Customs, Excise and Gold Tribunal - Delhi
G And P Engineering Co. vs Collector Of C. Ex. on 15 September, 2000
Equivalent citations: 2001(130)ELT197(TRI-DEL)
ORDER V.K. Agrawal, Member (T)
1. In this appeal the issue involved is whether the Drilling Rigs mounted on motor vehicle chassis are classifiable under Heading 87.05 of the Schedule to the Central Excise Tariff Act as decided by the Collector under the impugned order or under Heading 84.30 as claimed by the Appellants.
2. Shri J.M. Sharma, learned Consultant, submitted that the issue involved in the present appeal is squarely covered by two decisions of the Appellate Tribunal; that in the case of LMP Precision Engg. Co. Ltd. v. CCE, Baroda, 1994 (70) E.L.T. 580, it was held by the Tribunal that water well drilling rigs mounted on motor vehicle chassis is classifiable under Heading 84.30 and not under Heading 87.05; that the said decision was followed in the case of Sparr Equipments (P) Ltd. v. CCE, Bangalore, 1994 (73) E.LT. 53 (Tribunal). He also submitted that the drilling rig is required for digging the earth and for that purpose it has to be moved from place to place and as such the basic function of drilling rig is not a motor vehicle but drilling machine which is covered by Heading 84.30; that the chassis after receipt in their factory is modified by cutting out its length, modifying the Propeller shaft etc.; that the power from the engine of the chassis is also required to be transmitted to the drilling rig for the purpose of digging; that after such modification and after mounting drilling rig components, the resulting item is a drilling rig mounted on truck chassis without there being any identity of the truck chassis.
3. Countering the arguments, Shri R.K. Sharma, learned SDR, submitted that both the decisions relied upon by the learned Consultant are not applicable to the facts of the present matter as the Appellate Tribunal in the case of LMP Precision Engg. Co. Ltd. held the product classifiable under Heading 84.30 since the motor vehicle chassis and drilling rigs were integrated in such a manner that a chassis cannot be separately used as motor vehicle; that in the present matter the Appellants themselves in their reply to the show cause notice has submitted that the drilling equipment did not become an integrated part of the truck; that once the drilling rig is not integrally connected with the chassis, the ratio of the decisions relied upon is not applicable. He also referred to the Explanatory Notes of HSN below Heading 87.05 which provides that the Heading includes Mobile drilling derricks (i.e. lorries fitted with derricks assembly winches and other appliances for drilling etc.) and contended that accordingly the impugned product is classifiable under Heading 87.05 only. He further referred to the Explanatory Notes of HSN below Heading 84.30 which reads as under:-
"Certain machines of this Heading (for example - Pile drivers, oil well drilling machine) are often mounted on what is in fact and essentially complete automobile chassis or lorry in that it comprises atleast following mechanical features:
Propelling engine, Gear box, and Controls for gear changing, a Stearing and breaking facility. Such assemblies are classified in Heading 87.05 as Special Purpose Motor Vehicles."
The learned SDR finally submitted that in view of this Explanatory Note of HSN and the fact that drilling equipment did not become integrated part of the truck chassis the impugned goods are classifiable under Heading 87.05 only as Special Purpose Motor Vehicle.
4. In reply learned Consultant mentioned that the Appellants are not in the business of manufacturing Motor Vehicles. They are only manufacturing drilling rigs; that the product manufactured by them is almost same as manufactured by M/s. LMP Precision Engg. Co. In support of his contention he referred to pages 97 & 99 of the paper book which contains photographs of the product manufactured by them and M/s. LMP Precision. He also submitted that there are catena of decisions including the judgment of the Supreme Court in the case of CC£ v. Ram Body Builders, 1997 (94) E.L.T. 442 (S.C.) to the effect that the activity of building body on the chassis does not amount to manufacture of motor vehicle and the body built would be classifiable under Heading 87.07 of the Tariff; that even after introduction of Note (3) to Chapter 87 the Tribunal has held in the case of Kamal Auto Industries v. CCE, Jaipur, 1996 (82) E.L.T. 558, that the bodies built on chassis fitted with engine are classifiable under Heading 87.07; that this decision has been confirmed by the Supreme Court as observed by the Bench of the Tribunal in the case of Ambala Coach Builders v. CCE, New Delhi, 2000 (38) RLT 922. He, therefore, submitted that the mounting of drilling equipment on chassis will not amount to manufacture of motor vehicle.
5. We have considered the submissions of both the sides. We find that the Appellate Tribunal in the case of LMP Precision Co. (supra), after considering the Explanatory Note of HSN both under Headings 84.30 and 87.05, came to the conclusion that water well drilling rigs mounted on motor vehicle is classifiable under Heading 84.30 as the chassis cannot be separately used as a motor vehicle. The learned Consultant for the Appellants has shown that the product manufactured by M/s. LMP Precision Co. Ltd. is similar to their impugned product and merely because they have mentioned in their reply that it is not integrally connected the impugned product cannot be classified differently. Further, there is no evidence adduced by the Revenue to show that the chassis in the case of Appellants herein can be separately used as a motor vehicle. Further, the Supreme Court in Ram Body Builder's case has held that building of body on duty - paid chassis will not amount to manufacture of motor vehicle so as to attract classification as motor vehicle. In view of this, it cannot be said that mounting of drilling equipment on duty-paid chassis will amount to manufacture of special purpose motor vehicle. Accordingly, we allow the appeal filed by the Appellants.