging can at
best be termed as "un-finished Dumper" which does not have
the required characteristics of a chassis as is known to the trade.
As already noted supra, both the HSN Explanatory Notes and the
decision in case of Mahindra & Mahindra Ltd. (supra) of the
Tribunal envisage that the Chassis as contemplated for the
purpose of being charged to duty must be capable of movement
and being maneuvered. This would be evident from the fact that
both the HSN and the decision of the Tribunal considered the
existence of steering gear as an essential component of the
item. It is noteworthy that the HSN Explanatory Notes consider
a chassis frame even fitted with engine, transmission and axles
but without wheels as chassis, classifiable under Chapter
Heading 87.06, but not a chassis frame without a steering gear
even though fitted with wheels, engine, transmission and axle. It
is submitted that the entity emerging at Stage 4 is, therefore,
not capable of being brought to the market to be bought and
sold, nor is known to the trade as chassis for dumpers. It is
submitted that as far as their knowledge goes there is no
manufacturer in India, who manufactures and offer for sale
chassis for dumpers. This is because of the fact that unlike
ordinary commercial trucks, buses, etc.,; the dumpers
manufactured by the Appellant is manufactured for off-highway
use. In view of the size of the dumpers due to the heavy loads
to be carried, the design and manufacture of dumpers
manufactured by the Appellants are entirely different from other
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commercial vehicles like trucks, buses, which require chassis to
be manufactured by one manufacturer and the completion of the
body to be undertaken by another manufacturer, according to
the customer's need; wherein in this case, the dumpers are
manufactured by the Appellants according to their specifications
in varying capacities so as to offer a choice of models to the
customer and consequently the manufacturing process is
continuous and integrated which does not bring into existence
chassis at any intermediary stage, which is marketable. It is
submitted that the burden to prove the marketability is always
on the department. It is further submitted that the reliance
placed on Tender Notification issued by the Steel
Authority of India clearly states that the dumper is being
offered for sale in a dismantled condition and the chassis
referred to therein is only a skeletal frame as clarified by
Steel Authority of India, vide their letter dated 12.9.06. It
is submitted that for any commodity to be considered as
excisable, it should be marketable and known to the trade as
such. Since the entity dumper as it emerges at assembly stage is
not marketable, no duty can be levied at that stage.
2.6 The levy relating to National Calamity Contingent Duty
(NCCD) was brought into effect by virtue of Section 136 of the
Finance Act 2001. Sub-section 3 of Section 136 of the Finance
Act, 2001 reproduced herein below:
"The provisions of the Central Excise Act, 1944 (1 of
1944) and the rules made thereunder, including those
relating to refunds and exemptions from duties and
imposition of penalty, shall; as far as may be, apply in
relation to the levy and collection of the National Calamity
duty leviable under this section in respect of the goods
specified in the Seventh Schedule as they apply in
relation to the levy and collection of the duties of excise
on such goods under that Act or those rules, as the case
may".
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2.7 With regard to the above, it is submitted that the
provisions of the Central Excise Act relating to exemptions were
specifically borrowed for the purpose of levy and collection of
NCCD. That the Notification No.67/95-CE dated 16.3.1995
exempts chassis classifiable under Chapter Heading 87, when
captively consumed within the factory of production, provided
the finished product namely Dumper is cleared on payment of
duty. There is no dispute that the finished product namely
Dumper is cleared from the factory of the Appellants only on
payment of applicable Central Excise duty. In view of sub-section
3 of Section 136 of the Finance Act 2001 specifically making
applicable the provisions of the Central Excise Act 1944 relating
to grant of exemption from the Central Excise Act 1944 in so far
as the NCCD is concerned, the Appellants submit that the NCCD
leviable under Section 136 of the Finance Act, 2001 should also
be deemed to have been exempted by virtue of the fact that the
provisions relating to exemption have been specifically
borrowed. As regards, the exemption to NCCD under Notification
67/95, the Tribunal held that the same is exempt and places
reliance on the decision of Tribunal in the case of Tatra Trucks
India Ltd. Vs. CCE - 2008 (227) ELT 269. It is further
submitted that relying on the aforesaid decision of Hon'ble
Tribunal, Bangalore in the case BEML and Tata Trucks Ltd.
Supra, the Hon'ble Tribunal, Chennai recently in the case of
Komatsu India Pvt. Ltd. vs. CGST & CE, Chennai reported in
2023-VIL-1136-CESTAT-CHE-CE held that demand of NCCD is
not sustainable as there is no intermediate, identifiable and
marketable product viz., Dumper Chassis emerging in the
process of manufacture of dumpers; and further held that NCCD
is a duty of excise and the benefit of exemption Notification
No.67/95 would be available for NCCD also. The relevant
paragraph of the referred judgement is as below:
"16.6. The reason in the impugned order to hold that an
intermediate marketable product emerges is not based on
the process/ stages of manufacture. The reason is that
the appellant while making some exports had described
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the product as "chassis with cabin assembly" in the
export documents. The exigibility to duty of a product
cannot merely be based on how the assessee described
the product in a document. In case of dispute, the
department has to clearly state in the SHOW CAUSE
NOTICE the nature, classification and dutiability of the
product. The Tribunal in the case of Bharat Earth Movers
Ltd. (supra) has categorically held that the demand of
NCCD cannot sustain as there is no intermediate,
identifiable and marketable product viz. Dumper chassis
emerging in the process of manufacture of dumpers. The
issue as to whether NCCD is payable on dumper chassis
was also held in favour of assessee by the Tribunal.
...
16.17. From the foregoing, we find that the issue as to whether the exemption under notification 67/95 is available to NCCD is to be answered in the affirmative and in favour of the assessee. The demand of NCCD therefore cannot sustain and requires to be set aside. Ordered accordingly.
2.8 Reliance is also placed on the following decisions, wherein the courts have held that NCCD is a duty of excise and NCCD is not leviable on captive consumption.
