Custom, Excise & Service Tax Tribunal
Gujarat Forgings Pvt Ltd vs Rajkot on 1 July, 2024
Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench at Ahmedabad
REGIONAL BENCH-COURT NO. 3
EXCISE Appeal No. 11019 of 2021 - DB
(Arising out of OIO-RAJ-EXCUS-000-COM-05-06-2021-21 dated 24/09/2021 passed by
Commissioner of Central Excise, Customs and Service Tax-RAJKOT)
GUJARAT FORGINGS PVT LTD ........Appellant
Opp. Nsic, 80 Feet Road,
Aji Industrial Area Rajkot
Rajkot, Gujarat
VERSUS
COMMISSIONER OF C.E. & S.T.-RAJKOT ......Respondent
Central Excise Bhavan, Race Course Ring Road...Income Tax Office, Rajkot, Gujarat- 360001 WITH EXCISE Appeal No. 11022 of 2021 - DB (Arising out of OIO-RAJ-EXCUS-000-COM-07-08-2021-22 dated 24/09/2021 passed by Commissioner of Central Excise, Customs and Service Tax-RAJKOT) ASHOK ENGINEERING AND FOUNDRY WORKS ........Appellant Ashok Vatika, Dhebar Road Rajkot, Gujarat VERSUS COMMISSIONER OF C.E. & S.T.-RAJKOT ......Respondent Central Excise Bhavan, Race Course Ring Road...Income Tax Office, Rajkot, Gujarat- 360001 APPEARANCE:
Shri Anand Nainawati, Advocate for the Appellant Shri Rajesh Nathan, Assistant Commissioner(AR) for the Respondent- Revenue CORAM: HON'BLE MEMBER (JUDICIAL), MR. RAMESH NAIR HON'BLE MEMBER (TECHNICAL), MR. C L MAHAR Final Order No. 11475-11476/2024 DATE OF HEARING: 05.03.2024 DATE OF DECISION:01.07.2024 RAMESH NAIR The Appellants, i.e. M/s Gujarat Forgings Pvt. Ltd. ("GFPL") and M/s Ashok Engineering & Foundry Works ("Ashok") are inter alia engaged in the manufacture of Power-Driven Pumps (also referred to as 'PD Pumps') and Ignition Combustion Engine (hereinafter referred to as "IC Engines") falling under Chapter Heading 8413 and 8408, respectively, of the First Schedule to the Central Excise Tariff Act, 1985. The IC engines manufactured by the Appellants are captively consumed in the manufacturing of another product i.e.
2|Page E/11019 &11022/2021-DB PD Pumps in the factory, and also sold separately in the market on payment of excise duty. In respect of IC engines which are captively consumed in the manufacture of PD Pumps, the Appellants are claiming benefit of exemption from excise duty under Notification No.67/95-E dated 16.03.1995.
1.1 The Appellants are purchasing centrifugal pumps and base frame/trolley from the market and manufacturing the IC engines at their factory. In the factory, the centrifugal pumps are connected to the common crankshaft of the IC engine and the centrifugal pump and IC engine are coupled together on the base frame/trolley to manufacture PD pumps. The PD pumps are then tested for performance and quality before being cleared. In some cases, the PD pumps are unassembled and cleared in SKD condition for ease of transportation, whereas in most cases, the PD pumps are cleared in assembled condition only.
Both the Appellants have sufficient documentary evidence to support the bifurcation of quantity of PD pumps cleared in assembled condition vs. SKD condition since in the case of both Appellants, when the goods are cleared in SKD condition, the supporting Lorry Receipts provide unit of each items cleared i.e. no. of IC engines, no. of centrifugal pumps, no. of trolley etc. and where the PD Pumps are cleared in assembled condition then Lorry Receipts provide the no. of PD pumps only. During the period in question, PD Pumps were chargeable to excise duty @ 6% in terms of Sr. No. 235 of Notification No.12/2012-CE dated 17.03.2012. Since a portion of the IC engines are captively consumed in the manufacture of such PD pumps, the Appellants were availing the benefit of exemption from excise duty granted to intermediate goods under Notification No. 67/95-CE dated 16.03.1995 on such quantity of IC engines.
