Customs, Excise and Gold Tribunal - Tamil Nadu
Ashok Leyland Ltd. vs Commissioner Of Central Excise on 7 July, 2000
Equivalent citations: 2000(72)ECC536
ORDER V.K. Agrawal, Member (J)
1. In these 3 appeals filed by M/s. Ashok Leyland Ltd., the issue involved is whether the chassis for special purpose motor vehicles are covered by SI. No. 9 of exemption Notification No. 162/86-CE dated 1.3.86 and whether an omnibus show cause notice for demand of duty for subsequent period can be issued by the department.
2. Shri R. Raghavan, learned Advocate, along with Shri T.S. Balasubramanian, learned Advocate, submitted that the appellants manufactured chassis for special purpose motor vehicles; that SI. No. 9 of the table annexed to the notification provides concessional rate of duty to Three-axled motor vehicles which is not articulated vehicle and as such they satisfied both the conditions specified in column 3 of the table annexed to the notification; that it is not required under the notification that the chassis which falls under Heading 87.06 should confine to the chassis meant for vehicles falling under either Heading 87.02 or 87.04. He emphasised that once the chassis falls under Heading 87.06 and it is meant for Three-axled motor vehicles which is not an articulated vehicles, the benefit under the notification for concessional rate of duty is available to the chassis manufactured by them. He further mentioned that mentioning of Heading No. 87.02 or 87.04 are not relevant for the purpose of extending the benefit of the notification to the chassis. These headings are only meant for the vehicles in complete conditions. He further mentioned that once the chassis manufactured by them are covered by the wordings of the notification, the benefit cannot be denied to them by taking a narrow interpretation. He also submitted that mentioning of headings are not relevant for the purpose of extending the notification and in support he relied upon the decision in the case of Jain Engineering Co. v. CCE, Bombay , where the benefit of notification was extended to the parts of IC Engines though these parts were not falling within Chapter 84.06.
3. In respect of Appeal No. 4832/92, the learned Advocates pointed out that the demand for the period 1.4.89 to 31.5.90 has been confirmed by way of issue of corrigendum dated 29.1.92 to the Order-in-Original No. 23/91 dated 29.8.91; that no show cause notice has been issued by the department under Section 11A of the Central Excise Act for demanding duty for the period 1.4.89 to 31.5.90; that it is a legal requirement under Section 11Ato issue a notice before any demand of excise duty can be confirmed against an assessee; that there is no provision in law to issue an omnibus show cause notice stating therein that the clearances from a specified date would be liable to duty and then confirm the duty on the basis of such a show cause notice; that it is the requirement of law that a specific show cause notice with reasons and quantifying the amount of differential duty is issued. He also referred to the decision of the Supreme Court in the case of CCE, Baroda v. Kosan Metal Products Ltd. .
4. Countering the arguments, Shri Kunhi Kannan, learned DR, submitted that Notification No. 162/86 exempts the goods specified in column 3 of the table and falling under Heading Nos. of Schedule to the Central Excise Tariff Act specified in the corresponding entry in column 2 of the said table; that it is apparent from the wordings of the notification that only those goods which fall under a specified tariff heading are eligible for the benefit of the concessional rate of duty; that SI. No. 9 of the notification only exempts Three-axled motor vehicles other than articulated vehicles falling under Heading 87.02 and 87.04 and chassis, therefore, falling under Heading 87.06; that the chassis manufactured by the appellants are meant for a special purpose motor vehicles falling under Heading 87.05 which is not one of the headings mentioned in SI. No. 9 of the notification. He further submitted that the entire notification has to be read together for extending the benefit of a particular SI. No. and 87.05 is not mentioned in SI. No. 9 of the table; that the chassis meant for such vehicles are not eligible particularly in view of the word "therefore" used in the table.
