Customs, Excise and Gold Tribunal - Delhi
Steelage Industries Ltd. vs Collector Of Central Excise on 14 May, 1993
Equivalent citations: 1993ECR622(TRI.-DELHI), 1993(68)ELT93(TRI-DEL)
ORDER S.L. Peeran, Member (J)
1. The appellants are aggrieved with the order of the Collector (Appeals), Madras in order No. 77/86-M dated 24-4-1986.
2. The brief facts of the case are that the appellants filed a classification list No. 5/83 for trailer pump falling under Tariff Item 68 of the First Schedule to the Central Excise Tariff. The department took the stand by issue of show cause notice that the trailer was first manufactured by them under Tarrif Item 34(4) and subsequently other equipments were mounted on the trailer to form complete trailer pump and duty for trailer under Tariff Item 34(4) captively consumed under Rules 9 and 49 was demanded. The lower authorities confirmed the demand by classifying the goods under Tariff Item 34(4) of the first Schedule to the Central Excise Tariff and ordered payment accordingly. On appeal, the ld. Collector in his brief order has held :
"I have carefully gone through the facts of the case and also heard Mr. Khosla, who explained in detail the points in memo of appeal. It is not denied by the appellants that trailer pump has all the characteristic of a trailer. Their point is that when the pump is mounted, on a steel sheet, it is not a trailer. After mounting of the fact for the sake of mobility, wheels etc. are affixed. Thus before leaving the factory, what comes into existence is a trailer mounted with a pump. Therefore, both trailers and pump are manufactured by the appellant, and cleared as trailer pump. The article should merit assessment under Tariff Item 34, and the pump fitted should be taken as captively consumed in production of trailer pump classification under TI 68 was erroneous (both C.B.E.C. Tariff advices No. 29/81-13-3-1981 and 52/84 dated 20-10-1984 are in support of this view.
For the reasons stated above, the appeal fails and is rejected."
3. It is the contention of the appellant that in the show cause notice the demand was made on trailer and not on trailer pump as can be seen from its extract:
"On going through the write up submitted and the detailed probe of the products it was observed that a trailer was first manufactured by the party falling under Tariff Item 34(4) of the Central Excise Tariff and subsequently other equipments are mounted on the trailer to form complete fire fighting equipment falling under Tariff item 68".
"As to why the trailer emerging as a product first in the trailer pump should not be classified under TI 34(4) of the Central Excise Tariff and why duty should not be demanded for the trailer under Tariff Item 34(4) captively consumed under Rules 9 and 49 as amended of Central Excises and Salt Act, 1944".
4. Therefore, it is contended that the ld. Collector had erred in deciding the classification not of trailer as mentioned in show cause notice but that of the final product i.e. the trailer pump, which according to appellants falls outside the ambit of the show cause notice.
5. It is their further contention that in the cause of manufacture of trailer pump, the trailer never comes into existence in an independent and identifiable form and therefore, they cannot be charged with the manufacture of the product and duty demanded is not proper. The Asstt. Collector in order-in-original had clearly admitted that the engine and pump are first mounted on the frame of the trailer and it is after this mounting only that the equipment is further fitted with axles or suspension and tyres and the implication is that trailer does not come into existence, except perhaps as a integral part of the trailer pump. In the circumstances, the appellant contend that no manufacture of so called trailer comes into existence as an independent and identifiable form and hence they are not liable to pay duty on the imaginary product not into existence.
6. The appellants have desired their case to be heard on merits. We have heard the DR.
7. The Assistant Collector in the order-in-original has held :
"I find that the assessee no doubt manufactures a trailer but they first mount the engine and pump on the frames for their convenience. Because the engine and pump are first mounted on the frame of a trailer, it cannot be brushed aside that there was no manufacture of trailer. To suit their convenience, the pump and the engine are mounted, and then, the axles, the suspension and tyre wheels are fixed for mobility on the road as any other trailer".
8. It follows from the reading of the above para that the product which has come into existence is trailer pump 'itself. The product has emerged as a fully manufactured one. It is not the case that independent trailers of the tyre known in the trade are first manufactured and on that the other parts of engine and pump are assembled. The Asstt. Collector has drawn inferences without proper appreciation and the findings are not sustainable. Every vehicle has got a chasis and it would be wrong to presume that every chase of a vehicle is a trailer. The ld. Asstt. Collector has relied on the Oxford dictionary meaning of 'Trailer' as "wheeled vehicle drawn by another" and also that of the Chamber's Twentieth Century Dictionary gives the meaning as "carriage towed or dragged by a car, bicycle or a tractor" to come to conclusion that before the engine and pump is fitted on frame; the existence of frame is a trailer. It is well settled that for purpose of classification the dictionary meaning is a delusive guide and it is the commercial understanding and the people who deal in them which should be accepted as a guide [see Sales Tax Commissioner, U.P. v. S.N. Brothers, AIR 1973 SC 78, Dunlop India Ltd. v. Union of India, AIR 1977 SC 597; Collector of Central Excise v. Dowell's Electro Works 1990 (45) E.L.T. 96]. In this case the department has not placed any evidence that the frame is a trailer. Therefore, we are not inclined to accept the reasoning of the lower authorities. Further the Collector (Appeals) has also decided beyond the scope of the show cause notice, as contended by the appellant. In the result, the appellant's contentions are well founded and the appeal is allowed.