Custom, Excise & Service Tax Tribunal
M/S.Eicher Tractors Ltd vs Cce, Faridabad on 21 October, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066.
DIVISION BENCH
Court No.III
Appeal No.E/1440-1442/2005-EX(DB)
(Arising out of OIO No.46/RH/Adj/2004 dt.28.1.2005 passed by the CCE, Faridabad)
Date of Hearing/Decision 21.10.2015
For approval & Signature:
Honble Smt.Sulekha Beevi C.S., Member (Judicial)
Honble Mr.B.Ravichandran, Member (Technical)
1.
Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2.
Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
No
3.
Whether their Lordships wish to see the fair copy of the order?
seen
4.
Whether order is to be circulated to the Department Authorities?
yes
M/s.Eicher Tractors Ltd. Appellant
Shri V.P.Arya
Shri Sunil Datt
Vs.
CCE, Faridabad Respondent
Appearance:
Present for the Appellant: Shri B.L.Narasimhan, Advocate Present for the Respondent: Shri B.K.Singh, Special Counsel Coram: Honble Smt.Sulekha Beevi C.S., Member (Judicial) Honble Mr.B.Ravichandran, Member (Technical) Final Order No.53315-53317/2015 Per: B.Ravichandran There are three appeals arising out of Order-in-Original dated 28.1.2005. As the issue involved is the same, they are taken up together for decision.
2. Brief facts of the case are that the main appellants are engaged in the manufacture of tractors of various models liable to Central Excise duty. They are in the business of manufacture of tractors since 1959. The issue in present appeals relate to the period 1.1.1996 to 31.5.1998 involving the duty liability on transmission assembly manufactured and consumed by the appellants. The proceedings initiated against the appellants resulted into Order-in-Original dated 28.1.2005 wherein the original authority confirmed the demand of Rs.25,83,44,804/- and imposed equal penalty on the appellants. Penalties were also imposed on other two appellants who were employees of the main appellants. Aggrieved by the original order, the present appeals have been filed.
3. Learned Counsel for the appellant Shri B.L.Narasimhan during the arguments concedes that the issue on merits has been decided by the Honble Supreme Court in Escorts Ltd. 2015-TIOL-92 SC-CX. As such, he submitted that they have no case on merits. However, he strongly contended that the demands were clearly hit by time bar in terms of section 11A of Central Excise Act, 1944. He submitted that during the period 1996-1998, the tractors with capacity of less than 1800 cc were exempt under Notification NO.162/86-CE dated 1.3.1986. The components for such tractors were exempt under Notification No.239/86-CE. The appellants have been filing the classification list showing components as exempt. From 1.3.1993 the notification No.217/86-CE did not cover captive consumption of goods used in the exempted tractors and as such the appellant started paying duty and indicated the same in their classification list. Consequent on modernization of their plant starting from 1990, they have implemented single conveyor line in March, 1994. By this operation, assembly of complete tractors is integrated in one assembly line. They have filed revised ground plan on 5.5.1994. The same was approved on 18.7.1994. They have stopped taking input credit and also reversed modvat credit on inputs lying in stock as on 17.7.1994. They have filed revised classification list with effect from 18.7.1994. After the introduction of revised provisions of Rule 173B for classification/declaration from March, 1995, certain informations were called for by department which were also submitted. From April, 1994, the appellants started sending transmission assembly to their unit in Bhopal. In November, 2000, Central Excise officers visited their factory and consequently a show cause notice was issued on 29.1.2001 for demanding duty on transmission assembly for the period 1.1.1996 to 31.5.1998.
4. Learned Counsel strongly contested that the whole matter of marketability and thereupon dutiability of transmission assembly was subject matter of dispute and all the four major manufacturers of tractors in India had issue with the department. In fact in a similar matter, central excise authority held transmission assembly was neither manufactured item nor a marketable product in respect of TAFE. The said decision of the original authority was upheld by the Tribunal vide order dated 12.11.2009. The manufacture and marketability of transmission assembly and thereupon dutiability was finally decided by the Supreme Court in a combined order in Escorts Ltd. (supra). Learned Counsel drew our attention to the findings of the Supreme Court to the effect that demand for extended period on the ground of suppression of facts and wilful mis-statement is not sustainable. Learned Counsel stated that the appellants are engaged in the manufacture of tractors for many decades and have been filing all the records, information with the department in the form of classification list, ground plan for assembly line etc. Hence, there is no question of demand of extended period in their case.
