Custom, Excise & Service Tax Tribunal
Apollo Tyres Limited vs Commissioner Of Central Goods & Service ... on 13 August, 2025
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
CHENNAI
REGIONAL BENCH - COURT NO.III
(1) Excise Appeal No. 40616 of 2023
(Arising out of Order-in-Original No.28/2023 (COMMR) dated 06.06.2023
passed by Commissioner of GST & Central Excise, Chennai Outer, Newry
Towers, No.2054, I Block, II Avenue, Anna Nagar, Chennai-600 040)
M/s. Apollo Tyres Ltd. ....Appellant
Plot No.7, Institutional Area,
Sector-22,
Gurgaon-122 001.
Versus
Commissioner of GST & Central Excise, ... Respondent
Chennai Outer Commissionerate,
Newry Towers, No.2054, I Block,
II Avenue, 12th Main Road,
Anna Nagar,
Chennai-600 040.
WITH
(2) Excise Appeal No. 40226 of 2024
(Arising out of Order-in-Original No.28/2023 (COMMR) dated 06.06.2023
passed by Commissioner of GST & Central Excise, Newry Towers,
No.2054, I Block, II Avenue, Anna Nagar, Chennai-600 040)
Commissioner of GST & Central Excise, ... Appellant
Chennai Outer Commissionerate,
Newry Towers, No.2054, I Block,
II Avenue, 12th Main Road,
Anna Nagar, Chennai-600 040.
Versus
M/s. Apollo Tyres Ltd. ....Respondent
Corporate Office
No.7, Institutional Area,
Sector 32,
Gurgaon-122 001.
2
APPEARANCE:
Shri Joseph Kodianthara, Senior Advocate for the Assessee
Shri Ayyam Perumal, Special Counsel for the Revenue
CORAM:
HON'BLE MR. P. DINESHA, MEMBER (JUDICIAL)
HON'BLE MR. M. AJIT KUMAR, MEMBER (TECHNICAL)
FINAL ORDER Nos.40820-40821/2025
DATE OF HEARING: 18.03.2025
DATE OF DECISION:13.08.2025
Per: Shri P. Dinesha
These Appeals are filed by Assessee and Revenue
against the Order-in-Original No.28/2023 (Commr) dated
06.06.2023 passed by the Commissioner of GST & Central
Excise, Chennai Outer and the period involved is from
01.09.2013 to 30.06.2017. The starting point was the
issuance of Show Cause Notice dated 06.08.2019. A perusal
of the SCN indicates that it had inter alia proposed to
reassess and demand the duty by invoking Section 4A of the
Central Excise Act, 1944 on the premise that Tyre, Tube and
Flap cleared by the Assessee as a set or independently, was
a 'pre-packaged commodity' within the meaning of Legal
Metrology Act, 2009 (LM Act, for short). The second issue
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proposed in the above SCN, an alternate, on the premise
that if the demand under Section 4A did not hold good then
the plant-wise differential duty would be payable on account
of discounts not passed on to the buyers at the point of sale
under Section 4 (1) (b) of the Act.
2. The Appellant/Assessee appears to have filed its detailed
replies on various dates which were considered during
adjudication and the Commissioner, in the impugned order,
has extracted some of the pleadings. The relevant recording
as appear in the OIO are as under :
'....The intelligence and subsequent investigation revealed -
(i) Some Bias Tyres are inserted with a tube & flap and
partially inflated and strapped at 3 locations around the tyre
using plastic strip;
(ii) Some of the tube tyres are cleared without any
packaging as single unit and some tyres are inserted with a
tube & flap, partially inflated and strapped at 3 locations
around the tyre using a plastic strip;
(iii) Some of the tubes sold in the retail market are packed
in a polythene packing;
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(iv) Appellant/Assessee was paying Central Excise duty
under Section 4 in respect of tubes packed in polythene
packing sold in retail market; further, they are also paying
Central Excise duty under Section 4 in respect of tubes not
packed.
