Customs, Excise and Gold Tribunal - Bangalore
Rlr Equipments vs The Commissioner Of Central Excise on 12 September, 2006
Equivalent citations: 2007(114)ECC125, 2007ECR125(TRI.-BANGALORE), 2006(204)ELT407(TRI-BANG)
ORDER T.K. Jayaraman, Member (T)
1. This appeal has been filed against the Order-in-Original No. 51/2005 - Central Excise dated 28.2.2005, passed by the Commissioner of Central Excise (Appeals) Bangalore.
2. The appellants have stated that they are manufacturing "Drilling Rigs". However, in the proceedings before the lower authority the goods, manufactured by the appellants are described as "Drilling Rigs mounted on motor vehicle chassis". The lower authority by following the Apex Court decision in the case of LMP Precision Engineering Co. Ltd. classified the impugned goods under Chapter heading No. 8705.00. He further held that the appellant is not entitled for availing the benefit of Notification No. 8/99 in respect of the impugned goods. He demanded a duty of Rs. 16,17,298/- for the period from April 1999 to March 2002 under Section 11A of the Central Excise Act, 1944. He demanded interest under Section 11AB of the Act. Even though the Show Cause Notice was issued in October 1999, the adjudication was completed only on 31.8.2004 presumably for the reason that the issue itself was under dispute before various judicial fora. The appellants actually claimed classification under Chapter heading 8430.00 and claimed the benefit of Notification No. 8/99 dated 20.8.99 against the order of the Original authority. The appellants went before the Commissioner (Appeals). The Commissioner (Appeals) upheld the Order-in-Original with direction to ensure the arithmetical correctness of the differential duty. Aggrieved over the impugned order of the Commissioner (Appeals), the appellants have come before the Tribunal for relief.
3. Shri Dayanand, learned Chartered Accountant appeared for the appellants and Shri K.S. Reddy, learned JDR for the Revenue.
4. The learned Chartered Accountant urged the following points:
(i) The appellant was operating in a shed having size of 30' x 60'. They were manufacturing only water drilling rigs, but never mounted the water drilling rigs on the duty paid chassis. A copy of the factory layout and copies of some photographs of mounting of drilling rigs outside the factory was produced before the Bench. He urged that Drilling Rigs have to be mounted on duty paid chassis. It is apparent from the factory layout submitted to the department at the time of registration itself that the size of the factory was not sufficient to take the chassis inside the factory. With the help of the buyers' labourers the drilling rigs were mounted outside the factory on the duty paid chassis. It requires a crane to mount the drilling rigs on the chassis, apart from the lorry. The door of the factory was very small through which the crane cannot be taken.
(ii) The appellant had wrongly submitted in the reply to the Show Cause Notice that they were engaged in the manufacture of water drilling rigs mounted on the duty paid chassis. As the drilling rigs were mounted on the duty paid chassis outside the factory by the labourers of lorry owners itself, they were under the impression that the product should be classified as mounted on duty paid chassis. The partners of the appellants were the old employees of Spaar Equipments. They had resigned and started similar business. The Spaar Equipments had classified their product as "Water Drilling Rigs Mounted on Duty Paid Chassis" and accordingly the partners had classified the product. This is the reason why the product was classified as "water drilling rigs mounted on duty paid chassis". Further during the period of dispute, there was a CESTAT decision classifying the water drilling rigs mounted on chassis under chapter 84.30 of the Central Excise Tariff which eligible for SSI exemption.
(iii) As and when the Show Cause Notice was issued, the reply was drafted by the Advocate based on the CESTAT decision in the case of LMP Precession Engineering Co. Ltd. The actual facts of the case were not ascertained. Further copies of invoices were not examined while drafting reply and before submission of the same to the department.
(iv) The appellants has raised all the invoices for manufacturing of water drilling rigs as "water drilling rigs" only and nowhere it was stated that the same was water drilling rigs mounted on duty paid chassis. Copies of invoices were produced before the Tribunal. Further, an affidavit from Shri Prakash, partner to the effect that they had manufactured only water drilling rigs and never mounted the same on the duty paid chassis, was produced.
(v) During the tenure of manufacture, the appellants had raised two bills. The sale value of mounted water drilling rigs is around Rs. 15 lakhs. However for both the cases the drilling rigs were mounted outside factory by the appellants. In all other cases, the same was mounted by lorry owners. This can be even verified with the prices charged for the same. Wherever it was mounted by the lorry owners, the price was charged in the range of Rs. 5 lakhs. In view of the above the learned Consultant prayed that the impugned goods should be classified under Chapter heading 8430 of the Central Excise Tariff. Further, he stated that the Supreme Court decision is not applicable for the above mentioned reasons.
4. The learned JDR pointed out that the assessee themselves stated in their reply to Show Cause Notice that they were manufacturing "water drilling rigs mounted on chassis".
5. We have gone through the records of the case carefully. The issue of classification of water drilling rigs mounted on duty paid chassis, no doubt, has been settled by the Supreme Court in the LMP Precision Engineering Co. Ltd. case. The item has been classified under Chapter 87.05 and not under Chapter 84.30. But in the present case, the appellant argued that the above decision would not applicable to them as they had manufactured only water drilling and mounting on duty paid chassis was done outside the factory by the customers. They have given elaborate reason as to why in reply to Show Cause Notice, they had stated incorrect facts. We find that during the relevant period, there was decision of CESTAT to classify the item under Chapter 84.30 and it appears that the appellants had not taken care to project the facts carefully. In fact, we find that this point which appellant urges before the Bench that he had manufactured only water drilling rigs is not at all a point before the lower authority. However enormous evidence in the form of Photograph, Ground Plan, invoices and affidavit cannot be brushed aside. We find in all the invoices, the impugned item is described as water drilling rigs. The appellants' only case is that they had carried out the work of mounting the water drilling rigs on the chassis at out side factory with the help of the labourers of the customers. A perusal of invoice produced indicates that the value of the chassis is not included. In these circumstances, we hold that the appellant has manufactured only water drilling rigs classifiable under 84.30 and not "water drilling rigs mounted on duty paid chassis". Therefore the appellants are entitled to avail SSI benefit. We allow the appeal with consequential relief.
(Pronounced in the open court on 12.08.2006)