Customs, Excise and Gold Tribunal - Delhi
Betul Tyre And Tube (I) Ltd. vs Commissioner Of Central Excise on 5 February, 2004
Equivalent citations: 2004(94)ECC411
ORDER V.K. Agrawal, Member (T)
1. In these three appeals, filed by M/s. Betul Tyre and Tube (I) Ltd. and others, the issue involved is whether the tyres manufactured by them are meant for light commercial vehicle (LCV in short) or for tractor front and trailer, as claimed by them.
2. Shri A.R. Madhav Rao, ld. Advocate, mentioned that the Appellants Company manufacture pneumatic tyres for two wheeled, three wheeled and four wheeled motor vehicles; they also manufacture tyres for saloon cars and for tractor front and for trailer apart from tyres for animal driven vehicles and for power tillers; that they were availing the benefit of Notification No. 41/89 dated 1.3.89 wherein the rate of duty to be paid on a tractor front tyre was Rs. 150 and duty to be paid on a tractor trailer tyre of size 7.50 x 16 was Rs. 280%; that they, being small scale industry were paying 50% of the duty leviable on the types in terms of Notification No. 231/85-C.E., dated 11.11.85; that in the sale pattern followed by them they were effecting clearances of tyres from their factory to their depots located at Bhopal, Indore, Nagpur, etc. where the tyres were sold to the various dealers who in turn sold the same to the consumers or end users. He also mentioned that to facilitate the identification of the tyres, they were indicating on the tyres, they were indicating on the tyres the nature of the tyre, i.e. whether the type was a tractor front tyre or tractor trailer tyre; that for this reason, the invoices raised for sale of tyres did not have indication in many cases as to whether the tyres were tractor front tyre or tractor trailer tyres; that the tractor front tyres were of the size 6.00 x 16 and trailer tyres were of the size 7.50 x 16.
2.2. He submitted that a show cause notice dated 29.12.97 was issued to them for demanding duty and imposing penalty on the ground that LCV tyres and Jeep tyre were cleared by them in the guise of tractor trailer tyres and tractor front tyres respectively which had resulted in short payment of levy; that the notice referred to ISI standard 13154: 1991 for tractor trailer tyres and standard 10914 : 1992 for LCV Tyres to allege that LCV tyres are made for operating at higher speeds and the Ply Rating (PR) of the LCV Tyres is also higher than the, Tractor Trailer Tyres; that as per these specifications, the LCV Tyres have PR between 12 to 16 and the tractor trailer tyres have PR between 8 to 10; that since they had cleared tyres of PR of 14 and 16, the same were only LCV Tyres and not trailer tyres; that statement of the various sales officers had also been relied to show that tyres marked as tractor trailer tyres had been sold for LCVs such as Tata 407, Eicher, DCM Toyota; that the documents relating to sale of tyres to Best had been relied to infer that the tyres had been cleared as "Tractor Trailer Tyres which had been used by BEST in Tata 407 and Swaraj Mazda; that in the price list effective from 15.1.96, tyres of size 6.00 x 16 of Patterns T-51, T-309 and T-409 known as Tractor Front Tyre and Patterns LG, AVG, TSL-2 known as Jeep tyres had been shown under one Heading Tractor Front Tyres only; that the Commissioner, under the impugned Order, had confirmed the demand and imposed penalty on all the three Appellants.
3.1 The learned Advocate submitted that on the basis of their price circulars, M/s. BEST had raised a purchase order after which they had submitted a proforma invoice which categorically showed that the tyre size which was intended to be sold was tractor trailer tyre; that the commercial invoices 105 and 106 dated 30.10.95 as well as the invoice under which they had cleared the said tyres would show them as Tractor trailer tyres; that M/s. Best did not object it to the matter concerned in the proforma invoice; that consequently the reliance placed by the Commissioner that the tyres were used other than tractor trailer tyres would not go against them.