➢ Toyota Kirloskar Motor Pvt. Ltd. Vs. CCE Bangalore - 2007 (217) ELT 403 (Tri.-Bang) ➢ Indorama Synthetics India Ltd. Vs CCE, Nagpur -2016- VIL-1833-CESTAT-MUM-CE.
2.9 The show-cause notice has invoked the provisions of Section 11A of the Central Excise Act, 1944 which can be invoked only for collection of duty. Further, Rule 2(e) of the Central Excise Rules, 2002 defines 'duty' as the duty payable under Section 3 of the Central Excise Act, 1944. Section 3 of the Central Excise Act, 1944 refers only to duty leviable under the First Schedule and the Second Schedule of the Act. It is submitted that if for the purpose of collection, the provisions of the Central Excise Act, 1944 are applicable, then it should Page 11 of 33 E/22403/2014 logically be extended to exemptions also. Any contrary interpretation would render the borrowing provisions of the Finance Act, 2001 nugatory and meaningless. In view of the above it is submitted that the demand of NCCD is not sustainable and impugned order is liable to be set aside. In view of the above, it is prayed that the appeals may be allowed.
3. The Authorised Representative referring to the impugned order submits that since the Hon'ble Supreme Court has kept the question of law open, the said notices were taken up once again for deciding the issue on merit. Further, at para 24 of the impugned Order-in-Original, the Commissioner has considered the amendment made to Chapter Note 3 of Chapter 87 w.e.f. 07.03.2005 and the amended Chapter Note 3 read as "Heading 8706 shall include chassis whether or not fitted with a cab". Thereby, there is a change in the position of law in the cases being decided now when compared to the case already decided by the CESTAT in favour of the appellant and the said amendment also nullifies the argument that dumper without dump body should be considered as semi-finished dumper. In view of the said change in the statutory provisions, the decision of the Commissioner to consider and decide the present notices afresh is legal and correct.
3.1 He further submits that the adjudicating authority at para 22 of the impugned order has very clearly distinguished the findings of the Commissioner in the earlier Order-in-Original dated 31.01.2007. Previously the Commissioner had come to the conclusion that Chassis does not come into existence by holding that 'drive away chassis' does not emerge at Stage 4 and that for chassis to be called so, it should be able to move, stop and also run on uneven surfaces. However, the statutory provisions do not lay down any such criteria for chassis fitted with engine classifiable under CTH 87060043. The HSN notes very clearly states that chassis with or without wheels are classifiable under Chapter and therefore, the criterion of drive away chassis, considered in the earlier OIO is not a statutory requirement.
Page 12 of 33E/22403/2014 Referring to the HSN notes it is submitted that CTH 8706 states "This heading covers the chassis-frames or the combines chassis-body framework (unibody or monocoque construction), for the motor vehicles of headings 87.01 to 87.05, fitted with their engines and with their transmission and steering gear and axles [with or without wheels]. Hence the said criterion does not have any legal backing and also in the context of amended Chapter note 3 of chapter 87, the said finding appears to be not proper and legal and hence the issue is liable to be re-examined in proper perspective in terms of the prevailing provisions.
3.2 Learned AR further submits that the appellants themselves vide their letter dated 29.07.2006 have submitted the process of manufacture of Dumpers and as per the said process, the Dumper manufacture involves 5 stages which is spelt out at para 20 of the impugned order. On perusal of the said process, it can be seen that Engine, Cabin, Diesel Fuel Tank, Hydraulic Tank, Radiator, Steering system, Battery Box with batteries, Exhaust system and also Emergency Steering system among other parts/components gets assembled/fitted to the main frame by the end of 4th stage. In the 5th and last stage, Exhaust tube, Body, Cabin furnish and filling of Hydraulic fluid, diesel & gas are undertaken to complete the process of the manufacture of Dumper. The Dumper body is not built on the chassis as an integral part and it is fitted in Assembly stage 5. On a glance through the above process, it is evident that the chassis fitted with engine do come into existence before 5th stage assembly operation is undertaken. Accordingly, the process at the end of 4th stage, the chassis-frame with engine and also cabin, read with the Chapter note 3 of chapter 87 and HSN notes of CSH 87.06, evidently demonstrates the emergence of chassis fitted with engine with or without cabin, which is rightly classifiable under CSH 87060043.
