Customs, Excise and Gold Tribunal - Delhi
Krishna Fabricators P. Ltd. vs Collector Of C. Excise on 30 April, 1993
Equivalent citations: 1993ECR660(TRI.-DELHI), 1994(69)ELT729(TRI-DEL)
ORDER Lajja Ram, Member (T)
1. This is an appeal filed by M/s. Krishna Fabricators Private Ltd., Bangalore, (hereinafter referred to as "the appellant" or the "party"), against the Order-in-Original No. 5/91, dated 8-2-1991, passed by the Collector of Central Excise, Bangalore.
2. The allegation against the appellant was that during the period 1-9-1985 to 12-6-1988, they had manufactured steel seats for earth-moving equipment and tractors, and removed them without payment of duty, claiming exemption under Notification No. 91/68-C.E., dated 30-4-1968 and Notification No. 61/86-C.E., dated 10-2-1986, declaring them to be seats designed for use in automobiles, as per their declaration in their Classification Lists.
3. The appellant had pleaded that the seats manufactured by them were designed for use in automobiles, irrespective of end-use, or the type of the automobile in which ultimately the same were used by the customers. The design of the steel seats was the same, whether it was used in tractors, earthmovers, trucks, jeeps or vans. Seats could be used in any of these vehicles, without any alteration, and without any difficulty.
4. They referred to the Order-in-Original No. 66/84, dated 28-11-1984, passed by the Assistant Collector, Central Excise, Faridabad, in the case of R.R. Industries, Faridabad, wherein, it was held that the delux seats manufactured for Ford tractors were eligible for the benefit of exemption under Notification No. 91/68-C.E., dated 30-4-1968.
5. They also challenged the demand on the point of limitation, and stated that in no case the extended period of limitation could be invoked.
6. It was stated that in the Classification List No. 3/85, dated 6-5-1985, they had mentioned that the driver-operator seats designed for use in automobiles, including tractors and dumpers, were exempted under the then Tariff Item No. 40, in view of the Notification No. 91/68-C.E., dated 30-4-1968.
7. The Collector, Central Excise, Bangalore, while adjudicating the notice to show cause dated 4-9-1990, did not agree with the contention of the party that 'automobiles' included 'earth-moving equipment' and 'tractors', for the reason that in the Industries (Development and Regulation) Act, 1951, there was a definite distinction made between tractors, earth-moving machinery on the one hand; and motor cars, trucks, buses, jeep vehicles, vans, scooters, motor-cycles and mopeds, specified under the head "transportation"; on the other hand, tractors, harvesters and the like machinery had been specified under the heading "agricultural machinery". Bulldozers, dumpers, scrapers, showels, loaders etc., were specified, under the Heading "earth-moving machinery". Automobiles (motor cars, buses, trucks, motor-cycles, scooters and the like) were specified under Heading "transportation". He observed that the automobiles were meant for transportation of men and material, while tractors were for use in agriculture, and the bulldozers etc., were considered as earth-moving equipment. He added that the automobiles could not be equated with agricultural machinery or earth-moving equipment, and that all the above three goods - (1) transportation, (2) agricultural machinery and (3) the earthmoving machinery, were distinct in their characteristics and usages, and accordingly classified separately. He also added that automobile cess collected under Automobiles Cess Rules, 1984, was confined to the 'automobiles' specified under the Heading 'transportation' only, and that tractors and earthmoving equipment like dumpers and bulldozers etc., did not fall under the category of 'automobiles'.
8. He held that steel seats for use in tractors and earth-moving machinery were not eligible for exemption under Notification No. 91/68-C.E. and Notification No. 61/86-C.E. He observed in his order-in-original dated 8-2-1991 that earth-moving machinery and tractors were not automobiles, and that the steel seats designed for use exclusively in automobiles alone were eligible for exemption.
9. In appeal, the appellants have pleaded that the steel seats manufactured by them were designed for use in automobiles but due to their adaptability and versatility, they could be put to use in earth-moving equipment also, and even if the seats designed for use in automobiles are used elsewhere like earth-moving equipment etc., it would not be fatal for enjoying the benefit of the Notification. They referred to the exemption Notification No. 81/68-C.E. and 61/86-C.E., where the expression used is "designed for use in automobiles", and submitted that their steel seats were designed for use in automobiles. The Notifications could not be interpreted in such a way that the seats should have been designed for use only and exclusively in the automobiles.
10. They also pleaded that in any case placing reliance on the definition given in the Automobiles Cess Rules to interpret the Notifications under the Central Excise Law was incorrect and unsustainable.