(v) Appellant/Assessee was paying Central Excise duty under
Section 4A in respect of packed tubeless tyres and they are
paying Central Excise duty under Section 4 in respect of all
other tyres, tubes and flaps when removed/cleared as single
units and when cleared as sets put up for sale together by
way of carry strapping.
(vi) Two types of valuation were adopted by Appellant on
the clearances effected. While some of the products cleared
under Section 4A is proper, the assessment and valuation of
those clearances under Section 4 of Central Excise Rules,
1944 escaped appropriate Central Excise duty on the basis of
Section 4A.
....'
3. The Appellant/Assessee had questioned the jurisdiction
of the Central Excise Authority which is captured at
paragraph 11 (ix) which reads as under :
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"The very jurisdiction of the Central Excise authorities to
decide the issue does not exist since the question as to
whether the commodity is a packaged or pre-packaged
commodity on which MRP has to be affixed is for the
authorities under the Legal Metrology Department. The
Government had earlier under the provisions of
Standards of Weights and Measures Act clarified that
tyre, tube and flap assembled or strapped is not packaged
commodity. On this basis, the jurisdictional Commissioner
has also dropped the Show Cause Notice issued. As this
order has not been challenged by the Department
recourse to a fresh notice on the same issue invoking
Section 11A is without jurisdiction."
4. This apart, the Appellant/Assessee had also questioned
the invoking of the extended period of limitation since,
according to the Appellant/Assessee, it had been following
the very same modus for almost 25 years, for some of the
years Show Cause Notices were issued and for an
immediately preceding period [SCN No.39/2010 dt.
08.07.2010 for the period 01.01.2006 to 31.12.2009 & SCN
No.6/2011 dt. 25.01.2011 for the period 01.01.2010 to
31.12.2010], ld. Commissioner of Central Excise, Cochin
after being fully satisfied had dropped further proceedings
vide OIO No.4 & 5/2011 dated 28.02.2011 and hence, the
conduct of the Appellant/Assessee did not lead to
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suppression of facts. Support in this regard has also been
placed on the decision of Hon'ble Supreme Court in
Radhasoami Satsang Saomi Bagh Vs CIT - 1992 (1) SCC
659 and the Hon'ble Delhi High Court in J.K. Synthetics
Ltd. Vs UOI - 1981 (8) ELT 328 (Del.)
5. The Commissioner having reproduced most of the
pleadings of the Appellant/Assessee, however, without
answering some of the pleas, vide the impugned Order-in-
Original has confirmed the proposed demands including
interest at applicable rates and penalty. It is against this
order that Appeal No.E/40616/2023 has been filed by the
Assessee.
6. The Revenue has filed Appeal No.E/40226/2024
being aggrieved by the impugned order of the
Ld. Adjudicating Authority (i) not confirming the differential
duty with interest for the period 01.10.2013 to
30.06.2017 as against 01.04.2014 to 30.06.2017, (ii) not
imposing higher penalty under Rule 25 of Central Excise
Rules, 2002; and (iii) not imposing personal penalty under
Rule 26 of Central Excise Rules, 2002.
7. Learned Senior Advocate Shri Joseph Kodianthara
appearing for the Appellant/Assessee would contend that
when there is no dispute as regards the method adopted by
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the Assessee, there could be no question of covering a single
unit as a 'packaged commodity' especially when there was
no packing resorted to. This apart, the Original Authority has
observed going by Entry 108 of Notification No.49/2008-
CE/NT dated 24.12.2008, to hold that entry 'parts,
components and assemblies' of automobiles include 'Tyres,
Tubes, & Flaps' and therefore are rightly liable to be valued
under Section 4A but without examining the same in the
context of ratio laid down by Delhi Bench in the case of J.K.
Tyres & Industries Ltd. Vs CCE Indore - 2017 (358) ELT
1044 (Tri.-Del.) wherein it has been categorically held that
Tyres, Tubes and Flaps are used in many other machines and
hence they could not be considered as 'parts of automobiles'
and consequently, application of Section 4A vis-à-vis MRP
came to be set aside.
