Customs, Excise and Gold Tribunal - Delhi
Maruti Udyog Limited vs Collector Of C. Ex. on 13 October, 1997
Equivalent citations: 2003(162)ELT1153(TRI-DEL)
ORDER A.C.C. Unni, Member (J)
1. The present appeal arises from the order of Collector of Central Excise (Appeals), New Delhi dated 19-11-94. The issue involved relates to Modvat credit. By the impugned order, the order of the Assistant Collector directing recovery of two amounts namely Rs. 18,14,462.35 and Rs. 6,63,880.50 was confirmed.
2. Appearing for the appellants Shri R. Nambirajan, learned Advocate submitted that the impugned order had disposed of two show cause notices, one dated 3-5-88 demanding a duty of Rs. 6,63,880.50 for the period October, 1987 to March, 1988 and a second show cause notice, dated 25-4-88 demanding a duty of Rs. 18,14,462.35 for the period between March, 1986 and September, 1987.
3. Brief facts leading to the present appeal are :
3.1 Appellants are engaged in the manufacture of Motor Vehicles falling under Chapter 87 of the Central Excise Tariff Act, 1985. They were availing the benefit of Modvat credit of the duty paid on the inputs used in the manufacture of motor vehicles. During the years 1986-87 and 1987-88, appellants had declared 'Jack Assembly' supplied along with vehicles as an input used in the manufacture of the vehicles. They had accordingly taken Modvat credit on the duty-paid on 'Jack Assembly'. The appellants contend that they had filed various price lists and classification lists during the period 1986-87 and 1987-88 and these had been approved by the A.C. However, while assessing the RT-12s for the period March, 1986 to September, 1987, the Supdt. had written "assessed provisionally" in view of certain discrepancies. Appellants contend that there was no specific direction of the proper officer under Rule 9B of the Central Excise Rules to that effect. Two show cause notices one dated 25-4-88 and another dated 3-5-88 were issued to the appellants proposing to deny Modvat credit on 'Jack Assembly'. As regards the demand pertaining to the period March, 1986 to September, 1987, the appellants submitted that the show cause notice was issued on 25-4-88 and hence, was beyond the six months period and therefore, time barred. As regards show cause notice dated 3-5-88, appellants contended that Jack Assembly is used in the manufacture of motor vehicles inasmuch as no vehicle is despatched without 'Jack Assembly' which is essential for the motor vehicle and improves the utility of the vehicle.
3.2 The Assistant Collector by his order-in-original, dated 27-8-88 rejected the plea of limitation in relation to the show cause notice, dated 25-4-88 holding that a proposal to reverse the Modvat credit under Rule 57-I cannot be treated as recovery of duty short levied, short paid or erroneously refunded and therefore, no limitation would apply. Further, he also held that the Supdt. while assessing the RT-12 returns had specifically remarked that the assessment was provisional. On merits, the A.C. further held that 'Jack Assembly' was not required as an input for the manufacture of motor vehicles and hence, cannot be treated as an input used in or in relation to the manufacture of motor vehicles.
3.3 The Collector (Appeals), by his order dated 20-9-89 set aside the order-in-original passed by the A.C. for re-examination of the issue relating to finalisation of provisional assessment.
3.4 The A.C., after reconsidering the matter, passed the Order-in-Original No. 47/CE/94 dated 13-6-94 confirming the demand.
3.5 In appeal, the Collector (Appeals) passed the present order-in-appeal, dated 14-11-94 holding that Modvat credit had been provisionally assessed and therefore, there was no time bar.
4. Learned advocate submitted that it was an established practice of sale of motor vehicles during the period in question that in all cases of sale of motor vehicles, 'Jack Assembly' was included in the assessable value of the motor vehicles and therefore, 'Jack Assembly' is essential to market motor vehicles. He also submitted that it was a settled position of law that an item which is essential for the marketability of the final product is to be treated as used in the manufacture of the final product. Since, 'Jack Assembly' which is essential for the sale of motor vehicles as per the established trade practice, it is an item used in or in relation to the manufacture of motor vehicles. He, therefore, submitted that Modvat credit on Jack Assembly is allowable under Rule 57A.
4.1 He also pleaded that the show cause notice dated 28-4-88 was clearly beyond the six months period since the demand raised therein related to the period March, 1986 to September, 1989. He further submitted that the legal position was now well-settled by the decisions of the Tribunal as well as High Courts that even though there was no specific time limit mentioned under Rule 57-I during the period prior to 6-10-88, the time limit prescribed under Section 11A would govern the show cause notices issued under Rule 57-I as it stood prior to 6-10-88.
