Customs, Excise and Gold Tribunal - Tamil Nadu
A.P. Heavy Machinery And Engg. Ltd. vs Commr. Of C. Ex. on 14 November, 2000
Equivalent citations: 2001(73)ECC417, 2001(128)ELT155(TRI-CHENNAI)
ORDER S.S. Sekhon, Member (T)
1. Appeal No. E/4855/91B arises against Order-in-Appeal No. 13/91(V) C.E., dated 21-8-1991, wherein the Collector after having regard to the change in the classification found that in that case the revised classification list was approved by the Assistant Commissioner on 23-8-1990 and whereas the show cause notice issued only on 26-9-1990 proposing the change in the classification from Headings 84.28 to 84.31. He found merit in the contention of the appellants that revised classification should be operative only subsequent to 26-9-90 and accordingly ordered the same. We find that there is no cross appeal by the Revenue against the said order.
2. Appeal No. E/lll/93 is against the Order-in-Appeal No. 22/92 (G)CE., dated 25-9-1992, wherein the Commissioner has after considering that there was no dispute by the appellants that the conveyor system was classifiable under heading 8428.00 being mentioned in that heading and parts suitable for use solely or principally with the machine under headings 84.25 to 84.30 were classifiable under heading 84.31 and thereafter he did not accept the contention of the appellant that part cleared from the different manufacturer of the three units, put together constituted the manufacture of a complete system to be treated as individual item cleared from the respective factories and should be classified as conveyor system at all places. The Commissioner held that the classification was dependent on what exactly the item manufactured and cleared from the factory and as in this case 'idlers and rollers' were cleared from Vijayawada factory, there was no doubt that they were parts of the conveyor system classifiable under heading 8431.00 and ordered accordingly upholding the order of the Assistant Commissioner, Vijayawada.
3. We have heard learned counsel Sri K.R. Natarajan alone with Sri Srinivasan, advocate, who reiterated the grounds of appeal and relied upon the decision of Vishwa Industrial Co.(P) Ltd. as reported in 1999 (107) E.L.T. 774 and that of CCE, Delhi-Ill v. B.H.B. Engineers as reported in 2000 (40) RLT 791, wherein the Tribunal has held that conveyor system and mill rejects handling system supplied along with the parts and components in SKD or CKD condition against specific orders and some of the parts manufactured in assessee's factory while some were purchased from the market does not mean that what is manufactured and cleared is parts and components and not entire system and held the classification to be under heading 84.28 as conveyor system. In the case of B.H.P Engineers cited above, the Tribunal has held that parts of conveyor cleared against an order for conveyor system and when all such parts are cleared under different gate passes over a period for convenience of transportation are required to be classified as conveyor and not as parts of conveyor, though prescribed procedure was not followed. They submitted that in their case all the parts of conveyor system are manufactured by them same entity, having three factories at locations viz Vijayawada, Kondapalli and Visakhapatnam, which are admittedly situated in different municipal areas. They submitted that Board has issued instructions that a corporate entity should be considered as one manufacturer, even though they may have different units spread over at different locations and they should be considered as single manufacturer of conveyor system albeit, the parts being completely manufactured at three different locations but are supplied against a common order obtained by corporate entity and supplied to the same customer and assembled at the customers' site.
4. Learned DR Sri S. Kannan strongly relied on the Commissioner's order and submitted that in Order-in-Appeal No. 21/92 dated 25-9-92, the Commissioner (Appeals) has dealt with these submissions in detail and none of the grounds taken in the present appeal impugned against the Commissioners findings in any fashion. The two decisions which the appellants have submitted are distinguishable inasmuch as, in those cases there were removals from same factory but only over a period of time and not from three different factories and it is in this case, to come to a conclusion that when a part is removed from a factory, it should be classified as a whole entire system, especially when parts have been specifically given under different Chapter Headings, and the full conveyor system in another as in the present case.
5. In a rejoinder, learned counsel submits that the demand in the appeal No. E/111/93 has been made for retrospective period of six months which is in conflict with the finding of the Commissioner (Appeals) in the other case, holding that amendments of the classification list are prospective and also he relies on the decision of Cotspun India Ltd. as reported in 1999 (113) E.L.T. 353 (S.C.) and pleads that the demand should be prospective and as confirmed should be set aside.