8. Ld. Senior Advocate would also canvas that the
demand proposed vide Show Cause Notice was hopelessly
barred by limitation which issue though seriously contended
by the Assessee in their replies, but the same has been
ignored by the Adjudicating Authority. He would invite our
attention to the following decisions of Supreme Court in
support, viz., -
8
(i) Collector of Central Excise vs. Champhar
Drugs and Liniments - 1989 (44) E.L.T. 276
(S.C.)
(ii) Pushpam Pharmaceuticals Company vs.
Collector of Central Excise, Bombay -
1995 (78) E.L.T. 401 (S.C.)
(iii) Continental Foundation Joint Venture
vs. Commissioner of Central Excise,
Chandigarh - 2007 (216) E.L.T 177 (SC)
(iv) Uniworth Textiles Limited vs.
Commissioner of Central Excise, Raipur -
2013 (288) E.L.T. 161 (SC).
9. Explaining further, he would argue that a similar issue
was raised vide SCNs dated 08.07.2010 and 25.01.2011
supra, after considering the replies filed by the noticee and
after examining the issue in the context of clarifications
issued by the Ministry of Consumer Affairs and also various
Notifications issued by the Board in this regard, the ld.
Commissioner of Central Excise, Cochin had dropped further
proceedings and it is a matter of record that the Revenue
chose to accept the said Order-in-Original without filing any
further Appeal. The said OIO has therefore become final as
on date.
10. Without prejudice to the above, it is his case that the
other plea of the Appellant/Assessee regarding exemption
granted for packaged commodities exceeding 25 kgs. has
9
also been deliberately ignored by the Commissioner in the
impugned order and hence, the above two crucial aspects
indicate that there was nothing that was suppressed, that
too, with an intention to evade duty liability and hence, the
Department has miserably failed to justify invoking the
extended period of limitation. Hence, both on merits as well
as on limitation the impugned order confirming the arbitrary
demands raised without justification cannot be sustained. He
would thus pray for setting aside the same and allowing
Assessee's Appeal and for dismissing the Appeal filed by
Revenue.
11. Per contra, ld. Special Counsel for the Revenue
Shri Ayyam Perumal invited our attention particularly to para
21 of the impugned order wherein, the Original Authority has
given a categorical finding as to the applicability of section
4A ibid. He would also rely on other specific findings in the
impugned order both on merits as well as extended period of
limitation, to contend that the demand in the OIO is very
much in order and hence, would pray for dismissal of the
Appeal of the Assessee and for allowing the Revenue's
Appeal.
10
12. We have very carefully considered the rival contentions
and perused the documents placed on record including the
impugned order. The only issue to be decided by us is
"whether impugned order is sustainable or not"?
13. Section 4A ibid reads as under :
"4A. Valuation of excisable goods with reference to retail
sale price. --
(1) The Central Government may, by notification in the
Official Gazette, specify any goods, in relation to which it is
required, under the provisions of the Legal Metrology Act,
2009 (1 of 2010) or the rules made thereunder or under any
other law for the time being in force, to declare on the
package thereof the retail sale price of such goods, to which
the provisions of sub-section (2) shall apply.
(2) Where the goods specified under sub-section (1) are
excisable goods and are chargeable to duty of excise with
reference to value, then, notwithstanding anything contained
in section 4, such value shall be deemed to be the retail sale
price declared on such goods less such amount of abatement,
if any, from such retail sale price as the Central Government
may allow by notification in the Official Gazette."
...
Explanation 1. -- For the purposes of this section, "retail sale price" means the maximum price at which the excisable goods in packaged form may be sold to the ultimate consumer and includes all taxes, local or otherwise, freight, transport charges, commission payable to dealers, and all charges towards advertisement, delivery, packing, forwarding and the like and the price is the sole consideration for such sale :
Provided that in case the provisions of the Act, rules or other law as referred to in sub-section (1) require to declare on the package, the retail sale price excluding any taxes, local or otherwise, the retail sale price shall be construed accordingly.