3.3 It is further stated that the contract/tender notice issued by the appellant for painting of the dumper specifies reveals that the dumper body is detached to facilitate painting of the body Page 13 of 33 E/22403/2014 and the chassis separately which clearly that the appellant themselves have considered the said structure as chassis/frame. To substantiate his arguments relies on the decision of CESTAT in the case Tatra Trucks India Ltd: 2008 (227) ELT 269 [Tri.-Chennai] wherein the Tribunal observed that "It appears to us that the tipping cylinder along with the hydraulic pipelines present in the chassis, alone cannot bring about dumping of materials. The box like body is also essential for this purpose. Hence, it cannot be said that the product in question, which does not have the box-like movable body, has the essential character of a fully built dumper. Hence the subject goods can only be classified under 8706.49 as dumper chassis and not under 870430 as dumper." Therefore, by applying the above ratio to the present case, the dumper without its body, at the end of 4 th Stage, is to be classified as dumper chassis and not semi-finished dumper {as was held in the earlier Order-in-Original}. In view of the above, the appellant's contention that the adjudicating authority had already held that drive away chassis does not emerge in their earlier case in Order-in-Original No.02/2007 dated 31.01.2007 is distinguishable since the said 'drive away chassis' is not specified/ recognised by the statutory provisions. The appellant's claim that it is not their intention to manufacture chassis and they do not clear/sell the dumper chassis and that the entire process is an integrated process for manufacture of dumper only. The procedure involved being 'Integrated Process' does not mean there will not be any intermediate goods that are excisable and marketable that are emerging in the entire process and the intention to manufacture chassis not being there cannot be the criterion to prove that the chassis emerges during the process of manufacture of dumper. It can be observed that there are many other goods, where though the process is integrated process, there are many intermediate products which emerges and which are classifiable, though it is not intended/programmed to manufacture said intermediate products. Similarly, in the case of dumper also, though the process adopted by them may be an integrated process and they do not intend to manufacture chassis, as per the process stages, the chassis, which is appropriately classifiable under chapter 8706 emerges and the Page 14 of 33 E/22403/2014 same has to be liable to be held excisable at that stage of process. The appellant's argument that they do not manufacture any chassis for the above reason is devoid of any evidences since the process of manufacture submitted by themselves very evidently confirms the emergence of chassis after the completion of Stage 4. The appellants submitted photographs of their product and also of M/s Tata Motors to show the difference in the dumpers manufactured by the said two companies. The photographs display chassis without body fitted clearly in respect of M/s. Tata Motors dumpers, while the photographs of the appellants only display a completely built dumpers with body. The appellants have failed to submit the photographs of the dumpers at the end of each stage of process of manufacture or at least at the end of 4th stage when the body of the dumper would not have been assembled to substantiate their claim. Hence, the said photographs cannot be considered to be conclusive enough to substantiate their claim that the chassis does not emerge at all. It is noticed that the appellants raise Tender Notification/ agreement/contracts for various works to be done on the goods like Grinding, chipping & painting. On perusal of the sample copy submitted by them, it is seen that the contract uses the word 'chassis' numerous times while describing a structure for undertaking the said job by the contractors. The usage of the word 'chassis' in the said contracts only goes to prove that the appellants themselves as well as the contractors/market identify the said goods as 'Chassis'. Further, contending that it is not chassis, but frame does not help them since the HSN at chapter 8706 categorically states that "This heading the chassis-frames or the combined chassis-body framework (unibody or monocoque construction, for the motor vehicles headings of headings 8701 to 8705, -----" Thereby, usage of word frame will not make a chassis not to be a chassis.
3.4 With regard to marketability of the chassis, the Revenue argues that there is no doubt that the dumper chassis is very Page 15 of 33 E/22403/2014 much marketable and it is well known in the trade and it is seen that dumper chassis have been sold by M/s. Tata Motors. Though in the instant case there is no sale as held by the Hon'ble Supreme Court in the following cases the actual selling of the very same goods (marketability) was not a criteria for determining excisablity and that capability of being marketed was sufficient to hold that the goods are excisable/dutiable.
• Delhi Cloth and General Mills - 1977(1) ELT J199[S.C.] • Union Carbide India Ltd - 1986(24) ELT 169[S.C.] • Bhor Industries - 1989(40) ELT 280[S.C.] • Hindustan Polymers - 1989(43) ELT 165[S.C.] • A.P. State Electricity Board - 1994(70) ELT 3[S.C.] • Indian Cable Company Ltd. - 1994(74) ELT 22[S.C.] • Triveni Engineering & Industries Ltd - 2000(120) ELT 273[S.C.] • Sonic Electrochem (P) Ltd. - 2002(145) ELT 274[S.C.] • Cadila Laboratories (P) Ltd - 2003(152) ELT 262[S.C.] • Hindustan Zinc Ltd - 2005(181) ELT 170[S.C.] • Dharampal Satyapal - 2005(183) ELT 241[S.C.] • Gujarat Narmada Valley Fertilizer Ltd - 2005(184) ELT 128[S.C.] • Moriroku UT India (P) Ltd - 2008(224) ELT 365[S.C.] • Medley Pharmaceuticals Ltd - 2011(263) ELT 641[S.C.] • Escorts Ltd. - 2015(319) E.L.T. 406[S.C.]
The above decisions of the Hon'ble Supreme Court have been followed acquiescently by various High Courts and Tribunals. Consequently, in consonance of the above decisions, the argument of the appellants that they are not into selling the said dumper chassis and hence not marketable, is liable to be rejected outright and it is aptly to be held that the dumper chassis emerges as intermediate product during the process of manufacture of dumpers and the same is excisable and appropriately classifiable under 87060043.
3.5 Learned AR further claims that the Adjudicating Authority has observed that the notices involved in this Order-in-Original does not rely on any evidences but since the show cause notices have been issued as a sequel to the DGCEI investigations, the facts of the earlier notice are applicable in these notices also. Accordingly, the facts, evidences and also the process of manufacture as submitted by the appellants have been duly Page 16 of 33 E/22403/2014 considered as clear evidences to hold that the chassis with or without engine & cabin emerges as intermediate product. Accordingly, it can be seen that the findings of the Commissioner is based on the evidences available on record and also after analysing the process of manufacture in the proper perspective. In this case, it is apparent the twin tests of manufacture and marketability have been duly examined and found to fully satisfy the said tests as brought out in above paras. Thus, it is obvious that the burden of proof cast on the department to prove the emergence of chassis classifiable under 87060043 has been discharged completely and lawfully.
3.6 The AR further submits that the appellants have referred to the decision of the Chennai, CESTAT dated 07.11.2023 in the case of Komatsu India Ltd (supra) and have stated that the "Hon'ble Tribunal held that there is no emergence of an intermediate product called chassis in the manufacture of dumpers." The said argument is misleading in as much as the Hon'ble Tribunal dealt in detail with regard to the levy of NCCD in the said decision and has found at para 16.6 that "The exigibility to duty of a product cannot merely be based on how the assessee described the product in a document. In case of dispute, the department has to clearly state in the show cause notice the nature, classification and dutiability of the product." and has concluded at para 16.19 that "We make it clear that we do not render any decision on the classification of the impugned goods and confine our finding as to whether the demand of NCCD is sustainable or not." The appellants have submitted that the chapter 8706 covers the chassis of trucks which are used on roads only, which cannot be accepted in as much as the CSH 87060043 specified chassis - "For dumpers covered in the heading 8704". This matter has also been noticed in the case of Tata Motors. In the light of the above averments and facts of the present case, it is very clear that the chassis emerges at the IV stage of the manufacturing process of the Dumpers and the same is rightly classifiable under Chapter 8706 0043.