4.2 As regards the question of provisional assessment, learned counsel contended that for purposes of Section 11 A, the relevant date has been clearly provided for in Sub-section (3)(ii)(b) of that Section. In terms of Rule 9B dealing with provisional assessment, the proper officer may, either on the written request made by the assessee or on his own accord, direct that the duty leviable on the goods shall, pending the production of such documents or furnishing of such information or completion of any test or enquiry referred to in Sub-rule (1) be assessed provisionally. In any other case, the assessment can be made only finally. Learned counsel submitted that in the present case, no such circumstance existed and hence, the provisions of Rule 9B(1) were not applicable. In the instant case, the Supdt. had merely mentioned in the RT-12 assessment that the assessment is subject to production of certain documents. This cannot be treated as provisional assessment under the Act. Further, ......in RT-12 returns was merely for purposes of showing that assessment of RT-12 has not been completed. This cannot be treated as provisional assessment under the Act and for purposes of invoking 'relevant date' as defined in Section 11A(3)(ii)(b). In this connection, he referred to the Tribunal's decision in J.K. Cotton Spinning & Weaving Mills Ltd. v. CCE [1989 (23) ECR 385]. In the said case, it had been clearly held that for purposes of provisional assessment, a proper order under Rule 3B was necessary. Mere endorsement of RT-12 returns cannot make the assessment provisional as the assessments have to acquire the character of provisionality before the removal of the goods. The ratio of the said decision would also apply to Mod-vat cases. Further, the question whether 'Jack Assembly' is eligible for Mod-vat credit has no bearing on the question of provisional assessment of the final product and there was no provision under the Central Excise Rules relating to Modvat credit for allowing Modvat credit on a provisional basis. Learned counsel further contended that the mere fact that the proper officer had not completed assessment under Rule 173-I cannot by itself be deemed to mean that the assessments were provisional. An incomplete assessment under Rule 173-I is not a provisional assessment.
5. Defending the impugned order, the learned DR referred to the order and drew attention to the observations made therein stating that in the order-in-appeal, dated 12-10-89, the appellants themselves had admitted that 'lack' was not an input. The said point has, therefore, already been decided against the appellants and therefore, the appellants could not re-agitate the matter. As regards the question of provisional assessment, he pointed out that during the period in dispute, Rule 57-I contained no time limit for disallowing Modvat credit wrongly taken. Rule 57-I was amended only subsequently, i.e. by Notification No. 23/88, dated 6-10-88 to provide for a six months period. Therefore, there was no time bar for demanding credit taken by the appellants in the present case. As regards provisional assessment, it was not in dispute that RT-12 returns filed by the appellants had not been approved by the Supdt. Since he had made an endorsement in the relevant RT-12 returns that Modvat has been allowed subject to permission of A.C. and after verification of invoices and GP-1. There was, therefore, no final assessment and since the assessment was still pending at the time of issuance of show cause notice, no time bar was attracted in the case of show cause notice issued on 25-4-88.
6. We have considered the submissions.
7. On the question of the appellants themselves conceding before the Collector (Appeals) during the proceedings in Appeal No. 235/CE/DLH/83 that 'Jack Assembly' was not an input, learned counsel had drawn our attention to the Bombay High Court judgment in the case of Union of India v. Swan Mills Ltd. [1991 (56) E.L.T. 44 (Bom.)] wherein the Hon'ble High Court had observed that a concession on a point of law made by the appellants earlier cannot be treated as binding on them. We, therefore, do not consider that there is any bar to raising the point again before us in the present proceedings. As regards admissibility of 'Jack Assembly' supplied with motor vehicles for Modvat credit, we observe that this Tribunal had in the case of Bajaj Auto Limited v. Collector of Central Excise, Pune and Mahindra & Mahindra Ltd. v. Collector of Central Excise, Aurangabad [1996 (88) E.L.T. 355 (T) = 1997 (18) RLT 141 (CEGAT - NB)] held that 'Jack Assemblies' are entitled to avail Mod-vat credit in respect of excise duty paid on such goods during the period 1988 to 21-10-91 by virtue of CBEC's instructions. Following the ratio of the decision of the Tribunal in Bajaj Auto Limited (supra), we hold that 'Jack Assemblies' are eligible for Modvat credit under Rule 57A.
8. As regards the question of provisional assessment and time bar, we observe that the Tribunal in its order in the case of J.K. Cotton Spinning & Weaving Mills Ltd. v. CCE [1989 (23) ECR 335] had held that provisional assessment cannot be made in RT-12 returns. Following the ratio of the said order, we agree with the submissions made on behalf of the appellants that the remarks made in the RT-12 returns by the Supdt. stating that the assessment was provisional cannot be treated as a provisional assessment for purposes of Rule 9B. Since we are holding that the Department's claim that the assessment was only provisional and therefore, the show cause notice, dated 25-4-88 was within the period of limitation is not sustainable we hold that the said show cause notice is hit by time bar. As regards the argument that since Rule 57-I before its amendment in 1988 did not prescribe any time limit and the six months period provided in Section 11A would nevertheless apply, the Departmental Representative had relied on the Tribunal's decision in Man Industries Corporation Ltd. v. Commissioner of C.Ex. Jaipur [1996 (88) E.L.T. 178 (Tribunal)]. We find that the Tribunal had in that case rejected the assessees' contention that the show cause notice was time barred on the ground that in the facts and circumstances of the case, there was sufficient material on record that the demand had effectively been made within the normal time limit under Rule 57-I. The said decision does not, therefore, help the Department's case.
9. Having regard to the above discussion, we allow the present appeal and set aside the impugned order with consequential benefits to the appellants in accordance with law.