Customs, Excise and Gold Tribunal - Delhi
Gujarat Fisheries Central Co-Op. Assn. ... vs C.C.E. on 23 May, 1994
Equivalent citations: 1994(72)ELT496(TRI-DEL)
ORDER Lajja Ram, Member (T)
1. M/s. Gujarat Fisheries Central Cooperative Association Limited, Veraval, have filed the present two appeals against the common Order-in-Appeal No. B. 665-666/Ahd-3637/83, dated 23-3-1987, passed by the Collector, Central Excise (Appeals), Bombay. As both the appeals arise out of the common Order-in-Appeal, they were heard together and are being disposed of by this common order.
2. The matter in these appeals relate to the inclusion of the value of the bought out accessories supplied separately, in the value of the wooden fishing boats manufactured by the assessee, for the purposes of levy of Central Excise duty under Tariff Item No. 68 of the erstwile First Schedule to the Central Excises and Salt Act, 1944 (hereinafter referred to as the Tariff'). The Collector of Central Excise (Appeals) had held that "Since the accessories in question were essential part of the boats, their value has to be included for determining the assessable value of the boat". The appellants have, however, contested that the boats at the stage of removal from the place of manufacture - from the boat building yard were cleared/removed without the articles referred to as accessories, and further that these accessories were not supplied alongwith the boats. The exemption was also claimed under Notification No. 102/80-CE, dated 19-6-1980 on the ground that the boats manufactured by them were 'ocean going vessels' for the purpose of that exemption notification. The order has also been assailed on the ground of limitation.
3. The matter was posted for hearing on 23-3-1994 when Shri Devan Parikh, Advocate appeared for the appellant. The respondents were represented by Shri A.K. Singhal, J.D.R.
4. Shri Devan Parikh, the learned Advocate submitted that the assessee were a non-profit making body. The issue involved in both these appeals related to the inclusion of the value of certain accessories (like wire ropes, fishing gears, monofilament-ropes, wrench, shovels etc.) in the value of the wooden fishing boats. These accessories were not manufactured by them. They were bought out items supplied extra as per the requirements of the customers and their prices were charged separately. They were not being brought to the factory of production of boats and were purchased from outside and supplied separately. Even before the levy under Item No. 68 of the Central Excise Tariff in the year 1975 they were following the same pattern of invoicing. Nothing had been suppressed from the department as had been alleged in the show cause notice. The learned Advocate pleaded that keeping in view the nature of these accessories, their value could not be included in the value of the boats manufactured by them. These accessories were not fitted in the boats at the time of their clearance. The learned Advocate relied upon the following decisions in support of his arguments :-
(1) Diamond Clock Manufacturing Company Limited v. C.C.E., Pune, 1988 (34) E.L.T. 662 (Tribunal), wherein it has been held that the value of the bought out items, though essential but not manufactured by the assessee and not fitted into the machines supplied by the assessee to their customers, were not includible in the assessable value;
(2) Collector of Central Excise v. Kalinga Chemicals Industries, 1989 (44) E.L.T. 548 (Tribunal), wherein it has been observed that putting two products separately manufactured in a common container does not amount to manufacture. Relying upon the judgment of the Judicial Commissioner, Goa in the case of V.M. Salgaocar and Brothers Pvt. Limited v. Assistant Collector of Customs, Marmagoa, 1982 (10) E.L.T. 322 (Goa), the learned Advocate pleaded that the fishing boats in question were 'ocean going vessels' and were entitled for exemption under Notification No. 102/80-CE, dated 19-6-1980. It was also submitted that the period from 1-7-1979 to 16-2-1982 was barred by limitation. The period involved in these two cases is from 1-7-1979 to 30-4-1980 and from 1-5-1980 to 31-7-1982, and that the show cause notices were issued on 7-1-1982 and 16-8-1982.
