Customs, Excise and Gold Tribunal - Delhi
M/S Haryana Roadways Engineering ... vs Cce, New Delhi And Cce, Bhopal on 28 March, 2001
Equivalent citations: 2001(76)ECC75, 2001(131)ELT662(TRI-DEL)
ORDER
V.K. Agrawal
1. In these five appeals the common issue involved is whether the activity of fabricating body on the duty paid thesis amounts to manufacture of Motor Vehicle, classifiable under heading 87.02 to 87.05 of the Schedule toe the Central Excise Tariff Act interms of Note 3 to Chapter 87 or under heading 8707 of the Tariff as confirmed in the impugned Order and whether the extended period of limitation for demanding duty is invokable under Section 11 A (1) of the Central Excise Act.
2. We heard Shri K.K.Anand, ld. Advocate, for M/s Haryana Roadways Engineering Coporation Ltd., Shri J.S. Agarwal, ld. Advocate for M/s Haryana Coach Body Builders and M/s Batra Coach Builders, and Shri B.L. Narsiman, Ld Advocate for M/s Commercial Engineering and Body Co. Builders Pvt. Ltd, and M/s Ambala Coach Builders, and Shri M.P.Singh, ld D.R., on behalf of the Revenue.
3. The Larger Bench of the Appellate Tribunal vide Misc Order No. 73/2000-B dt. 22-5-2000 has held, following the dismissal of the appeal filed by the Revenue in the matter of Kamal Auto Industries, by the Apex Court on the ground of delay as well as on merits, that the Tribunal can not go into the matter afresh as the issue remains settled by the Supreme Court order and the Larger Bench, therefore, was of the view that the reference does not survive. The Appellate Tribunal in the case of Kamal Auto Industries Vs. Collector of Central Excise Jaipur, 1996 (82) ELT 558 has held that the activity of building body on chasis shall not amount to manufacture of Motor Vehicle fitted with engines and are classifiable under Heading 87.07 of the Tariff even after insertion of Note 3 to Chapter 87. Accordingly in view of the Supreme court's decision in Kamal Auto Industries case, the acutivity of bodies on chasis will be classifiable under Heading 87.07 of the Tariff.
4. Shri K.K.Anand, ld. Advocate, submitted, that show cause notice dt. 21-5-99 was issued to M/s Haryana Roadways Engineering Corporation for demanding duty for the period from May 1994 to December 1998 and accordingly the demand of Central Excise Duty upto the period of October 98 is hit by the time limit specified in Section 11 A of the Central Excise Act, as the extended period of limitation is not invokable; that the adjudicating authority has himself accepted the decision that the fact of body building was in the knowledge of the Department since the Department has issued them the show cause notices from time to time and the appeals were filed by the Department in the Supreme court; that the registration certificate was surrendered by them and the department also granted them the refund of the amount lying unutilised in the PLA. He, further, submitted that the finding of the Commissioner that where the classification of the goods is involved and the same is decided by the Supreme Court, the duty can be demanded for the whole period even if the issue was within the knowledge of the department is totally fallacious and contrary to the settled legal position; that it is settled law that Proviso to Section 11A can be applied only in those cases where the asessee has committed any fraud, collusion, wilful misstatement or suppressed the facts with the intent to evade duty; that where the facts are in the knowledge of Department extended period is not applicable; that they had not changed their stand in the matter of classification at any time and accordingly no penalty is also imposable on them.
5. Shri J.S. Agarwal, ld. Advocate submitted that the show cause notice dt. 28-8-98 was issued to M/s Batra Coach Builders for demanding the duty for the period from 1-8-93 to 31-1-98 and as such the entire demand is beyond the peiod of six months and thus is not sustainable and, therefore, no demand can be made from them. The ld. Advocate also pointed out that in the impugned Order No. 2/99 dt. 12-1-99 the Adjudicating Authority himself has held the demand of duty is limited to a period of six months only and as in their case the entire duty is beyond the period of six months no demand is to be worked out by the jurisdictional Assistant Commissioner in their case. He, therefore, requested that the penalty of Rs. 15 lakhs imposed on them is also not sustainable as no duty is to be confirmed against them.
6. In respect of M/s Haryana Coach Builders, Shri J.S.Agarwal, ld. Advocate, submitted that the entire demand is for the period from Feb 98 to July 98 and the show cause notice has been issued within the period of six months; that, however, no penalty is imposable in view of the fact that issue pertains to the classification involving interpretation of the Headings in the Tariff.
7. Shri B.L.NarsiHman, ld. Advocate, submitted that the demand in respect of Ambala Coach Builders, is within the period of six months; that no penalty is imposable as they had not violated any of the provisions of the Central Excise Act or the Rules with intent to evade payment of duty; that they were of bonafide belief that in view of Note 3 to Chapter 87 their activity would amount to manufacture of the complete vehicles which would be classifiable under Heading 87.02 to 87.05 and not as bodies under heading 87.07; that further interms of the contract entered into by them with their customars, excise duty liability is to be charged from their buyers and as such there was o incentive what so over to evade payment of duty. He, further, claimed that they would be eligible for Modvat Credit of the duty paid on inputs it should be given to them. Finally he submitted that the price charged by them should be considered as cum duty price in view of the decision of the Larger Bench in the case of Shri Chakra Tyres Vs. CCE 1999(32) RLT 1; that the assessable value has to be determined from the said cum duty price for the purpose of levying the duty. Similar arguments were made by the ld. Advocate in respect of appeal filed by M/s Commercial Engineering and Body Builders Company Pvt. Ltd in whose case also the entire duty was within the period of six months.
