Custom, Excise & Service Tax Tribunal
Lmp Precision Engineering Co Pvt ... vs Surat-I on 13 September, 2024
Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench at Ahmedabad
REGIONAL BENCH-COURT NO. 3
EXCISE Appeal No. 11244 of 2018 - DB
(Arising out of OIA-VAD-EXCUS-001-APP-001-2017-18 dated 13/02/2018 passed by
Commissioner ( Appeals ) Commissioner of Central Excise, Customs and Service Tax-
VADODARA-I)
Lmp Precision Engineering Co Pvt Limited ........Appellant
Plot No. 2p & 3, Gidc, Antalia,
Bilimora, Gujarat
VERSUS
Commissioner of C.E. & S.T.-Surat-I ......Respondent
New Building...Opp. Gandhi Baug, Chowk Bazar, Surat, Gujarat- 395001 APPEARANCE:
Shri Saurabh Dixit, Advocate for the Appellant Shri Rajesh Nathan, Assistant Commissioner(AR) for the Respondent CORAM: HON'BLE MEMBER (JUDICIAL), MR. RAMESH NAIR HON'BLE MEMBER (TECHNICAL), MR. C L MAHAR Final Order No. 12041/2024 DATE OF HEARING: 02.08.2024 DATE OF DECISION: 13.09.2024 RAMESH NAIR The background of the case is that there was a classification dispute in respect of the final product manufactured by the appellant namely Drilling Rigs suitable for Drilling Wells and Blast Holes (Mining) which are generally mounted on the truck chassis/crawler during the period from 01.03.1986 to 29.02.1988 whereby the appellant have declared their final products after classifying them under tariff heading No. 8430 as "other Moving Machinery for Earth Extractors" which are mounted on motor vehicles. The department issued show cause notice disputing classification and sought to classify the same under chapter heading No. 8705 as special purpose motor vehicle attracting 25% duty as against 15% duty paid under chapter heading No. 8430 classified by the appellant. In the said show
2|Page E/11244/2018-DB cause notice along with the change of classification, the consequential demand and penalty were also purposed. This matter travelled upto CEGAT, who vide its order dated 28.10.1993 reported at 1994 (70) ELT 580 (Tribunal) agreed with the classification adopted by the appellant and dropped the demand and penalty. The department filed an appeal before the Hon'ble Supreme Court, which vide its judgment dated 16.12.2003 reported at 2004 (163) ELT 290 (SC) settled the classification dispute against the appellant holding that the goods were classifiable under chapter heading No. 8705 as special purpose motor vehicle. 1.1 That pursuant thereto, the Appellant made detailed representations including through Chamber of Commerce, seeking alternative exemption benefit under Notification No. 242/86-CE for goods falling under CTH 8705.
Even the CBEC issued directions to consider the case suitably as well. The lower authorities, however, rejected the alternative exemption benefit on the following grounds:-
a. The Appellant had never claimed classification under CETH 8705 during relevant period and exemption Notice. No.242/86-CE is a conditional one;
b. Approval of CL claiming exemption and verification of fulfillment of conditions of exemption Notification can be examined only by assessing authority before whom CL is filed;
c. Benefit of exemption Notice. No.242/86-CE cannot be extended belatedly in retrospective manner at this stage. 1.2 The appellant letter dated 05.02.2015 seeking benefit of notification No. 242/86-CE dated 03.04.1986 in respect of clearances was responded
3|Page E/11244/2018-DB by the Deputy Commissioner of Central Excise & Customs, division Vadodara vide letter dated 26.02.2015 who did not accept the claim of notification No. 242/86-CE and directed the appellant to pay dues as confirmed under Order-in-Original dated 09.12.1991. Being aggrieved by the letter dated 26.02.2015, the appellant filed appeal before Commissioner (Appeals) who vide Order-In-Appeal VAD-EXCUS-001-APP-
001-2017 dated 13.02.2018 rejected the appeal. Therefore, the present appeal filed by the appellant.
2. Shri Saurabh Dixit, Learned Counsel appearing on behalf of the appellant submits that the benefit of exemption Notification No. 242/86-CE was denied on the ground that the condition of the notification has not been fulfilled. He submits that with regard to the condition the appellant have submitted various documents, therefore, the exemption was wrongly denied by the Ld. Deputy Commissioner and same was wrongly upheld by the Commissioner (Appeals). He further made following submission:-
1. That the said exemption Notification No.242/86-CE has only one condition that the Special Purpose Vehicles falling under CETH 8705 should be produced from duty paid chassis. That there is no dispute over the fact that the chassis were duty paid, as evident from the written confirmations from the original manufacturer as well as dealer from whom the same were procured by the Appellant.