5. Shri A.K. Singhal, the learned JDR submitted that without the accessories, the boats were not complete. The orders were placed for the complete boats, complete with the accessories while excise duty was paid on the boats without the accessories. This fact was suppressed from the department. Fitting of the accessories in the boats, was not the criteria for assessment. In this connection, the learned JDR relied upon the Bombay High Court's decision in the case of Mahindra and Mahindra Limited v. Union of India, 1984 (18) E.L.T. 262 (Bombay). Reliance was also placed on the Bombay High Court's decision in the case of Koran Business Systems Limited v. UOI, 1992 (58) E.L.T. 48 (Bom.), wherein it has been held that the value of the bought out parts was includible as camera in photocopying machine cannot function without timer and lense.
6. In rejoinder, the learned Advocate stated that the accessories were not fitted into the boats when such boats were cleared from the factory of the appellants. The boats could function without these accessories. They were not part of the boats. In this connection, he relied upon the Bomaby High Court's decision in the case of TI Miller Limited v. Union of India, 1987 (31) E.L.T. 344 (Bom.), and the Tribunal's decision in the case of Webel Telecommunications (I) Limited v. Collector, Central Excise, Calcutta, 1987 (32) E.L.T. 453 (Tri.), Bombay High Court's decision in the case of Koran Business Systems Limited v. Union of India, 1991 (51) E.L.T. 212. He further stated that no suppression has been alleged in the show cause notices. In this connection, the learned Advocate referred to the Tribunal's decision in the case of Piyush Kumar Prabhu Das Mehta v. Collector of Central Excise, 1991 (51) E.L.T. 151 (Tribunal), Tribunal's decision in the case of Mac Laboratories (P) Limited, Bombay v. Collector, Central Excise, Bombay, 1985 (19) E.L.T. 307 (Tri.) and Tribunal's decision in the case of Collector, Central Excise v. Steel Corporation of Punjab, 1989 (39) E.L.T. 65 (Tribunal).
7. We have carefully gone through the facts and circumstances of the case and have given our due thought and consideration to the submissions made by both the sides.
8. M/s. Gujarat Fisheries Central Cooperative Association Limited, Veraval, a cooperative association, were engaged in the manufacture of wooden fishing boats at their boat building yard in Veraval. It was a Gujarat Government sponsored body in which the Gujarat Government holding was 99%. The Boats were manufactured under the World Bank Projects, and the prices were fixed by the Commissioner of Fisheries, Government of Gujarat, who was also the Project Coordinator. At the relevant time, the wooden fishing Boats were not covered by any specific entry in the Central Excise Tariff, and on introduction of the Item No. 68 in the Central Excise Tariff as a part of the 1975 budget proposals, they came to be classified under that Item No. 68 of the Tariff. The assessee were availing of the exemption under Notification No. 120/75-C.E., dated 30-4-1975 in terms of which the Central Excise duty was calculated on the basis of the invoice value. It was alleged that alongwith the boats, certain accessories were also sold by the assessee to the purchasers of the boats, and no Central Excise duty was paid on such accessories. These accessories were not manufactured by the assessee. They were bought out items. No process was undertaken by the assessee with regard to these accessories. They were not. subjected to any process of manufacture. They were supplied as such. They were not fitted into the boats. They were charged separately. The Collector, Central Excise (Appeals), Bombay observed that the accessories in question were essential parts of the complete boats and their value was to be included for determining the assessable value of the boats.
9. The goods under consideration were classifiable under Item No. 68 of the Tariff. Item No. 68 was a residuary tariff entry and covered' the good's which were not elsewhere specified in any of the earlier tariff items. No specific description was provided for any of the goods which came to be classified under Item No. 68. The goods as presented for assessment were subjected to the 'levy. Among various exemption provided with regard to this "levy, an important exemption was with regard to the assessment on the basis of the invoice value under exemption Notification No. 120/75-C.E., dated 30-4-1975. This exemption was provided in exercise of the powers conferred on the Central Government under the then Rule 8 of the Central Excise Rules, 1944 (hereinafter referred to as the 'Rules')- The assessee manufactured the bare wooden fishing boats, and cleared them without accessories under invoice value assessment. The accessories were bought out items and were supplied and invoiced separately. In the nature of the excise levy under Item No. 68, the essentiality criteria of any of the accessories does not appear to be relevant while assessing the goods cleared without accessories. Of course, if any of the accessory is manufactured by the assessee, they will have to be assessed to duty in their own right. The Collector, Central Excise (Appeals) has observed that "It is seen that such accessories have been invariably supplied against each and every boat which shows that they were essential for the complete boat." The wooden fishing boats were to be assessed under Item No. 68 in the form in which they were cleared from the boat building yard. In the nature of this levy, it may not be relevant as what accessory will be required when these boats are put to use in the sea.