Page 17 of 33E/22403/2014 3.7 The Revenue argues that the appellants have submitted that the said goods are eligible for exemption under Notification No.67/95-CE dated 16.3.1995 for payment of NCCD also. They have relied on the Order-in-Original dated 31.01.2007 of the Commissioner for the earlier period in their own case which was upheld by the CESTAT reported in 2010(261) ELT 596 [Tri.- Bang.] besides the decision of CESTAT in Tatra Trucks India Ltd.
- 2008(227) ELT 269[Tri.-Chennai], in Toyota Kirloskar Motor Pvt Ltd. - 2007(217) ELT 403[Tri.-Bang] and Final Order No.41003-41005/2023 dated 07.11.2023 in the case of Komatsu India Pvt. Ltd. among others. It is seen that the CESTAT Chennai Bench in the Komatsu India Ltd.'s case has decided and allowed the appeals of the party vide Final Order No. 41003-41005/2023 dated 07.11.2023. While allowing the appeals, the Hon'ble CESTAT has distinguished the decision of the Hon'ble Supreme Court in the case of Unicorn Industries reported in 2019 (370) ELT 3[S.C.]. The Chennai Bench in the said Order had distinguished the Unicorn Industries decision by holding that the Notification involved in the said case was No.71/2003 and that the language in the Notification No.71/2003 is different and it grants only partial exemption to the extent of value addition; that the language used in the Notification No.67/95 is more specific. Further, in the said order, the CESTAT had relied upon the Modern Petrofils which involved Notification No.108/1995-CE dated 28.08.1995 and Circular dated 26.06.2002 which clarified the issue relating to payment of NCCD on goods exported under Bond. When the Bench could not rely on the Hon'ble Supreme Court decision of Unicorn Industries as it dealt Notification No.71/2003-CE, then the Hon'ble Bench should have considered the decisions which dealt Notification No.67/1995-CE itself. However, they have relied on the decisions involving Notification No.108/95 and Export under bond. Though the Department had relied on the Tribunal Decisions in the case of Paras Petro fills Ltd. - 2009 (237) ELT 367 [Tri.-Ahd.] and Superfine Syntex Pvt. Ltd. - 2009 (237) ELT 292 [Tri.-Ahd.], the same has been held per incuriam without any specific reasonings. In view of the Page 18 of 33 E/22403/2014 above distinguishing factors, the said decision dated 07.11.2023 of the Hon'ble CESTAT, Chennai cannot be made applicable in this case.
3.8 On the other hand, on perusal of the decision of the Hon'ble Supreme court in the case of Unicorn Industries, it becomes very clear that the said decision does not limit itself to any specific notification, but it is a general principle pronounced by the Hon'ble Supreme Court in the said matter. Para 40, 41 & 42 of the said decision clearly state that the order contained therein is a principle, that needs to be adopted by all in similar matters. It has been held therein that "The reason employed in SRD Nutrients Private Limited that there was nil excise duty, as such, additional duty cannot be charged, is also equally unacceptable as additional duty can always be determined and merely exemption granted in respect of a particular excise duty, cannot come in the way of determination of yet another duty based thereupon. The proposition urged that simply because one kind of duty is exempted, other kinds of duties automatically fall, cannot be accepted as there is no difficulty in making the computation of additional duties which are payable under NCCD, education cess, secondary and higher education cess. Moreover, statutory notification must cover specifically the duty exempted. When a particular kind of duty is exempted, other types of duty or cess imposed by different legislation for a different purpose cannot be said to have been exempted." It was also held that the decisions of three-judge bench of Supreme Court in Modi Rubber and Rita Textiles Private Limited are binding on them and have respectfully followed the same. In view of the above, it is incumbent on the lower authorities to also follow the same. The Hon'ble Supreme Court in the case of Modi Rubber Limited has observed that "The presumption is that when a notification granting exemption from payment of excise duty is issued by the Central Government under Rule 8(1), the Central Government would have applied its mind to the question whether exemption should be granted and if so, to what extent. And obviously, that can only be with reference to the duty of excise, which is then leviable. The Central Government could not be presumed to have projected its mind into the future and granted exemption in respect of excise duty which may be levied in the future, without considering the nature and extent of such duty and the object and purpose for which such levy may be made and without taking into account the situation which may be prevailing then. It is only when a new duty of excise is levied, whether special duty of excise Page 19 of 33 E/22403/2014 or auxiliary duty of excise or any other kind of duty of excise, that a question could arise whether any particular article should be exempted from payment of such duty of excise and the Central Government would then have to apply its mind to this question and having regard to the nature and extent of such duty of excise and the object and purpose of for which it is levied and the economic situation including supply and demand position then prevailing, decide whether exemption from payment of such excise duty should be granted and if so, to what extent. It would be absurd to suggest that by issuing the notification dated August 1, 1974 the Central Government intended to grant exemption not only in respect of excise duty then prevailing but also in respect of all future duties of excise which may be levied from time to time".
3.9 The Hon'ble Tribunal in the case of Superfine Syntex Pvt. Ltd. - 2009(237) ELT 292[Tri.-Ahmd.] and Paras Petrofils Ltd. - 2009(237) ELT 367[Tri.-Ahmd.] has categorically held that "In the absence of inclusion of NCCD under Notification 67/95 and in view of the similarity between Section 136 and Section 3(3) of both the enactments, we find that the decision of Commissioner (Appeals) has to be upheld." and held that exemption from payment of NCCD for captive consumption under Notification 67/95 is not admissible. All the above cited decisions are squarely applicable in this case. In view of the above decisions of the Tribunal involving the same issue of exemption of NCCD under Notification No.67/95-CE read with the judgements of the Hon'ble Supreme court in the case of Unicorn Industries and Modi Rubber Limited, it becomes abundantly clear that the appellants are not eligible for the exemption of NCCD on chassis that are captively consumed under Notification No.67/95-CE. He has also relied on the following decisions of the Tribunal.