11. It was also stated that they were availing the benefit of Notification No. 91/68-C.E., dated 30-4-1968, and thereafter under the successor Notification No. 61/86-C.E., dated 10-2-1986. Classification List filed as late as on 1-3-1988 was duly approved by the Assistant Collector who communicated his approval to the appellants on 6-4-1988. In other words, till 6-4-1988, the Department being fully aware of the activities of the appellants considered that they were entitled for exemption under Notification No. 91/68-C.E., and later under Notification No. 61/86, for the seats designed for use in automobiles, manufactured and cleared by them.
12. They also referred that in any case since all their customers were O.E. manufacturers, they were entitled for MODVAT credit, and there could, therefore, be no intention on their part to evade payment of duty.
13. The case was heard on 11-2-1993 when Shri V. Lakshmikumaran, Advocate appeared for the appellant. Shri S.K. Sharma, Junior Departmental Representative represented the respondent.
14. Shri V. Lakshmikumaran, the learned Advocate submitted that the steel seats manufactured by the appellants have enjoyed exemption under various exemption notifications, and even now they were eligible for exemption under Notification No. 80/90-C.E., dated 20th March 1990. He referred to the description of their products as given on pages 14 to 18 of the paper book, and as given in the Classification List at page 20 of the paper book, and pleaded that full details of the goods manufactured by them had been submitted to the Department. In identical facts and circumstances, the Assistant Collector, Central Excise, Faridabad had decided that the steel seats were eligible for exemption.
15. It was mentioned that the classification of the goods was not in dispute, and that the dispute was only about the eligibility for exemption.
16. He stated that the expression "designed for use" was different from the expression "actual use".
17. Shri S.K. Sharma, the learned JDR referred to the Classification List, and stated that it was not mentioned in the Classification List that the seats were for tractors and earth-movers. In the correspondence also, there was no mention of tractors and earth-movers. He referred to the Automobile Cess Rules, and submitted that tractors and earth-moving equipments were not included within the expression "automobile".
18. In reply, Shri Lakshmikumaran, learned Advocate stated that the definition as given in the Automobile Cess Rules could not be applied for the purposes of interpreting exemption Notification in the Central Excise Tariff. He referred to the letter, dated 4-6-1980 wherein, it had been stated by them that their steel seats manufactured have been designed for use in automobiles, but because of their adaptability and versatile use, the same steel seats designed for use in trucks, buses, vans and cars, could also be used in earth-moving equipment etc.
19. He relied on the following decisions in support of his arguments :
(a) AIR 1975 (S.C.) 17
(b) 1985 (19) E.L.T. 15 (S.C.)
(c) 1987 (32) E.L.T. 3 (S.C.)
(d) 1990 (45) E.L.T. 285 (Tribunal) - About limitation
(e) 1991 (51) E.L.T. 151 (Tribunal) - About limitation.
20. We have considered the arguments made on both the sides.
21. The main point for our consideration is whether the expression "automobiles", as occurring in the exemption Notifications 91/68-C.E. and 61/86-C.E., would include 'tractors' and 'earth-moving equipment'.
22. Under Notification No. 91/68-C.E., dated 30-4-1968, steel seats and chairs, falling under the then Item No. 40 of the erstwhile Central Excise Tariff, and designed for use in automobiles, railway carriages and air-crafts, were exempted from the duty of excise leviable thereon.
23. Under Notification No. 61/86-C.E., dated 10-2-1986 (as amended), steel seats and chairs, made partly or wholly of steel, falling under Heading No. 94.01,94.02 or 94.03 of the Schedule to the Central Excise Tariff Act, 1985, if designed for use in automobiles, railway carriages and air-crafts, were exempted from the duty of excise leviable thereon.
24. Item No. 40 of the erstwhile Central Excise Tariff covered "steel furniture" made partly or wholly of steel, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power, whether in assembled or unassembled condition, and parts of such steel furniture (but excluding slotted angles and channels, made of steel).
25. Under Heading Nos. 94.01, 94.02 and 94.03 of the Schedule to the Central Excise Tariff Act, 1985, various types of seats and chairs, hospital furniture etc., are covered.
26. The appellants were manufacturing steel seats of three models identified by them as under :
(i) Model 2 Vg : Suitable for trucks, buses, earth-moving equipment, jeeps, vans and cars.
(ii) Model 3 Eg : Suitable for trucks, buses, earth-moving equipment, vans, cars.