2. That as regards the issue that classification under CTH 8705 and exemption Notification No. 242/86-CE benefit was not claimed in CL, the issue on hand is no more Res Integra. That the Hon'ble Tribunal in the case of Gujarat State Fertilizers Co. Ltd. 1996 (83) E.L.T. 159 (Tribunal) has held that alternative claim under other notification is permissible even if not claimed in the Classification List or no appeal
4|Page E/11244/2018-DB is filed against the approval of Classification List because there can be no estoppel against the law.
3. That similar view was taken in the following cases as well:
• Fibrotex Processors 2016 (344) E.L.T. 339 (Tri. - Mumbai) • Shriram Bearings Ltd. 2001 (135) E.L.T. 600 (Tri. - Kolkata) • Kopran Chemicals Co. Ltd. v. Collector of Central Excise 1990 (48) E.L.T. 569 (Tribunal)
4. That in an identical case wherein for identical goods (special purpose vehicle), the benefit of similar exemption was granted vide the following decisions:-
Indian Hydraulic Industries 2002 (10) TMI 105 - Supreme Court Kailash Auto Builders Ltd. 2010 (6) TMI 387 - CESTAT, MUMBAI
5. The Hon'ble Apex Court as well as Tribunal, in catena of cases has allowed such alternative exemption benefit at later stage:
JAGDISH CANCER & RESEARCH CENTRE 2001 (132) E.L.T. 257 (S.C.) SHARE MEDICAL CARE 2007 (209) E.L.T. 321 (S.C.) JAYASWAL NECO LTD. 2015 (322) E.L.T. 587 (S.C.) RALLIS INDIA LTD. 2017 (358) E.L.T. 285 (Tri. - Mumbai) DURGABHAI DESHMUKH HOSPITAL AND RESEARCH CENTRE 2011 (272) E.L.T. 300 (Tri. - Bang.) CHHAJED FOODS PVT LTD 2024 (2) TMI 1320 - CESTAT AHMEDABAD
6. Be that as it may, the issue is one of complex interpretational nature of classification. The Hon'ble Tribunal had ruled the issue in favour of the Appellant on the classification, which was upturned by Hon'ble Apex Court. That the bonafide belief as well as lack of intention to evade duty can be well established from the facts and circumstances of the case. Even penalty was not imposed on the Appellant eventually.
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7. The impugned order does not bring on record anything so as to even remotely suggest that the Appellant acted in a malafide manner, by resorting to any fraud, suppression or wilful misstatement with any intention to evade duty/tax payment.
8. In fact, Hon'ble CEGAT Order dt.28.10.93 at Para 7 categorically holds that the demands are time-barred already. There is nothing in the Hon'ble Apex Court decision which suggests there was any intention to evade duty on part of the Appellant even if the CL description was incomplete.
9. The demand therefore deserves to be quashed and set aside on merits as well as being time- barred.
3. Shri Rajesh Nathan, Learned Assistant Commissioner (AR) appearing for the Revenue reiterates the finding of the impugned order.
4. We have carefully considered the submission made by both the sides and perused the records. We find that in the present appeal the issue involved is of neat question of law that whether the special purpose motor vehicle classified under 87.05 is eligible for exemption Notification No. 242/86-CE dated 03.04.1986. For the ease of reference the Notification is reproduced below:-
Notification - Central Excise - Central Excise - Tariff Motor vehicles [Chapter 87] Notification No. 242/86-C.E. Dated 3-4-1986 In exercise of the powers conferred by sub-rule (1) of rule 8 of the Central Excise Rules, 1944, the Central Government hereby makes the following amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 162/86-Central Excises, dated the 1st March, 1986, namely :
In the Table annexed to the said notification, for Sl. No. 11 and the entries relating thereto, the following Sl. No. and entries shall be substituted, namely :
(1) (2) (3) (4) (5)
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"11. 87.05 Special purpose Nil If the appropriate duty of excise
motor vehicles. has been paid on the chassis of
such vehicles and the
equipments used in the
manufacture of such vehicles".
Both the lower authorities have denied the above exemption Notification only on the ground that the appellant have not claimed the exemption notification in the classification listed. Therefore, at this stage the notification being a conditional one cannot be examined from its eligibility and therefore the notification was denied.