6. We have carefully considered the submissions and material on record and find that
(a) Three units of the same corporate entity situated in three different municipal limits cannot be considered as the same manufacturer, since Rule 174 provides for registration of every person who manufactures excisable goods therefore three Registrations have to be obtained separately by same company. Since the parts are excisable goods, each manufacturer at different premises is required to take out Excise licence now called as Registration for the manufacture of such parts. The goods are to be assessed in the condition in which they are presented for the purpose of assessment, the duty is to be assessed when the goods are being removed from the place of removal i.e. factory gate. For the ease of convenience of transportation of huge excisable goods, which cannot be transported as a single unit, and are removed with making them into CKD or SKD condition, the removal could be separately considered as a removal of the entire machine, but to have such a circumstance, the machine has to come into existence in the factory premises and thereafter broken down into SKD or CKD condition only for the ease of removal. This is what the decisions relied upon by the appellants indicate to our reading. The decisions relied upon are not very closely applicable to the facts of the present case since in those cases the removal in CKD or SKD condition the parts were from the same licensed premises of the manufacturer, in the present case the removals are from three different locations, which are having separate licence/registration under the Central Excise law and therefore, we cannot come to a conclusion that these removals are in CKD/SKD condition, since it is an admitted fact by the appellants before us that the conveyor system does not come into existence in any one of these three factories, as all the parts are not being manufactured in all the factories. In this view of the matter, we cannot apply case law relied upon by the learned counsel being clearly distinguishable to the facts of this case.
(b) We find that the Hon'ble Supreme Court in the case of Name Tu-laman Manufacturers Pvt Ltd. as reported in 1988 (38) E.L.T. 566 (S.C.) have in para 3 of the reported decision laid down the law on this subject as follows :-
"The appellant's contention before the Tribunal was that it was only preparing a part and that part is dutiable as a separate part. The appellant however, did the work of assembling. As a result of the work of the appellant a new product known in the market and known under the excise item 'weigh bride' comes into being. The appellant will become a manufacturer of that product and as such liable to duty. That is precisely what the Tribunal found on the facts of the case. The appellant seems to have been obsessed by the idea that as part of machine is liable to duty then the whole end product should not be dutiable as separate excise goods. That is mistake, a part may be goods as known in the excise laws and may be dutiable. The appellant in this case claims to have manufactured only the indicator system. If the indicator system is a separate part and a duty had been paid on it and if the rules so provide then the appellant may be entitled to abatement under the Rules. But if the end product is a separate product, which comes into being as a result of the endeavour and activity of the appellant then the appellant must be held to have manufactured the said item. When parts and the end product are separately dutiable both are taxable."
Relied on the same, we would consider the entity being cleared by the three licensed/registered manufacturing premises, though all the same owned by the same corporate entity to be only parts of conveyor system, which are admittedly classifiable under heading 84.31 and not as conveyor system classifiable under heading 84.28 as has been claimed by the appellants before us. In the facts of this case, the conveyor system can and does come into existence only at the buyers' site and applying the law as laid down by the Supreme Court, the parts cleared from the three different factories when assembled at site would constitute an excisable item under heading 84.28 at site and should be charged to duty as per law at site under heading 84.28. The Modvat credit, if any, would be eligible of the duty paid on parts, however, their case of classification of the conveyor system coming into existence at site is not before us.
16. In view of our findings regarding classification under heading 84.31 of the goods being parts of conveyor system, at all the three factories, we now proceed to consider the submissions regarding the confirmation of demands. We find that the Commissioner (Appeals) vide Order-in-Appeal No. 13/91 has held that the classification to be prospective and the same has not been challenged by the Revenue and therefore, has attained finality. In appeal No. E/lll/93, the appeal is against the Order-in-Appeal No. 22/92, we do not find the order impugned to be prospective or retrospective in nature except that he confirmed the order of the Assistant Commissioner of Central Excise, Vijayawada. Examining the said Order-in-Original, as it is placed in the paper book, we find that the order is for the period 1-2-90 to 31-7-90 for payment of duty at lower rate applicable to conveyor system and the differential demand of duty has been confirmed. This order is pursuant to show-cause notice dated 4-9-1990. The show-cause notice for demand under Section 11A has to be issued within a period of six months from the date of clearance and therefore it cannot be said to be in contravention of Section 11A in this case. From this order, we find that classification list No. 36/89, dated 30-1-90 approval was granted both for conveyor equipment as well as spares for conveyor equipment. Therefore, when the Proper Officer has come to a conclusion that conveyor equipment has not been cleared but only spares had been cleared, we find no force in the argument of the learned advocate that the demand is being made retrospective in the facts of this case. We also find that in appeal No. E/4855/91B, the Order-in-Original in the paper book is against a Central Excise assessee at Visakhapatnam, which we have found to be a different as-sessee, in which case, the Commissioner (Appeals) has held that the classification and demands to be prospective from the date indicated in his order. This order passed in the case of a different assessee by different Assistant Commissioner, incharge of Visakhapatnam Division and not Vijayawada Division in the other case which does not induce us to accept the learned advocate's contention that Commissioner (Appeals) order holding the change in the assessment of the Visakhapatnam assessee to be prospective should be applied to change in assessment of the Vijayawada assessee. We, therefore, find no reasons to interfere with the demands as determined against the assessee at Visakhapatnam in Appeal No. E/4855/91-B.
7. In view of our findings hereinabove, we find no reasons to interfere with the classification of the entity to be parts under heading 84.31 as held by the lower authorities and also the demands as confirmed. These two appeals merit rejection, we order accordingly.