10. In the case of Mahindra and Mahindra Limited v. Union of India, 1984 (18) E.L.T. 262 (Bom.), the issue related to the interpretation of Item No. 34A of the Central Excise Tariff, which covered the parts and accessories, not elsewhere specified, of motor vehicles and tractors including trailers. It was explained in the tariff entry itself that the expression 'tractors' shall include agricultural tractors. The various items such as mounted disc harrow, mounted tandem disc harrow, spring loaded tiller, rigid line cultivator, heavy duty tiller, mounted mould board plough, seed planter-cum-fertiliser distributor etc., were considered as accessories of agricultural tractors, and were classifiable under Item No. 34A of the Central Excise Tariff. The Bomaby High Court in the above case of Mahindra and Mahindra observed in para 6 of their judgment as under :-
"In the present case the implements in question are required to be used along with agricultural tractors and they are designed for such use. They thus add to the effectiveness and proper utilisation of agricultural tractors in agricultural operations. They can therefore be considered as accessories of agricultural tractors. Mr. Setalvad for the petitioners drew my attention to a decision of the Allahabad High Court in the case of Saks Tax Commissioner v. Lachman Singh reported in 1972 (36) S.T.C. 372 where an oil-can and steel files were considered as accessories of a chaff-cutter. It is not necessary to go so far in the present case. The implements are designed for use with an agricultural tractor and they add to the effectiveness of agricultural tractors. They can therefore be considered as accessories of agricultural tractors."
11. In the case before us, firstly we are concerned with an omnibus item i.e. Item No. 68 which covered all goods not elsewhere specified, and then the items like ropes, wrenches, shovels etc. are general purpose items and no case has been made out that they were specifically designed for use with the goods manufactured by the assessee. Thus, we do not consider that in the circumstances of this case, the various accessories which were not manufactured by the assessee but were bought out items and were not fitted in the goods under consideration but were supplied separately outside the factory premises, were liable to be assessed alongwith the goods under clearance and further wo do not consider that the value of such items should be added to the value of the goods cleared by the assessee from their factory.
12. The facts in the case of Koron Business Systems Limited v. UOI, 1992 (58) E.L.T. 48 (Bom.) were also different. Therein the petitioners were clearing the camera consisting of bellows and a frame and other attachments of document copier separately, and these attachments and the camera were then assembled into the document copier at the site where the photocopying machine was to be installed. The camera when assembled into the document copier included the timer and lens, and without the timer and lens, the camera will not function; and without camera the copying machine was useless and would not be sold in the market. The items though purchased in the market were assembled while manufacturing the copier machine. It was in these circumstances that the Bombay High Court held that while determining the assessable value of the copier machine, the value of the timer and the lens ever if the petitioner purchased the same in the market, is required to be included.
13. For goods falling under Item No. 68, a general input duty relief was also provided. The Assistant Collector, Central Excise, Junagarh who adjudicated the matter had observed, "the proper course open to the party in their case had been to ask for set off of duty which is claimed to have been already paid on these items." We find that although the dutiability of the accessories as such or duty adjustment with regard to dutiable accessories, has not been dealt with at any stage, the fact remains that the levy under Item 68 provided for full neutralisation of the duty already paid in respect of any part of the goods assessed under Item No. 68 or used in the production of goods falling under Item No. 68.