• Baba Asia Ltd. - 2011(267) ELT 115 (Tri.-Del) • Hero Honda Motors Limited - 2011(273) ELT 89 (Tri.- Del.) 3.10 With regard to the arguments of the appellant that if for the purpose of collection, the provisions of the Central Excise Act are applicable, then it should logically be extended to exemption also, the revenue submits that the provisions given in the Section 136 (3) would mean merely borrowing of machinery Page 20 of 33 E/22403/2014 provisions for collection of NCCD and the machinery that is borrowed is the Sections and the Rules, which inter alia gives the power to exempt. The said clause does not provide for borrowing of all the notifications also. By virtue of above clause, the provisions of Section 5A is made applicable to levy and collection of NCCD but the same would not be applicable to all the Notifications issued under Rule 5A for exempting duties of excise. Hence, in view of the fact that Section 136(3) only allows borrowing of the machinery for exemption, the appellant's contention that the same would allow borrowing the notifications already issued cannot be accepted and is liable to be rejected.
4. Heard both sides and perused the available records and the various decisions relied upon by both sides. The issues to be decided are:
a) Whether chassis emerges at the intermediary stage and is captively consumed in the manufacture of Dumpers.
b) Whether NCCD is leviable on these captively consumed chassis or are they exempted vide notification 67/95.
5.1 To understand the present appeal, we need to discuss the background of the entire case from the beginning. In 2007, the Learned Commissioner vide Order dated 31.1.2007 held that the chassis did not come into existence as a separate identifiable commodity and what comes out of the continuous process of manufacture is dumper; that NCCD is also not payable since chassis is exempt under Notification No. 67/95-CE dated 16.3.95. The said order was further upheld by the Hon'ble Tribunal vide Final Order No.1466/2009 dated 8.12.2009. The department did not accept the above decision of the Hon'ble CESTAT and filed an appeal against the same in the Hon'ble High Court of Karnataka under Section 35G of the Central Excise Act, 1944 vide Central Excise Appeal No.58/2010 to decide the question of law as to whether the Hon'ble CESTAT was right in holding that NCCD collected under the provisions of Section 136 of the Finance Act 2001 was eligible for exemption under Page 21 of 33 E/22403/2014 Notification No.67/95-CE dated 16.03.1995 as amended. The Hon'ble High Court of Karnataka vide order dated 15.09.2011 held that the issue raised by the Department did not fall in its jurisdiction under Section 35G of the Central Excise Act, 1944 and the same falls within the jurisdiction of the Apex Court as per Section 35L of the CETA, 1944. The Hon'ble court dismissed the department appeal with the observation that the department had liberty to file appeal before the Hon'ble Supreme Court. Accordingly, the Department filed a Civil Appeal No.5836/2012 along with an application for condonation of delay before the Hon'ble Supreme Court of India. The Civil Appeal was dismissed vide order dated 29.07.2013 on the ground of delay but however, held that the question of law was kept open.
5.2 The learned counsel submits that the issue involved in the present appeal which has culminated from 13 show-cause notices relates to the same issue settled by the above decision of this Hon'ble Tribunal in the appellant's own case reported in CCE, Mysore versus BEML: 2010 (261) ELT 596 (Tri- BANG), wherein the Tribunal had upheld the earlier order of the Commissioner which held that chassis did not come into existence and also held that they are eligible for the benefit of the notification on NCCD which has attained finality at the apex court.
5.3 Let's examine the earlier order to assess the claim of the appellant that the issue is one and the same. The Tribunal Vide Final Order No.1466/2009 dated 8.12.2009 observed as follows:
"8.1 First and foremost we have come to conclusion whether in the process of manufacture of Dumpers, coming into existence of Chassis would be considered as a product coming out of manufacturing process and whether it can be said that the said Chassis was a Drive away Chassis which is marketable. We find that the learned Commissioner has given a detailed finding as regards his conclusion on the manufacture of Dumpers, which we would like to reproduce:Page 22 of 33
E/22403/2014 "The process of manufacture of dumpers and flow chart were studied and the photographs produced by the defence were examined. The parts assembled/mounted during the manufacture of Dumper are detailed below as explained in the Flow Chart for manufacture of Rear Dumper:
Assembly Stage 1: On the main frame, Rear axle assembly, Rear suspension assembly, Hoist cylinder, Brake oil cooler S/A assembly, Engineering & S/A & Assembly, Basic Air System assembly, Frame wire harness assembly, Front suspension assembly are done.
Assembly Stage - 2: Hydraulic tank S/A & assembly, Hydraulic piping assembly, Break oil cooler piping, Air tank S/A & assembly, Front axle assembly, RH & LH Hand rails assembly, LH & RH Render side plate assembly, Skeletal cabin S/U & assembly, RH Floor S/A & assembly are done.
Assembly Stage - 3: Air cleaner, Orbirtrol assembly & piping, steering & tie rod assembly, radiator & piping, Drive shaft, Air system, Radiator S/A & assembly, Hoist cylinder assembly & piping, pump piping, Front & rear brake line are done.
Assembly Stage - 4: Grill assembly, Centre Deck S/U & assembly, Panel board assembly, gear shifter ECU, Tyres, TOE- IN adjust,, Emergency steering system assembly & piping, Gang Lube assembly, Exhaust S/A & piping, Battery box, Fuel tank S/A & assembly & Piping steering system are done.