4.1 We find that there was no occasion for the appellant to claim the exemption Notification 242/86-CE dated 03.04.1986, for the reason that there was a dispute about classification as the appellant had claimed the classification under 84.30 as against the Revenue's claim under 87.05. This dispute has been settled by the Hon'ble Supreme Court in the appellant's own case reported at LMP Preicision Engineer and Company Pvt Ltd. -2004 (163) ELT 290 (SC). Only after the said judgment of the Hon'ble Supreme Court it has been settled that the goods manufactured by the appellant i.e. Drilling Rigs mounted on truck chassis/crawler is classified under chapter 8705. Once the classification is settled, the Notification No. 242/86-CE which is applicable to the goods falling under Chapter 8705 became eligible to the appellant. The lower authorities have contended that the appellant have not claimed the said exemption in their classification list. It is a settled law that even if at later stage the issue of classification is settled and according to the classification held by the higher authority if any benefit of exemption notification is otherwise available. The same can be claimed at a later stage also, in this regard the appellant have relied upon
7|Page E/11244/2018-DB various judgments which directly apply in the fact of the present case. The relevant judgments are reproduced below:-
a) In the case of Fibrotex Processors (Supra) Tribunal has considered the similar issue wherein the facts was that initially the assessee had not claimed the benefit of notification but at a later stage the exemption was claimed and the same was extended to the assessee. The relevant part of the judgment is reproduced below:-
"7. As regards the submissions of the learned counsel that benefit of Notification No. 377/86-C.E. needs to be extended to them, we find strong force in the said contention. The said notification is reproduced.
"Effective rate of duty for compounded rubber. - In exercise of the powers conferred by sub-rule (l) of rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts compounded rubber, unvulcanised, in primary forms or in plates, sheets or strip (other than products which are made either wholly or partly of rubber and which are used for resoling, retreading or repairing of tyres, including the products, commonly known as tread rubber, camel back, cushion compound, cushion gum, tread gum and tread packing strips), falling under heading no. 40.05 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1096), from so much of the duty of excise livable thereon which is specified in the said Schedule as is in excess of the amount calculated at the rate of fifteen per cent. ad valorem".
It can be seen from the above reproduced notification that any product which is falling under Chapter No. 40.05 is to be extended the benefit of concessional rate of duty i.e. 15%, we do not find any reason not to extend the same to appellant herein. The argument put for its by the learned departmental representative that benefit of this notification was claimed before the tribunal for the first time, and not before the lower authorities, will not carry the case of the revenue any further, as the appellant was contesting the classification of their product as not falling under Chapter 40.05, hence cannot claim the benefit of notification thereof; and it is a settled law that assessee can be extended legimate benefit of the notification even at the stage of second appeal. Accordingly, we hold that for the period October, 1986 to February, 1987, the appellant is eligible for Notification No. 377/86-C.E., in respect of the product "rubber solution" of CTH-40.05. We find the duty liability for the period needs to be recalculated and appellant is directed to discharge the such duty liability."
b) In the case of Shriram Bearings Ltd (Supra) also considered the issue that even if the exemption notification was not claimed in the classification but if the same is eligible, it can be extended otherwise also. The relevant para is reproduced below:-
8|Page E/11244/2018-DB "4. The other ground adopted by the adjudicating authority for denying the benefit of the said Notification is that the same was not claimed by the appellants in their Classification List. We agree with the contention of the learned Advocate that availability of exemption Notification is not squarely dependent upon the same being claimed in the Classification List. The appellants claimed the Notification No. 217/86 in their Classification List which was denied to them and it was in the alernative, that they staked their claim for exemption in respect of the said Notification No. 64/86. Reliance by the learned Advocate on the Tribunal's decision in the case of Kopran Chemicals Co. Ltd. v. Collector of Central Excise reported in 1990 (48) E.L.T. 569 (Tribunal), holding that the exemption benefit is to be given even if not claimed in the Classification List, is appropriate. As such, we hold that the appellants' claim to the benefit of the said Notification is sustainable."
c) The identical issue was considered in the case of Kopran Chemicals Co.
Ltd. (Supra) wherein the exemption benefit was not claimed in the classification list, wherein it was held that only in failure to claim in the classification list that alone cannot disentitled the goods for exemption if the conditions of the relevant notification are otherwise fulfilled.
In view of the above judgment it is settled that even though the assessee did not claimed the exemption notification which otherwise eligible to the assessee in the classification list the benefit of the same claimed at a later stage cannot be denied.
4.4 As regard the condition of the notification that the appropriate duty of excise has been paid on the chassis of such vehicles and equipments used in manufacture of such vehicles. We find that there is no case of the department that the chassis of vehicle on which the Drilling equipment was mounted and also on such equipment no duty paid. In this regard it is a settled law that all the goods available in the market are deemed to be duty paid. Therefore, the inference of the Revenue that at this stage the fact that whether the chassis and equipments used in the manufacture of special purpose motor vehicle is duty paid or otherwise has no relevancy.
9|Page E/11244/2018-DB In view of the above, it is settled that chassis and equipments used for manufacture of special purpose vehicles are considered as deemed duty paid. Therefore, the condition of Notification No. 242/86-CE stand complied for and the appellant is eligible for the said exemption.
5. Accordingly, we set aside the impugned order and allow the appeal, with consequential relief.
(Pronounced in the open court on 13.09.2024) (RAMESH NAIR) MEMBER (JUDICIAL) (C L MAHAR) MEMBER (TECHNICAL) Raksha