14. Thus, we consider the t in the circumstances of this case, the value of the accessories is not includible in the value of the boats as manufactured and cleared by the appellants.
15. Although on the main issue of accessories itself, the appeals merit to be allowed, we may also refer to the plea of the appellants that the goods under consideration were eligible for exemption as 'ocean going vessel'. The goods have been described in the show cause notices as 'wooden fishing boats'. They have been referred to as "sailing vessel" in the certificates of the Registrar of Sailing Vessel Veraval, at page No. 64, 72, 80,88,96,104,118,132 and 144 of the paper book. 'Vessel' has been defined in Section 3(63) of the General Clauses Act, as under :-
" 'Vessel' shall include any ship or boat or any other description of vessel used in navigation."
Under amending Central Excise Notification No. 102/80-C.E., dated 19-6-1980, exemption, among other things, had been extended to ocean going vessels (by adding an entry to that effect in Notification No. 55/75-C.E., dated 1-3-1975). Notification No. 55/75-C.E., dated 1-3-1975 was superseded by Notification No. 104/82-C.E., dated 28-2-1982; however, exemption in favour of ocean going vessels continued under Notification No. 104/82-C.E. Notification No. 104/82-C.E., dated 28-2-1982 was again superseded by Notification No. 234/82-C.E., dated 1-11-1982, but here again exemption to ocean going vessels was provided.
16. It is seen that under Customs Notification No. 211/83-Cus., dated 23-7-1983, exemption was provided from the Customs duty in favour of capital goods, components, raw materials and consumables, when imported into India for repairs of ocean going vessels by a ship repair unit registered with the Director General of Shipping, Govt. of India. For the purpose of that notification the expression 'Ocean Going Vessels' was explained as to include:-
(a) liners; cargo-vessel for various kinds including refrigerator vessels for the transport of meat, fruit etc.; vessels specified for the transport of particular goods (grain, coal, ores, etc.); tankers (petrol, wine, etc.); yachts and other sailing vessels; cable ships; ice-breakers; floating factories of all kinds (for processing whales, preserving fish, etc.); whale catchers; trawlers and other fishing vessels; life boats; scientific research vessels; whether ships; vessels for the transportation of mooring of buoys; pilot-boats; hopper-barges for the disposal of dredged material etc.;
(b) warships of all kinds including submarine;
(c) tugs, dredgers, fire-floats and salvage ships."
17. In the context of excise exemption Notification No. 234/82-C.E., dated 1-11-1982, referred to above, the Central Board of Excise and Customs under their Tariff Advice No. 3/84, dated 14-2-1984 issued from File No. 13 /56/83-CX1 clarified that the explanation of ocean going vessels given in the Customs Notification No. 211/83-Cus., dated 23-7-1983 seemed to be broad based and the same should be adopted for the purpose of interpreting the phrase "Ocean going vessels" referred to in Notification No. 234/82-C.E., dated 1-11-1982 also.
18. The expression 'ocean going vessels', in terms of the explanation given in the Customs Notification No. 211/83-Cus. includes Yachts and other sailing vessels, whale catchers, trawlers and other fishing vessels.
19. The appellants have also relied upon the decision of the Judicial Commissioner, Goa in the case of V.M. Salgaocar and Brothers (P) Limited v. Assistant Collector, Marmagoa, 1982 (10) E.L.T. 322 (Goa), in which it has been observed in para 21 that "any vessel that navigates beyond the inland waters is sea going or an ocean going vessels."
20. In the case of Panduronga Timblo Industries and Ors. v. Union of India, AIR 1992 SCW 1158, the Hon'ble Supreme Court, after discussing the definitions of barge, boat, ship and vessels, held that the definition of vessel was wide enough to cover both boats propelled exclusively by oars as well as boats fitted with engines.
21. Thus, we consider that the boats manufactured by the appellants were even otherwise eligible for exemption as ocean going vessels.
22. As on these points alone, we consider that the appeals merit acceptance, we do not consider it necessary to discuss the other points raised by the appellants.
23. Thus, we allow both the appeals and order accordingly.