Customs, Excise and Gold Tribunal - Delhi
Sankey Wheels Ltd. vs Collector Of Central Excise on 20 March, 1986
Equivalent citations: 1986(9)ECC231, 1986(8)ECR118(TRI.-DELHI), 1986(24)ELT350(TRI-DEL)
ORDER K.L. Rekhi, Member (T)
1. A common issue is involved in these three appeals, they relate to the same appellants and were argued before us together. This combined order is passed to dispose of all of them.
2. The point of dispute is whether, during the period from 1-3-1979 to 1-6-1979, the appellants were entitled to supply the wheels manufactured by them to manufacturers of motor vehicles free of duty for fitment as original equipment of those vehicles. A chronological listing of the statutory changes during the relevant period will facilitate understanding of the issues involved.
Pre-1-3-1979 : Item 34A of the Central Excise Tariff covered "Parts and accessories, not elsewhere specified, of motor vehicles and tractors including trailers" and carried the tariff rate of 20% ad valorem. However, by exemption notification No. 99/71-CE, dated 29-5-1971, all parts and accessories of motor vehicles and tractors were made free of duty barring 12 items listed in the notification. Wheels, the subject goods, not being so listed, were thus fully exempt. Another notification No. 101/71-CE, dated 29-5-1971 exempted even 10 of the listed items if they were supplied for fitment to motor vehicles as original equipment.
1-3-1979 : As a part of the Budget proposals of 1979- (1) description of item 34A was revised to include 15 specified parts and accessories in the tariff item itself. The rate of duty remained the same at 20% ad valorem ;
(2) parts and accessories not so specified were to fall in the residuary item 68 of the tariff;
(3) notification No. 99/71-CE, dated 29-5-1971 was rescinded ;
(4) notification No. 75/79-CE, dated 1-3-1979 was issued to give full exemption to parts and accessories "falling under item No. 34A" if supplied for fitment as original equipment; this was in supersession of the earlier notification No. 101/71-CE, dated 29-5-1971 ;
(5) notification No. 76/79-CE, dated 1-3-1979 was issued to fix an effective rate of 8% ad valorem (same rate as applicable under item 68) for parts and accessories not specified in item No. 34A as substituted by the Finance Bill, 1979. The notification itself declared that this was done because it was not the intention that, pending the enactment of the Finance Bill, 1979, parts and accessories which "have not been specified in the said item No. 34A but classifiable under the said item" should pay duty at the rate specified in the said item.
19-4-1979 : Notification No. 167/79-CE, dated 19-4-1979 was issued to fully exempt parts and accessories, falling under item No. 34A, barring the 15 specified items, intended for use in further manufacture of excisable goods either in the same factory or in any other factory.
10-5-1979 : (1) Finance Bill, 1979 became an Act.
(2) Notification No 187/79-CE, dated 10-5-1979 amended notification No. 167/79-CE, dated 19-4-1979 to-
(i) substitute item No. 68 in place of item No. 34A ; and
(ii) delete the list of 15 items earlier excluded from exemption.
3. The appellants' claim was for full exemption under notification No. 75/79-CE, dated 1-3-1979. They made this claim in the classification list filed by them on 9-3-1979 soon after the Budget. On 22-5-1979, they filed another classification list claiming exemption under both notifications Nos. 75/79-CE, and 167/79-CE. The lower authorities denied the exemption to them on the ground that notification No. 75/79-CE applied only to the 15 parts and accessories specified in the substituted item 34A and that wheels being not so specified could get only the 8% ad valorem rate fixed by the other notification No. 76/79-CE, dated 1-3-1979. The lower authorities did not go into the applicability of the other notification No. 167/79-CE, dated 19-4-1979.
4. We have heard both sides and have carefully considered the matter. We observe that only such of the tariff changes proposed in the Budget of 1979 were effective immediately as related to imposition or increase of duty" This is so because the Declaration under the Provisional Collection of Taxes Act, 1931 inserted in the Finance Bill read with Section 3 of that Act applied only to imposition or increase of duty. Any other provisions of the Finance Bill were to take effect only after they were enacted. The tariff change made in item 34A did not affect the earlier rate of 20% ad valorem. On the contrary, enumeration of the 15 parts and accessories in the tariff item itself meant that the remaining parts and accessories were to attract the lower rate of 8% ad valorem under item 68. The change proposed in item 34A, being neither imposition nor increase of duty, was to take effect only after enactment. In other words, during the intervening period from 1-3-1979 to 9-5-1979, the old item 34A remained on the statute book and was in force. Consequently, during this intervening period, when notification No. 75/79-CE, dated 1-3-1979 and later notification No. 167/79-CE, dated 19-4-1979 referred to parts and accessories "falling under item No. 34A", it meant falling under the old item 34A and not under the revised item 84A. This was made clear also by the second paragraph (which stated the Government's intention) of notification No. 76/79-CE, dated 1-3-1979 which referred to such parts and accessories "as have not been specified in the said item No. 34A but classifiable under the said item". Had the Budget change made in item 34A been effective immediately, notification No. 76/79-CE would have been unnecessary because then the non-listed parts and accessories would have straightway fallen under item 68 whereunder the tariff rate of duty itself was 8% ad valorem.
5. The learned representative of the department evidently sensed the error in which the lower authorities had fallen and instead he came out with a totally new plea-that the old notification No. 101/71-CE, dated 29-5-1971 applied only to certain parts and accessories specified therein, that this notification was superseded by notification No. 75/79-CE, dated 1-3-1979, that the superseding notification could, therefore, apply only to such parts and accessories as had been listed in the superseded notification and that wheels being not so listed in the old notification, the mew notification did not apply to the wheels. The plea is hardly tenable. As on 1-3-1979, notification No. 101/71-CE was dead and gone and the successor notification No. 75/79-CE had to be interpreted and applied in its own terms. The successor notification applied to all parts and accessories falling under item 34A. Hence, no reference to the terms of the dead notification No. 101/71-CE, was permissible.
6. In regard to the second notification No. 167/79-CE, dated 19-4-1979, as later amended by notification No. 187/79-CE, dated 10-5-1979, the benefit whereof was also sought by the appellants, the prayer of the learned representative of the department was that the matter be remanded to the Assistant Collector as the lower authorities had not gone into it. We see force in this prayer because the notification gave the exemption subject to certain conditions-of intended use and of observance of the prescribed procedure-and there is nothing on record to show whether these conditions were fulfilled or not. Notification No. 75/79-CE, dated 1-3-1979 also contained similar conditions. The lower authorities did not go into the matter of observance of these conditions because they rejected the appellants' claim on the short point that the notification did not apply to wheels.
7. To sum up, our conclusion is that during the period from 1-3-1979 to 9-5-1979 the exemption given under notification No. 75/79-CE, dated 1-3-1979 applied to wheels of motor vehicles and tractors, including trailers. During the period from 19-4-1979 to 1-6-1979, the exemption given under notification No. 167/79-CE, dated 19-4-1979 (as amended later by notification No. 187/79-CE, dated 10-5-1979) also applied to similar wheels. We order that the Assistant Collector should verify whether the appellants have fulfilled the conditions laid down in the two notifications and, if they have, the Assistant Collector should give them the consequential relief.
8. The three appeals are allowed in these terms.