Custom, Excise & Service Tax Tribunal
Automobile Corporation Of Goa Ltd vs Commissioner Of Customs & Central ... on 8 September, 2011
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. I Appeal Nos. E/698 to 700/10 (Arising out of Order-in-Appeal No. CEX/GAO/VSK/02 to 04/2010 dated 20.01.2010 passed by Commissioner of Customs & Central (Appeals), Goa.) For approval and signature: Honble Mr. S.S. Kang, Vice President Honble Mr. Sahab Singh, Member (Technical) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
====================================================== Automobile Corporation of Goa Ltd Appellant (Represented by: Mr. V. Sridharan, Sr Advocate) Vs Commissioner of Customs & Central Excise, Goa Respondent (Represented by: Mr. V.K. Singh, SDR) CORAM:
Honble Mr.S.S. Kang, Vice President Honble Mr. Sahab Singh, Member (Technical) Date of Hearing : 08.09.2011 Date of Decision: 08.09.2011 ORDER NO..
Per: S.S. Kang
1. Heard both sides. Since common issue is involved, all these appeals are taken up together for disposal. The appellants filed these appeals against the impugned order passed by the Commissioner (Appeal) whereby the refund claims filed by the appellants in terms of Rule 5 of the Cenvat Credit Rules, 2004 were rejected.
2. Brief facts of the case are that the appellants are engaged in the activity of building the bus bodies on the chassis supplied by M/s Tata Motors Ltd. M/s Tata Motors Ltd cleared the chassis on payment of appropriate duty and the appellants were availing credit on the duty paid on chassis and also purchasing duty paid inputs which are used in the fabrication of bodies. Thereafter the complete buses were cleared on payment of appropriate duty to DTA and some buses were also cleared under bond for export.
3. The appellants filed refund claims under Rule 5 of the Cenvat Credit Rules, 2004 in respect of the duty paid on inputs used in the fabrication of bodies. The refund claims were rejected by the adjudicating authority on merits. The appellants filed appeals before the Commissioner (Appeals). The Commissioner (Appeals) dismissed the appeals on the ground that the appellants are not eligible to file refund claims under Rule 5 of the Cenvat Credit Rules, 2004, as the appellants are neither manufacturer of the final products which were cleared for export under Bond, nor they are manufacturers of the final product cleared for home consumption.
4. The contention of the appellants is that the appellants are independent manufacturers. The appellants rely on the Chapter Note 5 to Chapter 87 of the Central Excise Tariff which provides that and submits that as per Chapter Note 5 to Chapter 87 of the Central Excise Tariff, the appellants are manufacturers of motor vehicle which were exported. Therefore, being a manufacturer, they are entitled for unutilized credit accumulated in their account as per the provisions of Rule 5 of the Cenvat Credit Rules, 2004. The appellants also rely on the decision of the Honble Patna High Court in the case of Tata Engineering and Locomotive Co Ltd and another vs Union of India 1988 (35) ELT 617 (Pat) to submit that the body builders are manufacturers of motor vehicle for the excise purposes and the companies supplying the chassis are not manufacturers of motor vehicles. The appeal filed by the Revenue against this decision was dismissed by the Honble Supreme Court as reported in 1997 (94) ELT A-128 (SC). The appellants also rely on the decision of the Tribunal in Swaraj Mazda Ltd vs Collector of Central Excise, Chandigarh 2000 (125) ELT 959 (Tribunal) to submit that the body builders being separate independent manufacturers are liable to pay duty on the manufactured motor vehicle. The contention is that being the manufacturer of motor vehicles, the appellants entitled to file refund claim under Rule 5 of the Cenvat Credit Rules, 2004.
5. The Revenue submitted that the appellants were receiving duty paid chassis and availing credit in respect of the duty paid and discharging duty on the complete buses after utilizing such credit. In some case, the appellants were receiving chassis under bond and the buses were exported and drawback was also claimed on the duty paid on inputs used in such exported buses and relies on the findings of the Commissioner (Appeals) in the impugned order.