Explanation 2. -- For the purposes of this section, -11
(a) where on the package of any excisable goods more than one retail sale price is declared, the maximum of such retail sale prices shall be deemed to be the retail sale price;
(b) where the retail sale price, declared on the package of any excisable goods at the time of its clearance from the place of manufacture, is altered to increase the retail sale price, such altered retail sale price shall be deemed to be the retail sale price;
(c) where different retail sale prices are declared on different packages for the sale of any excisable goods in packaged form in different areas, each such retail sale price shall be the retail sale price for the purposes of valuation of the excisable goods intended to be sold in the area to which the retail sale price relates.
Pre-packed commodity as per LM Act reads thus:
Legal Metrology Act "Pre-packed commodity" means a commodity which without the purchaser being present is placed in a package of whatever nature, whether sealed or not, so that the product contained therein has a pre-determined quantity.
Rules Rules 2(g) "packer" means a person who, or a firm which pre-packs any commodity, whether in any bottle, tin, wrapper or otherwise, in units suitable for sale whether wholesale or retail;
Rules 2(h) "principal display panel", in relation to a package, means the total surface area of the package where the information required under these rules are to be given in the following manner, namely:-12
(i) all the information could be grouped together and given at one place; or
(ii) the pre-printed information could be grouped together and given in one place and on-line information grouped together in other place;
Rule 2(k) "retail package'" means the packages which are intended for retail sale to the ultimate consumer for the purpose of consumption of the commodity contained therein and includes the imported packages;
Rule 3 - Applicability of the Chapter "The provisions of this Chapter shall not apply to -
(a) packages of commodities containing quantity of more than 25 kg or 25 litre including cement and fertilizer sold in bags upto 50 kg; and
(b) packaged commodities meant for industrial consumers or institutional consumers."
Rule 6 (1) - Declarations to be made on every package (1) Every package shall bear thereon or on label securely affixed thereto, a definite, plain and conspicuous declaration made in accordance with the provisions of this chapter as to -.....
13The relevant definition as per SWM Act & Rules read thus:
SWM Act Section 2 (b) "commodity in packaged form" means commodity packaged, whether in any bottle, tin wrapper or otherwise, in units suitable for ale, whether wholesale or retail. SWM (PC) Rules Rule 2 (k) "Packer" means a person who, or a firm or a Hindu undivided family, which pre-packs any commodity, whether in any bottle, tin, wrapper or otherwise in units suitable for sale whether wholesale or retail; Rule 2(l) "Pre-packaged commodity" means a commodity which without the purchaser being present, is placed in a package of whatever nature, whether sealed or opened, so that the product contained therein has a pre-determined value and includes those commodities which could be taken out of the package for testing or examining or inspecting the commodity.
Rule 2 (m) "Principal display panel", in relation to a package, means the total surface area of the package where the information required under these rules are to be given. This information could be given in the following manner :
(i) All the information could be grouped together and given at one place; or
(ii) The pre-printed information could be grouped together and given in one place ; and
(iii) Online information grouped together in other place;14
Rule 2(p) "retail package" means a packages which are intended for retail sale to the ultimate consumer for the purpose of consumption of the commodity contained therein and includes the imported packages:
Provided that for the purposes of this clause, the expression ultimate consumer shall not include industrial or institutional consumers:
Rule 2-A Applicability of the Chapter: The provisions of this Chapter shall not apply to -
(a) packages of commodities containing quantity of more than 25 kg or 25 litre excluding cement and fertilizer sold in bags upto 50 kg; and
(b) Packaged commodities meant for industrial institutional consumers.
Rule 3 - Chapter to apply to packages intended for retail sale - The provisions of this Chapter shall apply to packages intended for retail sales and the expression "packages", wherever it occurs in this Chapter, shall be construed accordingly.
Definitions under both the Acts/Rules are pari materia, but it is also a fact that LMA does not at all deviate materially insofar as characteristic of 'commodity' is concerned. Therefore, mere denial as the earlier order was under SWM whereas the present case is under LMA without bringing on 15 record the specific distinguishing factors may not be sufficient.