Assembly Stage - 5: Eng & Trans belly guards assembly, Body assembly, Rock ejector, Mudguards assembly, Pressure set for hoist & steering, Preparation for start, Rear dumper equipment, Assembly trials and quality trials, start and check, Cabin Furnish (Steering column assembly, steering wheel assembly, seat assembly, fan assembly & electrical, air systems, interlinking of controls to engine, transmission Hyd. Eng, suspension oil & gas charging, diesel filling activity is done.
Then it goes for final test, where greasing, decols, intensive testing in two stages are done. Finally, after painting the dumper will be handed over to the shipping department.Page 23 of 33
E/22403/2014 The noticee has strongly disputed the emergence of chassis at stage IV of assembly. The investigation has failed to establish that the steering column was installed at stage IV of the manufacturing process, to qualify the items to be a chassis as defined in terms of the explanation under HSN. It cannot be held that the subject item was a drive away chassis at stage IV of assembly. There is no contrary material to dispute the shop manuals, parts catalogue, charts and processing flow chart as well as the classification declaration filed by the notice. The investigation has failed to establish that there was a steering mechanism and a functional breaking capability at stage IV which could direct its motion, stop it, and allow it to run smoothly over uneven surfaces for qualifying the disputed item to be a chassis. On the contrary, it is fairly established that the process of manufacture of Dumper is a continuous integral process. The assembly of aggregates on a main frame, attachment of other accessories and coupling of steering assembly, installing Body on the frame etc., are all integral and inseparable. Noticee has no intention to manufacture an independent marketable chassis nor do such an item independently emerge.
.........
In view of the above discussion, it is clear that the stage at which the investigation has alleged the emergence of a chassis during the course of manufacture of Dumper is not factually correct and the allegation made against the notice, is not convincing both on merits and in law. The argument of the investigation that the stage at which the said purported item claimed to be chassis emerges does not stand qualified so in terms of the explanation under HSN or as explained in the various judicial decisions relied by the notice. Further, the said item has not been proved to be a chassis as can be understood in the trade. There is no separable stage at which chassis and Dumper independently exist nor a stage at which the chassis which are usable and marketable in trace emerge.
The clarification given by the Mysore Chamber of Commerce & Industry, Mysore, is also relevant in this context.
"In the light of the objectives and comprehensive corporate information, the Trade could recognize the drive away chassis Page 24 of 33 E/22403/2014 where the rear portion left open for fabrication of body according to the wishes of the buyer. In the manufacture of dumper by BEML, the body is mounted on a frame fitted with certain components and thereafter, Steering wheel, Gadgets, Pedals, Belly Guard etc. are fitted making fit for movement as vehicle. Therefore, the frame on which body is mounted is not having characteristics for self-propelling as vehicle on the road. In the liable Parlance, frame off-highway Dumper of capacity of pay load of 3 tonnes and above is not capable of being bought and sold in the market. Market recognizes only finished of- highway Dumper of the above capacity. The Dumper manufactured by BEML are off-highway moving equipment which are built on a frame (no chassis) stage by stage to meet operational requirement as Dumper only. One goes to the market to buy a frame of Dumper of the above capacity, one cannot get it in the market because it is not a commercially known product in the Trade. Therefore, the frame of the Dumper of the above capacity is not having commercial identity known to the market for being bought and sold. The Dumper without body is a semi-finished Dumper having all essential characteristics of Dumper since per se the Dumper without body is not capable of being bought and sold in the market"
In view of the above findings, and the explanation given in the HSN as detailed in Para 88, I hold that no separate excisable goods viz., "chassis" emerge in the process of manufacture of Dumpers by the noticee as alleged by the investigation."
8.2 It can be seen from the above reproduced findings, after the verification and considering the process of manufacture and flow chart, the Adjudicating Authority came to the conclusion that the items which come into existence at a particular stage, i.e. stage 4, cannot be called as Drive away Chassis. He also placed reliance on the clarification given by the Mysore Chamber of Commerce Industry i.e. on the basis of findings available at the time of adjudication, the Adjudicating Authority has held that the Drive away Chassis does not come into existence at the factory premises of the respondents. As against these findings, we find that Revenue has not refuted the same in their entire grounds of appeal. The findings indicated in the above reproduced paragraphs, are not controverted by any evidence, to dislodge the findings of the Adjudicating Authority."
Page 25 of 33E/22403/2014 5.4 The Hon'ble Karnataka High Court Bench on 15-9-2011 dismissed the CEA No. 58 of 2010 filed by Commissioner of Central Excise, Mysore against the CESTAT Final Order No. 1466/2009, dated 26-10-2009 as reported in 2010 (261) E.L.T. 596 (Tri.-Bang.) (Commissioner of Central Excise, Mysore v. Bharath Earth Movers Ltd.). While dismissing the appeal, the High Court passed the following order:
"The substantial question of law that arises for consideration in this appeal is as under:-
Whether the Hon'ble CESTAT is right in holding that National Calamity Contingent Duty (NCCD) levied and collected as per the provisions of Section 136 of the Finance Act, 2001 was eligible for exemption under Notification No. 67/95 Central Excise dated 16-3-1995?
2. Therefore, it is clear that the resolution of the dispute between the parties involves the Notification dated 16-3-
1995. As held by this Court in the case of Commissioner of Central Excise v. M/s. Mangalore Refineries and Petro Chemicals Limited in CEA No. 6/2007 disposed of on 1-9- 2010, the said issue falls within the jurisdiction of the Apex Court under Section 35L of the Act and this Court has no jurisdiction under Section 35G to go into the said question. Hence, the appeal is dismissed reserving liberty to the appellant to prefer an appeal before the Supreme Court.
Registry is directed to return the certified copies of the order of the Tribunal and other documents, if any, to the appellant."