5. Regarding the demand of duty in A. No. E/4832/92, the learned DR submitted that show cause notice dated 26.8.89 clearly mentions that the appellants have to show cause as to why the differential duty on clearances effected from 31.3.89 onwards should not be recovered from them; that as such it cannot be said that no show cause notice was issued to them. In this connection, he also reiterated the findings of the Commissioner (Appeals) as contained in Order-in-Appeal No. 128/92,wherein, he has observed that the additional demand raised by corrigendum was well within the date of issue of Order-in-Original No. 23/91 dated 29.8.91 and since the additional demand was based only on the issue of classification and dutiability decided by the Assistant Collector and confirmed by Collector (Appeals), the additional demand is covered by the show cause notice.
6. We have considered the submissions of both the sides. Notification No. 162/ 86-CE dated 1.3.86 reads as under:
EFFECTIVE RATES OF DUTY FOR MOTOR VEHICLES AND PARTS THEREOF: In exercise of the powers conferred by Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, and in super session of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 70/86-Central Excises, dated the 10th February, 1986, the Central Government hereby exempts the goods specified in column (3) of the Table hereto annexed and falling under heading Nos. of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), specified in the corresponding entry in column (2) of the said Table, from so much of the duty of excise leviable thereon which is specified in the said Schedule as is in excess of the amount calculated at the rate specified in the corresponding entry in column (4) of the said Table, subject to the conditions, if any, laid down in the corresponding entry in column (5) thereof.
_____________________________________________________________________________ SI. No. Heading No. Description of goods Rate Conditions ______________________________________________________________________________ 9 87.02 or Three-axled motor vehicles Fifteen 87.04 or other than articulated Percent 87.06 Vehicles and chassis therefor ad valorem ______________________________________________________________________________ It is apparent from the perusal of the notification that the Central Government has exempted goods which are specified in column 3 and which fall under the headings mentioned in corresponding column 2 of the table annexed to the notification. We find ourselves unable to agree with the learned Advocates that the classification of the Three-axled motor vehicles which are not articulated vehicles falling under Heading 87.02 or 87.04 will not be relevant for extending the benefit of the notification to the chassis manufactured by them. As pointed out by the learned DR, the words used in the notification are "chassis thereof' and in view of these specific words the chassis which are partially exempted under SI. No. 9 are the chassis meant for Three-axled motor vehicles other than articulated vehicles falling under Heading 87.02 and 87.04. It is not in dispute that the chassis manufactured by them and which are in dispute in these proceedings are meant for vehicles falling under Heading 87.05. The decision in the case of Jain Engineering (supra), in our view, does not support the case of the appellants for the reason that the notification exempted IC Engines and parts thereof. In view of the exemption specifically available to the parts of the IC Engines, the Supreme Court held that it is not necessary that parts should also fall under Heading 87.06. It is not the situation in the present matter as the chassis only of Three-axled vehicles falling under Headings 87.02 and 87.04 are to be given the benefit of the notification under SI. No. 9. It is not the case of the appellants that Heading No. 87.05 is also mentioned in column 2 of SI. No. 9. Accordingly, we hold that the chassis manufactured by the appellants which are in dispute in these proceedings are not eligible for the benefit of the Notification in terms of the SI. No. 9 of the table annexed to Notification No. 162/86. Accordingly, the demand of Central Excise duty which are subject matters of A. No. E/4835 & 4836/92 are also upheld.
7. We find substance in the submissions of the learned Advocates that no demand of Central Excise duty can be confirmed without issue of show cause notice under Section 11A. The highest Court of the land has pronounced in many decisions including in the case of Kosan Metal Products, (supra) that show cause notice under Section 11A has to be issued for demand of Central Excise duty. Mere mention that the appellant should also show cause as to why the duty should not be demanded from 31.3.89 is not a show cause notice as is required under Section 11A of the Ceintral Excise Act. There was no bar for the department to issue a show cause notice specifically mentioning the period and the amount of duty which was demandable from the appellants. In view of this, the demand for the period 1.4.89 to 31.5.90 which is the subject-matter of A. No 4832/92 is set aside. We make it clear that demand for the period 28.2.89 to 21.8.89 has already been confirmed in A. No. 4835/92 and as such the demand for the same period which the subject matter of A. No. E/4832/92 being the second demand for the same period is infructuous.
8. All the three appeals are disposed of in the above terms.