3.2 With regard to sale from their Bhopal Depot, the learned Advocate mentioned that tractor trailer tyres were cleared from their factory to Bhopal Depot; that the person in charge of Bhopal Depot, due to lack of knowledge, wrote the size of tyre as 750 x 16; that this does not mean that they had not sold any tractor trailer tyres from Bhopal Depot; that they had filed affidavits of some of the dealers to the effect that what had been sold by the dealers were only tractor front tyre and what had been used by the consumers were only tractor front tyres only; that Shri Tejender Singh, in his statement, had clearly stated that he had not marketed any tyre for any LCV namely Tata 407, Swaraj Majda, DCM Toyota, etc.; that Shri Abhay Kumar Tiwari had also deposed to this effect; that Shri Tiwari had further mentioned though the use of such tyres is possible for LCV, proper service could not be obtained because such tyres were made for tractor front and tractor trailers only. He also mentioned that the Appellants had specifically requested for cross examination of Shri Nazir of Fakri Auto which had not been allowed to them; that, therefore, the statement of Nazir Ali to the effect that he had received 10 tyres of size 6-60 for jeep only cannot be relied upon; that the Appellants had produced a bill from one of the customers and an affidavit from the customer to support their contention that these tyres had been fitted as tractor front tyres only. He also emphasised that the Appellants sold to every buyer only tractor front tyres and if after purchase, the customers use the same for some other application other than what it is meant for, they cannot be accused of having sold a tyre which had been fitted in a jeep. He also referred to a letter dated 5.6.98 from Supreme Traders, Bhopal wherein it is mentioned that they were selling Appellant's tyres -- tractor front tyres and tractor trailer tyres and "in case the tyres are being used in any other vehicles except tractor and tractor trailers the claim should not be entertained." The learned Advocate relied upon the decision in the case of Kedia Agglomerated Marbles Ltd. v. CCE, 2003 (85) ECC 485 (SC) : 2003 (54) RLT 363 (SC) wherein the Supreme Court observed, when the Appellants had produced technical information on the manufacturing process and affidavits of persons in trade to demonstrate that the product is commercially known as marble Mosaic Tiles and the Department did not produce any material or evidence in rebuttal, that the evidence and material produced by the Appellant could not be ignored and matter cannot be decided "only on the basis of the trade name given by the Appellant to its products."
4. The learned Advocate also submitted that the specifications provided in the ISI cannot be taken as a Bench mark as they do not manufacture tyres in accordance with ISI specifications and with the ISI mark; that they manufacture tyres in terms of ITTAC specifications, which is also an Apex body and has an equal force in determining the nature of the tyres; that moreover, a comparison of the specifications provided by the ISI and the ITTAC indicates that the tyres of PR 8 to 14 can be used in both the LCVs as well as in tractor trailers; that thus the mere fact that the ISI specifications does not indicate the PR for a tractor trailers beyond 10 cannot be a conclusive proof to infer that any tyre having a PR of more than 10 has to be a LCV tyre only; that the Supreme Court in Vikrant Tyres Ltd. v. CCE, Madras, 2000 (115) ELT 26 (SC) has held that if the tyres are capable of use on the road, they would be classifiable under Item 16(1)(b) of the Old Central Excise Tariff and not under Item 16 (III) relating the tyres for vehicles or equipment designed for use off the road. He submitted that the issue is no longer res-integra in view of the Final Order No. C/1/3513-14 dated 6.10.2000 in the case of Balkrishna Industries v. CCE Auranagabad, 2000 (72) ECC 635: Final Order CI/3513-4/WZB/2000 dated 6.10.2000- that the Commissioner has distinguished the said decision on the ground that the Tyres Report submitted by the Appellants herein did not indicate tensile strength, skid depth and nature of valve at all; that the Appellants had never produced any test report for the tyres; that they had only produced dockets; that the Appellant did have designs for various tyres including jeeps, bus, however, they had not cleared any jeep tyre during the period; that mere possession of a design or scheme of a jeep tyres cannot lead to an inference that they had manufactured any jeep tyres and effected clearance thereof; that the inference drawn by the Commissioner that final combines in the dockets did not carry any date is also not correct as the stock combine code and final combine code are on a same sheet of paper reverse to each other; that consequently no date is mentioned on the final code combine; that the Tribunal has followed the decision in Balakrishna Industries case in the matter of CCE, Cochin v. Apollo Tyres Ltd., Final Order No, 155/2003-NB(A) dated 21.3.2003.
He finally submitted that as the Appellant company have not contravened any of the provisions of Rule 173 Q or Rule 198 of the Central Excise Rules, 1944 no penalty is imposable on them; that the penalty imposed under Rule 209A on other two Appellants is also not sustainable as they had no personal knowledge or belief that the goods were liable to confiscation; that neither the show cause notice nor the impugned Order had indicated or pointed out any role played by them personally and with knowledge that any excisable goods were liable for confiscation; that in the absence of any such evidence, penal provisions under Rule 209 A are not at all attracted.