8. Shri M.P.Singh, ld. DR, submitted that the issue regarding classification of the fabrication of body has been settled by the Supreme Court in the case of Kamal Auto Industries; that extended period of time limit is invokable in cases where genuine confusion about classification of a particular product prevails. He, further, submited that the price charged by the Appellants was not cum duty price which is evident from the fact that the goods were cleared after claiming the benefit of exemption from payment of duty; that as such duty was never a consideration while charging the price from the customers.
9. We have considered the submissions of both the sides. The Appellate Tribunal in the case of Kamal Auto Industries Vs. CCE Jaipur, supra, held that "No doubt, Chapter 87 Note 3 clarifies that building a body for purpose of headings 87.01 to 87.05 amounts to manufacture of Motor Vehicle, but at the same time, we find that this Chapter Note does not cover the bodies built on chasis fitted with engines which is classifiable under Chapter 87.06. Therefore, the classification of bodies built by independent manufacturers, on chasis is classifiable under 87.07". This decision of the Tribunal has been confirmed by the Supreme Court as observed by the Larger Bench in Misc Order No. 73/2000 dt. 25-5-2000 as the appeals filed by the Revenue against the decision in Kamal Auto Industries case were dismissed on the ground of delay as well as on merits. In view of this the classification of the bodies built on the chasis are classifiable under Heading 87.07 of CETA. We, however, agree with the ld. Advocate that extended period of limitation is not invokable in view of the fact that Department was aware about the acativity undertaken by the Appellants and Department itself was of the view that the classification of bodies built on chasis would be under Heading 87.02 to 87.05 in terms of Note 3 to Chapter 87 which is evident form the fact that an appeal was filed by the Revenue in the case of Kamal Auto Industries. These views were stated that by the Ministry of Finance, in circular No 447/13/99 Cx dt. 22-3-1999 wherein it was mentioned that "The apex Court, thus, has not given any ruling in respect of the classification after the insertion of the said Chapter Note and thus the classification on and after 25-7-91 would be governed by the said Chapter Note ....The department has not accepted the interpretation and has filed an appeal in the Supreme Court against the said Order of the Tribunal" (Kamal Auto Industries)' In view of these facts it cannot be said at all that there was any suppression or wilful mis-statement on the part of the assessees or there was any intent to evade payment of duty. We do not also agree with the ld. DR that in cases of dispute about classification the demand for extended period can be raised and sustained as the other course open to the Department are to keep the assessment provisional or to issue show cause notices from time to time. We also agree with the ld. Advocates that no penalty is imposable in view of the fact that issue involved is interpretation of Note 3 to Chapter 87 of the Tariff and particularly in view of the fact that Department also contested the matter in the Supreme court to the effect that the activity of fabricating of bodies on the chasis will be classification under Heading 87.02 to 87.05. We, therefore, hold that no penalty is imposable on any of the Appellants and accordingly we set aside the penalty wherever imposed on the Appellants in these matters.
10. We confirm, the demand for the normal period i.e. demands covering the period of six months and accordingly order as under:
1. In appeal NO. E/2402/9-B filed by M/s Haryana Raodways Engineering Corporation, demand for period May 1994 to October 1998 is set aside and the demand of duty is upheld for the period November and December 1998.
(2) In Appeals Nos.E/652/99-B and E 310/2000-B filed by M/s Ambala Coach Builders and Commercial Enginering and Body Builders Company Pvt. Ltd respectively, demand of duty within six month period is upheld. The contention of the ld. Advocate, that they would be eligible for benefit of Notification No. 4/97 CE-(Sl No 204) is not acceptable as the said Sl. No. does not cover heading 87.07 of CETA.
(3). In Appeal No. E/403/99-B filed by M/s Haryana Coach Builders demand of duty is upheld.
(4). In Appeal NO E/712/9-B filed by M/s Batra Coach Builders the demand is not sustainable as entire duty is beyond the period of six months.
11. We also agree with the ld. Advocates that the Appellants are eligible to avail of modvat credit of the duty subject to the condition that they produce documentary evidence of payment of duty on the inputs within one month of the receipt of this order to the satisfaction of the adjudication authority. Further, as held by the Larger Bench of the Appellate Tribunal in Shri Chakra Tyres, supra, the original consideration received by an assessee for sale of the goods has to be taken as cum duty price for the purpose of demand of duty. Consequently we do not find any substance in the contention of the ld. DR that as the appellants had cleared the impugned goods availing exemption, a question of price being cum duty price does not arise. The Larger Bench in Shri Chakra Tyres case has held that any consideration has to be taken as cum-duty price for the purpose of demand of higher duty subsequently. Any consideration" that the same price would have gone up had credit duty been paid in the first instance can not, in our opinion, be made the basis for non-abatement of differential duty from the realised sale price--- Total duty purposed to be demanded shall have to be abated from the cum duty price actually received and liable to be received as a consideration for sale of goods." Accordingly the duty wherever upheld by us has to be calculated after arriving at the assessable value from cum duty price.
12. All the appeals are disposed of above terms.