Customs, Excise and Gold Tribunal - Delhi
Bajaj Auto Ltd. vs Collector Of Central Excise on 21 July, 1987
Equivalent citations: 1987(14)ECC186, 1987(31)ELT970(TRI-DEL)
ORDER H.R. Syiem, Member (T)
1. The dispute that remains before us out of the original disputes is about the spare tyres and tubes. These articles according to the Central Excise are fitted as spares to the trailers. The learned counsel for the Appellant M/s. Bajaj Auto Ltd., however, submitted before us that the three wheeler powered vehicle with its accompanying trailer form a single unit they call auto-track; the spare wheel to which the tyre and tube are fitted, is meant for the single unit auto-track; it is not for the trailer. He argued that such spare tyres are accepted as original equipment forming part of motor vehicles in commercial and industrial practice. For example, all motor vehicles are cleared with spare tyres, and the whole assessed as one, the spare tyre being accepted as original equipment for all the vehicles, whether 2-wheeler, 3-wheeler or 4-wheeler.
2. There is no need to labour the point. A spare tyre known as the stepney always forms an original equipment cleared with all powered vehicles, and we are aware that such is the accepted practice. But the problem here is not the clearance of the spare wheel with a motor vehicle, but the clearance of the spare wheel with a vehicle formed by the junction or union of two, the pulling unit and the pulled unit, the first being a powered vehicle and the second being a trailer. These two, according to the appellant M/s. Bajaj Auto Ltd., form one unit called auto-track and that the stepney or spare wheel with spare tyre and tube is meant for use for the powered 3-wheeler. Inspite of the fact that they invoiced the spare wheel with the trailer, the spare wheel is actually meant for the whole unit, composed of two vehicles, and therefore, it makes no difference to the entitlement of the spare tyre and tube to concessional duties as an original equipment for the 3-wheeler tracting unit.
3. There is a serious fallacy in this argument. From the argument of the manufacturers themselves, the auto-track comprises two units; the pulling unit and the trailer, the two always moving and travelling together jointed more or less permanently. The unit, however, is still composed of two parts, one of which is the trailer and we cannot ignore the mechanical fact that the trailer can be uncoupled or disjointed from the 3-wheeled pulling unit. When the two parts function as one, we still have the trailer, and it is always a trailer, howsoever, it is coupled or jointed to the pulling unit; the manufacturers, Central Excise, the buying public and the users etc. acknowledge the rear component to be a trailer. Now when the stepney has to be fitted because one of the five tyres of the unit requires replacement, it becomes a part of the wheel assembly of the unit. It can be fitted to the 3-wheel pulling unit; it can just as easily be fitted to the trailer if one of the two tyres needs replacement. No one will ever know which part of the unit the stepney goes into as replacement. It can be either of the two units, and since the trailer has a wheel and tyre that can accept the stepney as replacement, the stepney or spare sheel is in reality a reserve not for just the powered 3-wheeler, but also, for the trailer behind it.
4. It is, therefore, not a mere case of passing off the spare tyre and tube for the 3-wheeler but also, for its companion trailer. In my opinion, the notifications do not permit this; the equipment must be for 3-wheelers - it may not be partly used or usable, for trailers.
5. This is to say nothing of the risk to the revenue in the recommendation by the assessee that since spare tyre and tubes are in the company of 3-wheeler, the law is satisfied. 1 hold that the law must be satisfied in full measure and that there should be not even the smallest opportunity for dissatisfaction to arise. But if such is the case as when the assessing officer fears that the law would not be satisfied completely, I would not be able to hold that he does wrong in denying the exemption. The spare tyre and tube can be used, and is certain to be used, on either the puller unit or on the trailer. The law is not completely satisfied. I, therefore, reject the appeal.
6. The learned counsel for the manufacturers submitted that, at the most, the duty, if adjudged payable on the spare tyre and tube, should be recovered only for 6 months. The Assistant Collector recorded clearly that he did not consider it necessary to take penal action. He would not have recorded such a statement when he was satisfied that no fraud had been involved. But he was not consistent when he failed to restrict the duty recovery to 6 months.
7. There are no merits in the arguments. The Assistant Collector was perhaps, inconsistent, but the inconsistency was only in not taking penal action against the factory. The exemption had been taken without entitlement; the tyres and tubes diverted to uses not sanctioned for exemption, and not to just one tyre and tube, but to 3 tyres and tubes. How did M/s. Bajaj accept liability for the two tyres and tubes fitted to trailers? Surely, according to them, the Central Excise would know or would have known they were not covered by the exemption. Why would the spare tyre and tube also not be served identically? All three were diverted illegally and used impermissibly.
8. But were the Central Excise aware? We think not. They were not told that the tyres and tubes had been used irregularly? After all, the factory does manufacture motor vehicles for which similar tyres and tubes receive legitimate duty subsidy. So when the factory divert the same kinds of tyres and tubes to illegitimate uses also, it is by no means certain that the officers would know. They may know; but they may just as likely not learn about it, from documents that do not detail explicitly the wrong uses.
9. The appellants maintain that the Central Excise knew the spare wheel was attached to the trailer. By the same token, they also knew that the trailer had the two wheels fitted. But this did not prevent M/s. Bajaj accepting the duty burden on the pair of trailer tyres and tubes. Why the line at the spare wheel?
10. The Assistant Collector's abstinence can be attributed to Bajaj's agreement to shoulder the responsibility for the duty.
11. After all this, however, the proceedings were initiated for recovery of duty under Rule 196 of the Central Excise Rules, 1944. This rule prescribes no time limit for recovery of duty. Chapter X has its own rules for clearances under exemption. After clearances, the responsibility for the duty is transferred by an elaborate procedure to the buyer-user of the bounty-fed goods. This is for reasons that are obvious. Once the property in the goods changes hands, the manufacturer, who is the prime target of duty recovery proceedings, fades out and loses control over the disposal of the goods. The gratuity achieves completion only by the use of the goods, and use is beyond the manufacturer's power. The receiver of the gratuity, in fact, is not the manufacfurer but the buyer, because the manufacturer sells the goods, less the duty which, even when it reaches him from the buyer, is rerouted to the exchequer. Since it is the buyer's use that consummates and concludes the exemption process, it is in the fitness of things that he should also be the one who must ultimately answer for the duty.
12. The time limit that the law provides for demands is applicable only to the factory that manufactures the goods. For example, time limit must start ticking from the so-called relevant date. None of the relevant dates can fit a demand under Rule 196. The time limit provided by Section 11A of the Act cannot fence these demands in.