5.1 Countering the arguments Shri R.C. Sankhla, learned Senior Departmental Representative, submitted that sub-Heading 4011.50 of the Tariff onwards, the words "used" has been mentioned which signifies that the tyres for being classified should be "used" in the specific motor vehicles; that relevant sub-Headings read as under: "4011.60 -- Of kind used on tractors, including agricultural tractors 4011.70 -- Of a kind used on trailers."
5.2 He contended that if the tyres are to be classified under these two sub-Headings of the Tariff, the tyres should be of a kind used on tractors of trailers; that BEST had specifically placed order for Tata 407 and Swaraj Mazda and the commercial invoices Nos. 105 and 106 both dated 30.10.95 gave the description as in the purchase Order; that rib pattern mentioned in Best Purchased Order and Proforma Invoice is found on tyres meant for LCV only; that Chief Material Manager of BEST, in his letter dated 12.5.97 addressed to Senior Intelligence Officer, Directorate General of Anti-Evasion, had clearly mentioned that they "had used this item for Tata 407 and Swaraj Mazda"; that it is thus evident that the Appellants had taken a positive action of removing the tyres meant for LCV in the disguise of tractor front tyre.
6. Regarding sale of 10 tyres of size 6.00 x 16 to M/s. Fakri Auto Parts, the learned Senior Departmental Representative referred to the statement dated 8.5.97 of Shri Nazir Ali in which he had deposed that these tyres were sold for fitment in jeep and that 6000-16 tyre so procured by them are sold for Jeep only; that the Appellants had not advanced any reason for cross examining Nazir AH. Regarding various affidavits produced by the Appellants, the learned Senior Departmental Representative contended that the affidavits had been given without verification; that these affidavits have been cyclosryled and are self-serving affidavits given by their own employees; that no agreement has been brought on record to show that the dealership would be cancelled if the tyre is used for any purpose other than for tractor front and tractor trailer; that similarly the letter dated 5.6.98 of the Supreme Traders is self-serving letter which has been written after the search and issue of show cause notice. He, therefore, contended that these affidavits and letters do not prove any thing. The learned Senior Departmental Representative also mentioned that the Appellants in their reply to the show cause notice mentioned that they are not maintaining accounts at Bhopal Depot and that in many invoices there was no indication of tyres being tractor front tyre or tractor trailer tyre; that now in their Memorandum of Appeal, their plea is that the person in charge of the Bhopal Depot had written the size of the tyres as 750 X 16 due to lack of knowledge. Finally the learned Senior Departmental Representative submitted that burden of proof that tyres are tractor front tyre or tractor trailer tyre is on the Appellants as they want to avail the benefit of exemption Notification. The learned Advocate mentioned in re-joinder that barring the Purchase Order of BEST, the Revenue has no other evidence to show that the tyres were not tractor front tyres or tractor trailer tyres.
7. We have considered the submissions of both the sides. The issue involved in these appeals is whether the Appellants are manufacturing tractor front tyres and tractor trailer tyres or whether they are manufacturing tyres meant for light commercial vehicles and jeeps and clearing them in the disguise of tractor front tyre/trailer tyre. In our view the issue has to be examined from the angle as to whether generally the tyre as manufactured by the Appellants are being manufactured in the Tyre Industry for being used as tractor front tyres and tractor trailer tyres or the Appellants are manufacturing these tyres with the intention of being used only for LCVs and Jeeps. Certainly if the, tyres are meant for Tractor Front and tractor trailers and the customers use them for LCVs and Jeep, then Appellants cannot be held liable for the same. However, if the tyres are made specifically according to the shape, size, strength, ply etc. which is more for LCV tyres/jeep tyres, the tyres are to be classified as LCV/Jeep Tyres and not tyres meant for tractor front and tractor trailer. We find that the various specifications provided in ISI Specifications and/or ITTAC Specifications have to be looked into and the views of the experts in the field are to the obtained. None of the parties to these appeals have brought on record these specifications and the expert opinion at all. In absence of such material, the issue, which is a technical one, cannot be decided only on the basis of statements and affidavits. We also find force in the submissions of the learned Advocate for the Appellants that the Adjudicating Authority should have allowed the cross examination of Nazir Ali of Fakri Auto. We, therefore find it necessary to remand the matter to the Jurisdictional Adjudicating Authority for a fresh Adjudication after considering the matter as per directions contained in the Order, after referring to Specifications provided in IS Specifications and ITTAC Specifications and obtaining expert opinion and after allowing the cross examination of Nazir Ali. Both the sides are also at liberty to adduce any technical material in support of their respective contentions within two months of receipt of this Order. All these Appeals are thus allowed by way of remand.