14. To our mind, to overcome or to deviate from the earlier year's proceedings culminating in the OIO No.4 & 5/2011 dated 28.02.2011 whereby the Commissioner after being completely satisfied had dropped the proceedings both in law as well as on facts, the Adjudicating Authority in the impugned order has vainly relied on the directions of the Hon'ble High Court vide its order dated 06.08.2018 in the Writ Petition [extracted at para 14 of the impugned order], which was clearly the recording of the submissions of the counsel. This, however, cannot and will not circumvent the logic or the acceptance of the earlier year's OIO; as we understand, the only way to not to follow a precedent is only when the same stands set aside, in appeal, as provided under the statute; the same cannot be called-in question in a separate proceedings and nor would any court entertain such an argument. The order in the writ petition is clearly against the proceedings for the subsequent period and hence, the understanding of the Adjudicating Authority to assume the directions of the Hon'ble High Court as 'uninfluenced by any of the averments made by the department..' cannot be held 16 to be covering the acceptance or otherwise of the OIO for the earlier period.
14.2 We also have the benefit of the SCNs [No.32/2010 dated 08.07.2010 & No.6/2011 dated 25.01.2011] issued for the earlier period 01.01.2006 to 31.12.2009 & 01.01.2010 to 31.12.2010 respectively wherein, the very first proposal at para 4(i) is as under:
(i) the practice of assessment of tyres under Section 4 of the Central Excise Act, 1944 should not be changed to assessment under Section 4A of the Central Excise Act, 1944.
14.3 The explanation offered along with the replies, as available at para 5 of the common OIO Nos.4 & 5/2011 dated 28.02.2011 further reveals that -
'....in the process involved in making the set, there was no pre packing or packing with respect to the set; that it was untenable to state that the tyres, tubes and flaps were sold in pre packed condition; that the tubes and flaps were merely inserted into the tyre and the tyre was strapped at 3-4 places to prevent the flap from falling out; that it could not be taken as pre-packing/packing'.
14.4 To the above factual pleadings, the observations of the Commissioner at para 6 of OIO dt. 28.02.2011 is of relevance and the same reads as under:
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"6. The assesse further submitted that the averments in para 3 of the SCNs were clearly untenable; that on the very issue of clearance in sets, SCNs had been issued earlier by the Adjudicating Authority and hence to state that the clearance in sets were done without the knowledge of the Department was therefore absolutely erroneous; that they had correctly declared the assessable value and paid duty under Section 4 and hence the attempt to invoke the extended period under the proviso to Section 11A(1) was patently unsustainable."
[emphasis supplied by us]
15. Relevant findings in the OIO as could be seen from para 10 of OIO dt. 28.02.2011 onwards, are also considered by us, para 13 of the same however, reveals as under:
"13. As per the documents on record, the activities carried out with reference to packing in these cases are that after manufacture of the tyre, the bought out tube is put inside the tyre, the flap which is also procured from outside is kept above the tube within the tyre, the tube is partly inflated and then a few polythene straps are put around the tyre with tube and flap inside....."
16. At para 29 of the impugned OIO, the Commissioner observes that '..ATL have carry strapped the Tubes & Flaps inserted into the Tyres which is a pre-packaged commodity in terms of Section 2(l) of Legal Metrology Act, 2009 and this fact was also suppressed...'. From the above, we fail to 18 understand if there is any deviating factual matrix; Primarily, there is no denial as to the practice adopted by the Appellant/Assessee over last 25 years and secondly, their declarations in the statutory documents for over 25 years as pleaded including for the period under challenge remains consistent. Facts of the case, the consistent practice of the Assessee and requirement under relevant statues have consistently remained the same.
