Customs, Excise and Gold Tribunal - Tamil Nadu
Enfield India Ltd. vs Commissioner Of Central Excise on 22 May, 1996
Equivalent citations: 1996(88)ELT773(TRI-CHENNAI)
ORDER V.P. Gulati, Member (T)
1. The issue involved in the appeal relates to demand of differential duty in respect of motor bikes which were earlier cleared on payment of duty from the appellants' factory and were later brought inside the factory under Rule 173H and which on clearance after the processes carried out under Rule 173H were found to fetch higher price by reason of the change of the model. The learned lower authority has held in this connection as under:
"The appellants argue that they could have carried out the rectification processes in their own depot. But as things stand, they chose to avail of Rule 173-H procedure and filed D3 intimation to bring back the duty paid goods. As seen from the D3s, pre-authenticated GPls, the motor cycles are cleared at a higher value is in order. The reliance placed by the apellants on Notification No. 217/86, dated 2-4-1986 is misplaced, since the notification speaks of exemption to modvat items if used within the factory of production or in any other factory of the same manufacturer in the manufacture of finished goods whereas the impugned transactions are covered under Rule 173-H of Central Excise Rules, 1944".
2. The appellants' Advocate is absent and has sought adjournment for the reason that he unavoidably held up in hospital. Since the issue falls in a short compass, we have declined the request for adjournment and have taken up the appeal itself for disposal on merits.
3. The learned JDR for the Department has pleaded that the goods were initially allowed clearance and the goods had been earlier cleared on payment of duty and subsequently the appellants were allowed to bring in those goods under Rule 173H after complying with the requirements of the said rules by filing necessary D3 intimation. He has pleaded that these goods were subjected to some changes and that for the reason the model of the motor bike having changed and this model which emerged as a result of the processes carried out in the factory commanded a higher price. He has pleaded that since the appellants after the clearance of the goods in terms of Rule 173H get a better price in respect of the goods, the Revenue is also entitled to the differential duty attributable to the value addition as a result of the processes carried out under Rule 173H. He was asked to show to us in terms of Rule 173H as to how as a result of the processes carried out, any differential duty could be demanded once the appellant has satisfied the requirements of Rule 173H. He has no specific plea to make except to say that by virtue of the change of the model a new product has come into existence, and therefore the demand of differential duty is maintainable in law.
4. We have considered the pleas made. We observe that the Central Excise authorities allowed the appellants the facility under Rule 173H. There is nothing in record to show that his facility was wrongly given to the appellants. Under Rule 173H the Appellants are permitted to bring in the goods which need to be re-made, refined, re-conditioned, repair or subjected to any similar processes in the factory. In the present case the appellants obviously has done some modifications of the machine resulting in the change of the model. The goods which emerged as a result of the processes carried out continue to remain motor bike falling under the same Tariff Heading. The processes therefore carried out by them can only be termed as re-making, one of the processes permitted to carry out under Rule 173H. Once it is held that the appellants' goods falls within the parameters of Rule 173H any duty demand that has to be made will have to be in terms of this rule. The change or upgradation of the machine or change of some parts cannot be taken to be manufacture of a new product for excise purposes. Once the facility of remaking is available the term 'remaking' has to be given a meaningful meaning. Remaking of this would involve some change which is felt necessary by the assessee for the purpose for which the goods were brought inside the factory. In our view in the context of the appellants operations the appellants can be taken to have come within the parameters of Rule 173H. Rule 173H does not envisage any payment of duty in respect of the goods cleared from the factory after the operations permitted to be carried out under Rule 173H have been carried out. Unlike Rule 173L where on receipt of the goods duty paid refund is contemplated in respect of the goods received back and subsequent clearances of the goods after the operations carried out in terms of Rule 173L and which operation are similar to those mentioned under Rule 173H, the goods are liable to pay duty. Under Rule 173L by a deeming fiction after re-making or refining has been carried out the goods so emerging after those processes are to be treated as a new manufacture. This is not the position under Rule 173H. As it is the authorities are demanding differential duty attributable to the value addition as a result of the processes carried out not on the full value of the goods which were brought into the factory. In case -the goods have been treated as new manufacture then duty should have been demanded on the full value of the goods as cleared from the factory. This not having been done we hold that the authorities themselves are not treating the product emerging in the hands of the appellants as fresh manufactured goods. In that view of the matter we hold that the demand as raised is not sustainable in law and therefore we allow the appeal.