5. Learned Special Counsel Shri B.K.Singh appeared for the Revenue stated that the appellants are fully aware of duty liability of intermediate products, transmission assembly and they have deliberately failed to mention the same in their classification filed on 18.7.1994. Under self removal procedure system, it is pointed out that duty is cast on the assessee to take action towards payment of duty, when the exemption availed was withdrawn on a particular day. He strongly pleaded that difference in contents of classification lists prior to and post July, 1994 should be construed as an attempt of not furnishing full information on the part of the appellants.
6. We have heard both sides and examined the appeal records.
7. We find that the issue of duty liability of transmission assembly has been settled on merits by the Honble Supreme Court in Escorts Ltd. (supra). Hence, there is no examination of merits in the present case of the appellants. However, we find that the appellants have strong case on the question of time bar. The chorological of events as explained by the learned counsel for the appellant indicate that the appellants have been informing the department at various stages regarding various types of items manufactured and consumed/cleared by them and also the introduction of single assembly line with effect from March, 1994. We find that on similar set of facts, Honble Supreme Court held that there is no case for invoking extended period for demand. It is also admitted fact that different views have been taken by the different authority of department and also the Tribunal in respect of marketability and consequently duty liability of transmission assembly. The issue was finally resolved by the order of Honble Supreme Court in Escorts Ltd. (supra). In the same judgement itself, the Honble Supreme Court held that there is genuine belief on the part of the assessee regarding non liability of duty on this product consumed captively. Hence Honble Supreme Court held that there is no suppression or wilful attempt to evade duty.
8. We find that the facts and analysis as considered by the Honble Supreme Court are squarely applicable to the present appeals. The main appellants are engaged in the manufacture of tractors for many decades and there is no new product added during the impugned period. The question involved is one of interpretation which admittedly was done differently in different jurisdiction. We are not in agreement with the contention of the learned special counsel for the Revenue that there is deliberate omission in the classification list dated 18.7.1994 filed by the appellants. Covering letter dated 18.7.1994 by the appellant explained the reason for filing the revised classification list. From having multiple assembly and processing line, they have switched over to single integrated conveyor assembly line and as such they were filing a revised classification. We agree with the learned counsel for the appellant on his contention that single assembly line had eliminated the emergence of various intermediate products for separate accounting and listing, and integrated assembly line is a continuous seamless process finally resulted in the manufacture of tractors. As such it is not sustainable to allege suppression of facts or wilful mis-statement on the part of the appellants with reference to non payment of central excise duty on transmission assembly manufactured and consumed by them. The whole marketability and taxability was settled, only by the Apex Court as stated above, much later. We also find that the Tribunal vide final order No.51710/2015 dated 26.05.2015 in the case of Punjab Tractors Ltd. has held that there is no case for fraud or wilful mis-statement in a situation similar to this. We find that the Tribunal in the case of Accurate Chemicals Industries vs. CCE, Noida-2014 (314) ELT 334 (Tri.-Del.) examined the scope of self assessment and responsibility of assessee and jurisdiction of the central excise officers. In the present case, change over to integrated assembly line resulted changes in the classification list filed in July, 1994 when certain items indicated in the earlier classification list are not mentioned in revised list. This cannot be construed as wilful mis-statement on the part of the appellants. The reason for revised classification list has been explained in the covering letter of the appellants. Finally, we find that non payment of duty during the impugned order cannot be attributed to wilful conduct of the appellants as tax liability on such items was subject matter of dispute and settled only by the Apex Court. As such, if at all, it can be a mistake which is common to both department and the appellant and in such situation no extended period can be invoked and no penalty can be imposed on that ground. Accordingly we allow the appeals by setting aside the impugned order only on the ground of time bar.
(pronounced in open court) (B.Ravichandran) (Sulekha Beevi C.S) Member (Technical) Member (Judicial) mk 7