(iii) Model 4 Tg : Suitable for tractors, combine harvestors, forklift trucks, vans, jeeps.
27. All the three models were suitable for trucks and vans.
28. Model 2 Vg and 3 Eg were both suitable for trucks, buses, earthmoving equipment, vans and cars. Model 2 Vg and Model 4 Tg were both suitable for jeeps and vans.
29. Thus, the suitability of all the models was common for different uses.
30. In this connection, reference may be made to the letter, dated 4-6-1980 of the manufacturer, wherein, it was stated that because of their adaptability and versatile use, their steel seats designed for use in trucks, buses, vans and cars, are also used in earth-moving equipment
31. 'Tractor' is a motorised vehicle. It runs on tyres. They can only be driven by persons holding a valid licence. They are suitable for use on roads. If need be, they could be, and are often engaged in the transport of goods.
32. Under the Motor Vehicles Act, 1988 [Section 2(44)] Tractor is a motor vehicle.
33. Although under Item No. 34, 'tractors' were given a separate subitem No., both motor-vehicle and tractors were covered under Item No. 34 of the Central Excise Tariff.
34. For the purposes of Chapter 87 as per Note 2, 'tractor' 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.
35. As regards dumpers, in the revised Classification List No. 3/85 with effect from 6-5-1985, driver operator seats designed for use in automobiles including trucks and dumpers exempted under Tariff Item No. 40 were shown under Column 5 of the List which covered particulars of 'other goods'.
36. Under Notification No. 162/86-C.E., dated 1-3-1986, dumpers were classifiable under Heading No. 87.04 which covers motor-vehicles for the transport of goods.
37. In the case of Ashok Leyland Ltd. v. Union of India [1991 (52) E.L.T. 32 (Mad.)], the Madras High Court with regard to 'dumpers' had observed as under:
"Tariff Item No. 34 deals with 'motor vehicles' and the term 'motor vehicle' is described as meaning a mechanically propelled vehicle adopted for use upon roads. Therefore, merely because the equipment in this case viz beaver rear dumper is capable of being put on the road and is also capable of carrying loads over long distances, it does not cease to be an equipment coining within the definition of a 'motor vehicle'.
37.1 The High Court had added that "this mechanism is intended to move materials from one place to another and to dump them in a chosen site. Such a specialised material handling equipment is similar to earth-moving machineries and, therefore, this vehicle as a whole would come within the definition of a 'motor vehicle'."
38. The expression 'automobile' has a wider connotation - one which runs by its own motor - internal combustion engine.
39. Motor vehicle has been defined as a motor driven vehicle for use on roads and highways.
40. In both the exemption Notifications No. 91 /68-C.E. and No. 61 /86-C.E., the expression "automobiles" has been used along with the "railway carriages" and the "air-crafts". 'Railway carriages' move on fixed rails, and the 'aircrafts' fly in the air and run on the runways. Taken all the three-automobiles, railway carriages and aircrafts - together, they cover a very wide area.
41. The word 'automobile' was first used in France in the late 1880s. It comes from the Greek word Auto meaning self, and the French word Mobile meaning moving. Literally, it means a self-propelled vehicle.
42. While its dictionary meaning is 'motor-car', the way the expression "automobile" has been used in the Notification along with railway carriages and the aircrafts, any restricted meaning given to it does not appear to be consistent with the scheme discerned from the reading of the notifications as a whole.
43. As observed by the Hon'ble Supreme Court in the case of Jain Engineering Company v. Collector of Customs, Bombay, 1987 (32) E.L.T. 3 (S.C.), paragraph 7, when the intention is clear and manifest it will be unreasonable to take a narrow view of the Notification.
44. As explained by the Hon'ble Supreme Court in Collector of Central Excise v. Park Exports Private Ltd. [1989 (38) E.L.T. 741 (S.C.)] and Tata Oil Mills Company Ltd. v. Collector of Central Excise [1989 (43) E.L.T. 183 (S.C.)], in interpreting the scope of any Notification, the Court has first to keep in mind the object and purpose of the Notification. All parts of it should be read harmoniously in aid of and not in derogation of that purpose.
45. According to the "Noscitur A Sociis" principle, which means that "the meaning of a word is to be judged by the company it keeps", it could be safely said that the exemption was intended to all variants of steel seats for carriage or conveyance used on land, on rails or space. Of course here in place of a restricted meaning, by the principle of Noscitur A Sociis, it appears natural that a larger meaning is imparted to the expression "automobile".