5.5 The Hon'ble Supreme Court Bench on 29-7-2013 dismissed the Civil Appeal No. 5836 of 2012 filed by Commissioner of Central Excise, Mysore against the CESTAT Final Order No. 1466/2009, dated 26-10-2009 as reported in 2010 (261) E.L.T. 596 (Tri.-Bang.) (Commissioner v. Bharat Earth Movers Ltd.). While dismissing the appeal, the Supreme Court passed the following order :
"We have heard Mr. Mukul Gupta, learned senior counsel for the appellant. Civil Appeal is dismissed on the ground of delay. Question of law is kept open."Page 26 of 33
E/22403/2014 5.6 In the above order the issues are twofold:
a) Whether Chassis fitted with engine falling under Chapter Heading 8706 0043 emerged during the course of manufacture of the Dumpers and was consumed captively in further manufacture of dumpers.
b) NCCD which is specified under seventh schedule to the Finance act 2001 does not find mention in notification number 67/1995 CE dated 16.03.1995 and is not eligible for the exemption under the said notification.
5.7 The first issue is question of fact and the second issue is question of law. Question of fact as to whether chassis emerged as an intermediate product and was captively consumed in the manufacture of dumpers was decided by this Tribunal vide Final Order No.1466/2009 dated 26.10.2009 in favour of the appellant concluding that drive away Chassis did not come into existence at the intermediary stage. This order was appealed against which was not entertained by the Hon'ble High Court on the issue of jurisdiction and liberty was given to the revenue to file before the Supreme Court and the Supreme Court dismissed on delay keeping the question of law open. The Supreme Court of India in the case of Union of India Versus Kirloskar Oil Engines Ltd.2001 (127) E.L.T. 322 (S.C.) decided on 20-7-2000 observed that:
"Two questions which arise for consideration in this appeal are whether aluminium strips which is an intermediate product during the course of the manufacture by the respondent is a marketable commodity or not and secondly whether the principle of unjust enrichment would apply to the present case.
2. The question as to whether the intermediate product is a marketable commodity or not is essentially a question of fact. The judgment under appeal arises from a writ petition having been filed by the respondents wherein the main contention raised was with regard to the vires of Rule 9 of the Central Excise Rules. That point was not Page 27 of 33 E/22403/2014 gone into, the vires being ultimately upheld by this court and the writ petition was allowed with the High Court coming to the conclusion that the intermediate product was not a marketable commodity."
Therefore, the question whether Chassis emerged as an intermediary product or not being a question of fact stands settled and the Revenue cannot reopen the issue unless any new facts or change in laws/facts have emerged.
5.8 The Revenue in the earlier show-cause notices after detailed investigation by the DGCEI alleged emergence of the chassis at the intermediate stage on the basis of 2 documents; one is the tender document, where a tender was awarded for painting a chassis and the other document was the sample auction sale notice of Steel Authority of India Limited wherein in the Auction Notice under description column 'Dumper No. 62 Model 1150 BEML' make consisting of chassis was mentioned. As already explained by the Counsel, this was clarified by the Steel Authority of India vide their letter dated 12.9.2006 to BEML stating that these dumpers consist of various uses and unserviceable components like main frame (referred as chassis in the auction catalogue) body hoist (referred as dallah in auction catalogue), air tank etcetera and as such accordingly described in the action catalogue.
5.9 The Commissioner in the earlier Order-in-Original No.2/2007 referring to the HSN Notes observed that "this heading covers the chassis frames or the combined chassis body frame work, for the motor vehicle of heading 8701 to 8705 fitted with their engines and with their transmission and steering gear and axles (with or without wheels) that is to say goods of this heading or motor vehicles without bodies. The explanation emphasises the necessity of a steering mechanism for qualifying to be called chassis. The noticee has brought out very elaborately in their reply to the notice and written submissions that such steering mechanism is coming into existence only at Page 28 of 33 E/22403/2014 the final stage at which stage the fully finished dumpers also come into existence. Their claim is backed with flow chart, technical opinions, affidavits, shop manual, part catalogue, photographs etc; No attempt has been made by the investigation to drive home the point that chassis as defined in HSN undisputedly emerges. In the absence of any technical expert opinion of any other independent evidence to controvert the deposition of the technical personnel of the notices the latter has to be given the weightage."
5.10 The arguments of the Revenue today are on two grounds. First, the question of law has been kept open and second, the amendment brought by introducing Note 3 to Chapter 87. We have already held that whether Chassis comes into existence at the intermediary stage is only a question of fact. Now to examine the other issue with regard to the amendment, let's examine the present show-cause notices. The present notices read:
"M/s. Bharat earth movers limited Mysore complex Belavadi post Mysore 570018 (BEML for short) are holders of Central Excise registration certificate No. AAACB8433DXM002 and are engaged in the manufacture and clearance of 'dumpers' under chapter heading number 87060043 IB ID. During the course of manufacturing of dumpers, "chassis fitted with engine"
Classifiable under Chapter Heading No.87060043 comes into existence and such "chassis fitted with engine" are being captively consumed in the manufacture of dumpers."
5.11 The above notice nowhere alleges that the amendment brought about by Note 3 to Chapter 87 but reiterates the issues dealt in the earlier notices. The Commissioner at para 17 of the impugned order says "on perusal of the present show cause notices it is seen that the same do not rely on any evidences to allege that chassis were manufactured Page 29 of 33 E/22403/2014 by the assessee. However, since the show cause notices have been issued as a sequel to the case investigated by the DGCEI it is to be construed that the facts of that case are applicable to the present notices also." These facts are also reiterated by the Authorised Representative on behalf of the Revenue while arguing the case before us goes to prove that there is nothing new brought on record when compared to the earlier notice which has already been set aside.