6. We find that the Commissioner (Appeals), in the impugned order held as under:-
the manufacturer who shall be allowed refund of such amount (representing the unutilisable Cenvat credit) is not the appellant as he is legally neither the manufacturer of the final product which is cleared for export under Bond nor is he the manufacturer of the final product cleared for home consumption.
16. I therefore, do not find merit in the argument of the appellants that they were eligible for the refund on merits in terms of Rule 5 of the Cenvat Credit Rules, 2004. I also find that the original adjudicating authority has come to the right conclusion of disallowing the refund claims but for the wrong reasons. The refunds cannot be granted not because of the need for verification of the computational details but because in terms of Rule 5 of the Cenvat Credit Rules, 2004 the appellant is not eligible to file the refund claim in the first place.
7. We find that the appellants are builders of bus bodies on the chassis supplied by M/s Tata Motors Ltd. Chapter Note 5 of Chapter 87 of the Central Excise Tariff provides as under:
For the purpose of this Chapter, building a body or fabrication or mounting or fitting of structures or equipment on the chassis falling under heading 8706 shall amount to manufacturer of a motor vehicle.
8. In view of above Chapter Note, the activities undertaken by the appellants amount to manufacture.
9. The Honble Patna High Court in the case of Tata Engineering and Locomotive Co Ltd (supra) where the Tata Engineering and Locomotive Co (TELCO) cleared chassis to the body builders for body building on payment of appropriate duty and thereafter TELCO sells the motor vehicles and the Revenue raised a demand on TELCO on the fully build motor vehicle. In that situation the Honble Patna High Court held that the independent body builders are manufacturers of body on its own account and not for or on behalf of TELCO and TELCO cannot be held to be manufacturer of the motor vehicle. The appeal filed by the Revenue was dismissed by the Honble Supreme Court reported as 1997 (94) ELT A-128 (SC).
10. In a similar situation, the Tribunal in Swaraj Mazda Ltd (supra) held that the ownership of the goods is not the criteria for levy of excise duty and the body builders are independent manufacturers and liable to pay duty on the manufacture of complete motor vehicle.
11. In view of the above, it cannot be said that the appellants are not independent manufacturer and M/s Tata Motors Ltd is the manufacturer of complete motor vehicle. Therefore, the findings in the impugned order passed by the Commissioner (Appeals) that the appellants are not manufacturer of final product are not sustainable and set aside.
12. Rule 5 of the Cenvat Credit Rules, 2004 provides as under:
Rule 5. Refund of CENVAT Credit.- Where any input or input service is used in the manufacture of final product which is cleared for export under bond or letter of undertaking, as the case may be, or used in the intermediate product cleared for export, or used in providing output service which is exported, the CENVAT credit in respect of the input or input service so used shall be allowed to be utilized by the manufacturer or provider of output service towards payment of,
(i) duty of excise on any final product cleared for home consumption or for export on payment of duty; or
(ii) service tax on output service, and where for any reason such adjustment is not possible, the manufacturer or the provider of output service shall be allowed refund of such amount subject to such safeguards, conditions and limitations, as may be specified, by the Central Government, by notification:
Provided that no refund of credit shall be allowed if the manufacturer or provider of output service avails of drawback allowed under the Customs and Central Excise Duties Drawback Rules, 1995, or claims rebate of duty under the Central Excise Rules, 2002, in respect of such duty; or claims rebate of service tax under the Export of Service Rules, 2005 in respect of such tax.
13. As per the provisions of the above Rule, where the manufacturer is unable to utilize the credit accumulated in respect of the inputs used in the manufacturer of excisable goods which were exported, the manufacturer is entitled for refund subject to the conditions prescribed therein. In view of the above provisions the Rules, it cannot be said that the appellants are not eligible to file refund claim. In view of this, the impugned order is set aside and the matter is remanded to the Commissioner (Appeals) to decide the refund claims of the appellants on merits after affording them a reasonable opportunity of being heard.
14. All the appeals are disposed in the above terms.
(Order portion pronounced in Court.) (Sahab Singh) Member (Technical) (S.S. Kang) Vice President rk 7