46. Even in the Automobile Cess Rules, 1984, relied upon by the Collector of Central Excise, Bangalore, a wider meaning has been given to the expression "automobiles".
47. While as per well accepted rule of interpretation, the definition of an expression given in one statute may not be applicable to another statute, we find that the expression 'automobile' under Rule 2(b) of the Automobile Cess Rules, 1984, covered more than the motor cars. It covered not only motor cars but also trucks, buses, jeep type vehicles, vans, scooters, motor cycles, mopeds and the like.
48. In the case of MSCO Private Ltd. v. Union of India and Ors. [1985 (19) E.L.T. 15 (S.C.)], the Hon'ble Supreme Court have observed that the interpretation of the word "industry" in the Industrial Disputes Act, 1947 will not apply to the Notification granting exemption under the Customs Act.
49. The Tribunal in the case of Shri Vaidyanath Ayurved Bhawan Ltd., Patna v. Collector of Central Excise, Patna, Order No. 438-439/85-C, dated 7-6-1985 reported in 1985 (22) E.L.T. 844 (Tri.), has observed that the definitions of the terms used in one enactment cannot be imported while interpreting the terms and expressions in another enactment. They have added that the definitions are always subject to the context of a particular enactment and the object behind it. Words and phrases occurring in an Act cannot be construed according to the meaning assigned to them in other Acts, which are not incorporated or referred to therein.
50. In the case of Central Coal Fields Ltd. v. State of Orissa and Ors. [1992 AIR SC 1366], the issue before the Hon'ble Supreme Court was whether dumpers and rockers were motor vehicles. In that case, the Supreme Court were concerned with dumpers of various denominations and rockers which seemingly were similar to dumpers, but were heavier than those. Dumpers and rockers were known to carry bulk goods, building materials/mining products, agricultural and forestry products, earth stones, bricks concrete mortar etc., their structure being of simple design and easy to handle. Tripping was performed by releasing the locking device retaining tipping body. The dumper required no more than a few seconds for the emptying of its tipping body and did not give any trouble to the driver when being operated on uphill or downhill roads, with its load unbalanced or when the load refused to slide out easily.
51. The Hon'ble Supreme Court observed that the dumpers run on tyres, were suitable for being used on public roads and they could only be driven by persons holding a valid licence. They were engaged in the transport of goods. The mere fact that the dumpers and rockers were heavy and could not move on the roads without damaging them was not to say that they were not suitable for use on roads. The word 'adapted' in the provisions of Section 2(18) of the Bihar and Orissa Motor Vehicles Taxation Act, 1930 (after amendment by Act 100 of 1956), was read as "suitable" in Bolani Ores case (AIR 1975 SC 17) by interpretation on the strength of the language in Entry 57 List II of the Constitution.
52. The Hon'ble Supreme Court held that dumpers and rockers were vehicles adapted or suitable for use on roads, and were motor vehicles.
53. As we have discussed above in the context, the expression 'automobile' has been used in the exemption Notifications under consideration, tractors are covered by the expression "automobile". Further in view of the Supreme Court decision in the case of Central Coal Fields Ltd., referred to above, there is no doubt that tractors are a motor vehicle and the expression 'motor vehicle' and 'automobile' are synonymous for the purposes of these notifications.
54. The Tribunal's observations in the case of Madras Radiators and Pressing Ltd. v. Collector of Central Excise, [1989 (44) E.L.T. 247 (Tri.)], that the steel seat assembly did not qualify to become a furniture, and that the steel seats assembly for tractors were not classifiable under Item No. 40 of the Central Excise Tariff, are not relevant for the purposes of disposal of the case before us, as the point for consideration before us is the applicability of exemption notification to the steel seats, and not to the steel seat assembly.
55. Thus keeping in view the way the expression "automobiles" has been used in Notification No. 91/68-C.E., dated 30-4-1968 and Notification No. 61/86-C.E., dated 10-2-1986, along with 'railway carriages' and 'aircrafts', we consider that the steel seats designed for use in automobiles, but used in tractors and earth-moving equipment, were eligible for exemption under those Notifications No. 91/68-C.E., dated 30-4-1968 and No. 61/86-C.E., dated 10-2-1986.
56. In the circumstances, we are not discussing the point of limitation, although on the point of limitation also the appellant appears to be having a good case.
57. Accordingly, we set aside the order in original No. 5/91, dated 8-2-1991, passed by the Collector of Central Excise, Bangalore from File No. V/94/15/16/89-C1, and allow the appeal with consequential relief to the appellant, if any.