1.2 The demand of duty in the present appeals is based on the denial of benefit of exemption under Notification No. 67/95-CE to IC engines which are captively consumed in manufacture of PD pumps, on the ground that the PD pumps are not arising out of a process of manufacture and therefore, it cannot be held that the IC engines are used captively in manufacturing activity in terms of Section 2(f) of the Central Excise Act, 1944. In addition to PD Pumps, one of the Appellant M/s Ashok, also manufactures mono-block pumps. The only difference between mono-block pump and PD pump is that mono-block pump is smaller in size and the pump directly fits on the common crankshaft of
3|Page E/11019 &11022/2021-DB IC Engine; whereas in PD pumps, the IC Engine and pump are coupled on a common base frame/trolley and the same is bigger in size.
1.3 The Appellant M/s GFPL are selling PD Pumps under the brand names 'FIELDMARSHALL' and 'SPEEDWEL' whereas the Appellant M/s Ashok are selling PD Pumps under their own brand name 'REGAL' and also manufacturing PD Pumps for M/s USHA International Limited under the 'USHA' brand. Judgment in the case of Honda Siel Power Products and investigation by the Department.
1.4 On 04.11.2015, the Hon'ble High Court of Allahabad in the case of M/s. Honda Seil Power Products - 2016 (332) ELT 222 (All), held that mere placing of bought out pump and own manufactured IC Engine in a single carton does not amount to manufacture as no new item comes into existence. Based on the above judgment, an investigation was conducted by the Central Excise Commissionerate of Rajkot against various PD Pumps manufacturers located within their jurisdiction, including the Appellants in the present appeals. Pursuant to the such investigation the present show cause notices were issued to the appellants. Wherein it was conducted that mere fitting / coupling of IC engines manufactured by the appellant to the PD pumps which was brought out does not amount to manufacture of PD Pump set therefore the exemption notification No. 67/95-CE dated 16.03.1995 is not available to the appellant in respect of the IC engines which claimed to have captively consumed in manufacture of PD pumps. The show cause notices have been adjudicated vide Orders-In-Original dated 24.09.2021 whereby the Learned Principal Commissioner confirmed that the entire demand of duty proposed in all the show cause notices except for dropping of demands of Central Excise Duty on IC engines where the PD pumps were untimely cleared for export in respect of the both the appellants. Aggrieved by the impugned orders the appellants have filed the present appeals.
2. Shri Anand Nainawati, Learned Counsel appearing on behalf of the appellant submits that the Principal Commissioner has completely relied on the case of M/s. Honda Seil Power Products - 2016 (332) ELT 222 (All) deliver by the Allahabad High Court without appreciate the significant difference between of that case and fact of the present case while ignoring the judgment of this Hon'ble CESTAT in the case of Usha International Ltd. - 2018 (5) TMI 381 -
4|Page E/11019 &11022/2021-DB CESTAT Chandigarh which is squarely applicable to the facts of the present case.
2.1 He further submits that the Ld. Principal Commissioner has also overlooked the fact that the show cause notice entirely relies upon the facts of PD pumps cleared in semi-knocked down condition ("SKD") whereas only a small portion of the total quantity of PD pumps were cleared in SKD condition and majority of the IC engines were captively consumed in PD pumps which were cleared in assembled form. He submits that allegation made in the show cause notice in any case, cannot be applied to the PD pumps cleared in assembled condition. Therefore, assuming without admitting that the case of the Department, even then the demand of Central Excise duty on IC engines captively consumed in manufacture of PD pumps which are cleared in assembled form is not sustainable under any circumstances.
2.2 He submits that IC Engines which are captively consumed in the manufacture of PD Pumps are eligible for exemption under Notification No.67/95-CE dated 16.03.1995. As the activities undertaken by the Appellants amount to manufacture in view of Note 6 to Section XVI of Central Excise Tariff Act. He also submits that there is an error in the quantification of duty demand on IC Engines in as much as the IC Engine captively consumed in other product like Monoblock Pumps which is not in dispute in the present case. the dispute in the present case is only pertains to IC Engines used in the manufacture of PD Pumps. He further submits that the demand for the June-2014 to April-2014 is barred by limitation as there is not suppression of fact on the part of the appellant.