5.12 At para 24 of the impugned order, the Commissioner states "it is relevant to consider the amendment made to Chapter Note 3 of Chapter 87 with effect from 07.03.2005 vide Notification No.14/2005 dated 07.03.2005 to replace the Note which reads as 'motor chassis fitted with cabs fall in headings 8702 to 8704, and not in heading 8706, with the note which reads as heading 8706 shall include chassis weather or not fitted with cab'. The period covered by the show-cause notice, which has been decided vide Order-in-Original No. 2/2007 was from 01.03.2003 to 31.01.2006. Hence major period covered by the case already decided by the Commissioner and CESTAT was prior to the above amendment. In the case of assembly of dumpers by the assessee, the cabin is fitted in the 2nd stage of assembly itself and therefore, prior to 07.03.2005 the same could not have been classified as chassis, as per the said Chapter Note. However, during the subsequent period, which is the period covered by the present show-cause notices, chassis whether or not fitted with the cabin is classifiable as chassis. Thereby, there is a change in position of law in the cases being decided now when it is compared to the case already decided by Hon'ble CESTAT in favour of the assessee and the said amendment also nullifies the argument that the dumper without dump body should be considered as a semi-finished dumper ."
5.13 The only question remains is whether Note 3 to Chapter 87 with effect from 07.03.2005 which replaces "Motor Chassis fitted with cabs fall under Heading 8702 to 8704, and Page 30 of 33 E/22403/2014 not under Heading 8706" with "8706 shall include Chassis whether or not fitted with a cab" will destroy the entire findings of the Hon'ble Tribunal. First of all, the above observations are beyond the scope of the notice as the notice remains factually same and relies on the same documents that were relied upon previously. There is no whisper of Chapter Note 3 in any of these notices and no new facts have been brought out to show that in view of these changes, the chassis comes into existence even though it is not culminated into a drive away chassis. Secondly, the change in the Chapter Note, whether or not fitted with a cab will not make any change in the decision rendered earlier because the criteria based on HSN was whether it is a drive away chassis. From the Chapter Heading and the HSN Notes reproduced below, it is clear Chassis fitted with engines and with their transmission and steering gear and axles fall under Chapter 8706. The Commissioner at para 88/88.1 states "this heading covers the Chassis frames or the combined to Chassis body frame work for the motor vehicles of headings 8701 to 8705 fitted with their engines and with their transmission and steering gear and axis (with or without wheels). That is to say goods of this heading are motor vehicles without bodies. The above explanation to emphasise the necessity of steering mechanism for qualifying to be called Chassis. The noticee has brought out very elaborately in their reply to show cause notice and written submissions narrated in earlier paras that such steering mechanism is coming into existence only at the final stage, at which stage the fully finished dumpers also come into existence. Their claim is packed with flowchart, technical opinions, affidavits, shop manual, part catalogue, photographs etc;" These facts have not changed and even during the relevant period in the present case, the definition of Chassis remains the same and there is nothing new on record brought about to dispute the above facts.
8706 Chassis Fitted with Engines, for the Motor Vehicles of headings 8701 TO 8705 8706 00 11 ---- Of engine capacity not exceeding 1,800 cc 8706 00 19 ---- Other Page 31 of 33 E/22403/2014
--- For the vehicles of heading 8702:
8706 00 21 ---- For transport of not more than thirteen persons, including the driver 8706 00 29 ---- Other
--- For the motor vehicles of heading 8703:
8706 00 31 ---- For three-wheeled vehicles 8706 00 39 ---- Other
--- For the motor vehicles of heading 8704:
8706 00 41 ---- For three-wheeled motor vehicles 8706 00 42 ---- For vehicles, other than petrol driven 8706 00 43 ---- For dumpers covered in the heading 8704 8706 00 49 ---- Other 8706 00 50 --- For the motor vehicles of heading 8705 87.06 87.06 - Chassis fitted with engines, for the motor vehicles of heading 87.01 to 87.05 This heading covers the chassis-frames or the combined chassis-body framework (unibody or monocoque construction), for the motor vehicles of heading 87.01 to 87.05, fitted with their engines and with their transmission and steering gear and axles (with or without wheels). That is to say, goods of this heading are motor vehicles without bodies.
The chassis classified in this heading may, however, be fitted with bonnets (hoods), windscreens (windshields), mudguards, running-boards and dashboards (whether or not equipped with instruments). Chassis also remain classified here whether or not fitted with tyres, carburettors or batteries or other electrical equipment. However, if the article is a complete or substantially complete tractor or other vehicle it is not covered by this heading.
(a) Chassis fitted with engines and cabs, whether or not the cab is complete (e.g., without seat) (headings 87.02 to 87.04) (see Note 3 to this Chapter).
(b) Chassis not fitted with engines, whether or not equipped with various mechanical parts (heading 87.08).
5.14 In fact, at para 15 of the earlier order, one of the allegations of the Revenue was that "as per note 4 to chapter 87, heading 8706 shall include chassis whether or not fitted with a cab. The dumper consists of two parts viz (1) Chassis and (2) the dump body," and further explains as to how the chassis has come into existence at Stage IV of the manufacturing process. This allegation of the Revenue was set aside by the Commissioner and upheld by the Tribunal. In view of the above, there is nothing new in the present show-cause notices nor in the impugned order to be decided afresh since all these factors Page 32 of 33 E/22403/2014 have been already considered and the decision has been rendered in favour of the appellant. As seen from the Chapter Headings and the HSN Notes, nothing has changed and therefore, the orders discussed above in the appellant's own case has attained finality. Accordingly, following the above decisions, we are also of the view that the 'Chassis' does not come into existence at the intermediary stage and therefore, the question of dutiability does not arise.
5.16 With regard to NCCD, since we have held that the Chassis does not come into existence at the intermediary stage and therefore, the question of captive consumption does not arise, consequently, the question whether exemption is available to NCCD under Notification No.67/95 becomes only academic and not delved into.
6. In view of the above, the impugned order is set aside and the appeal is allowed.
(Order pronounced in Open Court on 03.05.2024.) (D.M. MISRA) MEMBER (JUDICIAL) (R. BHAGYA DEVI) MEMBER (TECHNICAL) rv Page 33 of 33