17. In the light of the above, the Commissioner owed his responsibility to answer in the proper manner known under law as to why he is not accepting the earlier year's order and findings therein but unfortunately, without specifically bringing on record any of the change/s in law or on factual matrices and alleging that the earlier order is '...irrelevant, baseless and against directions of the court...' does not inspire any confidence to any court, not to speak of a honest tax payer; the same is arbitrary being inconsistent. The said view expressed in the impugned order by the Commissioner not only lacks merits but also appears to have been passed without proper application of mind.
18. At para 24.9, the Commissioner has spelt out that the introduction of LM Act which incorporated drastic changes 19 when compared to the earlier SWM Act & Rules. Unfortunately, we do not see any such 'drastic changes' being applied to the case on hand, nor is it discussed anywhere in the impugned order. Even if we accept the above findings on merits, but nevertheless the same in no way offer an escape route insofar as limitation coupled with suppression is concerned since it is not the case of the Revenue that the Appellant/Assessee had changed its practice of declaration in the statutory documents for the period in dispute, without disregarding the fact that there have been SCNs for various periods as well, as observed at para 14.4 supra.
19. Regarding limitation, we find that at para 27 while attempting to defend invocation of extended period, the Commissioner observes that '... identical products having same products codes were valued and assessed differently... Therefore, it is not understood as to why double standards were adopted...'. In fact, this was one of the allegations in the earlier SCN issued, perhaps relentlessly, by the Revenue. The findings at para 30 of the impugned OIO is therefore an attempt in vain, to defend the limitation. We would also now examine this issue in the context of relevant provisions under CEA.
20
20. Section 11A of the Central Excise Act, 1944 prescribes the modes of recovery of duty of excise and sub-section (4) is invokable 'where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, by reason of -
(a) fraud; or
(b) collusion; or
(c) any wilful mis-statement; or
(d) suppression of facts; or
(e)......
....'
21. Thus, the primary requirement is the short-levy or non-levy, for any of the reasons specified in clauses (a) to
(e). Revenue has strangely adopted Section 11A(8) in the SCN on the pretext that the Hon'ble High Court '...had passed an interim injunction staying investigation proceedings ...... the period of stay of 09 months granted by the Hon'ble High Court is to be taken into account for the purpose of demand in the instant notice as the provisions of sub-section 8 of Section 11A of the Central Excise Act, 1944. Therefore, the demand of central excise duty in the instant notice is extendable beyond the period of 5 years and calculated for the period from 01.09.2013 to 30.06.2017..'. 21
22. We are unable to comprehend any logic in the above averment; period of 5-years is given only when there is non- levy or short levy, etc., by reason, inter alia, of 'suppression of facts', otherwise, Section 11A(4) cannot be pressed into service at all. Without establishing 'suppression', the provision cannot be invoked automatically and for that, Revenue has to necessarily ponder over the past conduct of the Appellant-Assessee first and then the treatment by the Revenue. Both the parties are very well aware of the respective positions and there are documents evidencing the same.
23. This apart, we also find that there was a specific plea as to the non-applicability of LM Act by virtue of exemption since the pre-packaged commodity exceeded the weight specified under the said Act, the lower authority has once again failed to give a finding on this plea. When a specific plea is urged in response to a statutory notice, it is the duty of issuing authority to meet the grievance, consider the same on its merits and then give a proper finding. Not addressing the pleas/defense urged by a noticee would only indicate the incompetence and that the Authority had no answer; assuming silence may amount to acceptance. But in any case, the above two crucial facts are enough to hold that 22 there was no suppression, much less with an intent to evade duty, and hence, the duty demand by invoking the extended period of limitation is clearly an out of question.
24. In view of this alone, we are satisfied that the impugned order calls for interference as the Lower Authority has given room for inconsistency for no reason, that too without bringing out on record any deviating factual matrix and hence, we have no hesitation in setting aside the impugned order, which we hereby do.
25. Accordingly, the Appeal filed by Assessee is allowed with consequential benefits, if any, as per law. As a consequence, Revenue Appeal is dismissed.
(Order pronounced in open court on 13.08.2025) (M. AJIT KUMAR) (P. DINESHA) Member (Technical) Member (Judicial) gs/vl