2.3 He also submits that the similar issue has been considered by the lower Authorities in various following orders:-
Parshwa Diesels Pvt. Ltd. Order-in-Appeal No. RAJ-EXCUS-000-APP-011- 012-2023 dated 30.01.2023 Prem Engineering Pvt Ltd. Order-in-Appeal No. RAJ-EXCUS-000-APP-013- 014-2023 dated 31.01.2023 Shree Satya Industries Order-in-Appeal No. RAJ-EXCUS-000-APP-021-
022-2023 dated 31.01.2023
Ameer International Order-in-Appeal No. RAJ-EXCUS-000-APP-023-2023
dated 31.01.2023
5|Page E/11019 &11022/2021-DB
Sardhara Industrial Corporation Order-in-Appeal No. RAJ-EXCUS-000- APP-017 to 018-2023 dated 31.01.2023 2.4 In all the above cases, the demand was set aside and as per the inquiry made under RTI, it was replied that the above orders have been accepted by the department. In view of the Learned Principal Commissioner taken a different view is incorrect and illegal. In support of his submission he placed reliance on the following judgments:-
Usha International Ltd. v. CCE, Delhi-IV 2018 (364) ELT 1103 (T) Quippo Energy Pvt. Ltd. v. CCE, Ahmedabad - II 2016 (331) ELT 617 (Tri.
- Ahmd.) Leo Circuit Boards Pvt. Ltd. v. CCE, Belapur 2015 (330) ELT 227 (Tri. Mum.) Exide Industries Ltd. v. CCE & ST, Delhi - III 2016 (333) ELT 101 (Tri. Del.) Majestic Auto Ltd. v. CCE, Meerut 2001 (130) ELT 551 (Tri. Del.) CCE v. Indo Asian Fuse Gear Ltd. 1993 (68) ELT 207 (T) Rico Auto Indistries Ltd v. CCE 2007 (210) ELT 583 (Tri-Del.) S.M. Telesys Ltd v. CCE 2006 (201) ELT 275 (T) Western Refrigeration Pvt. Ltd v. CCE 2009 (245) ELT 485 (T) Patel Field Marshal Industries v. CCE, Rajkot 2003 (158) ELT 483 (Tri. Mum.) Birla Corporation Ltd. v. CCE 2005 (186) ELT 266 (SC) Jayaswals Neco Ltd. v. CCE 2006 (195) ELT 142 (SC) Cargill India Pvt. Ltd. v. Union of India 2013 (288) ELT 209 (Guj.) CCE v. Aurobindo Pharma Ltd. 2010 (259) ELT 673 (A.P.) Maintained by Hon'ble Supreme Court in 2011 (269) ELT A147 (SC) CCE v. Ratan Melting & Wire Industries 2008 (231) ELT 22 (SC) CCE, Jaipur v. Super Synotex India Ltd. 2014 (301) ELT 273 (SC) Union of India v. Uttam Steel Ltd. 2015 (319) ELT 598 (SC) CCE v. Diamond Scaffolding Co. 2011 (274) ELT 10 (Cal) Padmini Products v. Collector of Central Excise 1989 (43) ELT 195 (SC) Continental Foundation v. CCE 2007 (216) ELT 177 (SC)
3. Shri Rajesh Nathan, Learned Assistant Commissioner(AR) appearing on behalf of 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 the learned Principal commissioner has decided the matters solely relying upon the judgments of M/s. Honda Seil Power Products Ltd delivered by the Hon'ble High Court of Allahabad. From the said judgment we observed that if the PD Pumps and IC Engines are not assembled and kept together in one packing and cleared that
6|Page E/11019 &11022/2021-DB activity does not amount to manufacture. However, in the present case it is the claim of the appellant that in majority of cases the IC Engine has been fitted with the PD Pumps and the PD Pump set was cleared duly assembled with IC Engine. Therefore, the fact of the case of M/s. Honda Siel Power Products Ltd judgment is different from that of the present case.
4.1 It is also observed that as regard the Monoblock Pumps there is no dispute that the IC Engine was used in the manufacture of Monoblock Pumps. Therefore, the interpretation and contention applied in the case of PD Pump will not apply in the case of Monoblock Pump. Therefore, there is an error in the order to this effect. We are of the prima facie view that in a case where the PD Pump and IC Engine are cleared in SKD form as per the Hon'ble Allahabad High Court Judgment the activity will not amount to manufacture. Therefore the same may be given separate treatment as compared to the PD Pump and IC Engine cleared duly assembled. We also observed the appellant has heavily relied upon the judgment in the case of Usha International Ltd.(supra) however the same was not considered by the adjudicating authority.
5. From the above facts we find that the impugned order suffers from various infirmity, accordingly the matter needs to be reconsidered on all the issues. Hence we set aside the impugned order and remand the matters to the adjudicating authority for passing the fresh order keeping in view our above prima facie observation.
(Pronounced in the open court on 01.07.2024) (RAMESH NAIR) MEMBER (JUDICIAL) (C L MAHAR) MEMBER (TECHNICAL) Raksha