2008 (4) TMI 550 - AT - Central Excise

Summary

Issues:
Levy of cess under the Industries (Development and Regulations) Act, 1951 on tractors manufactured by the appellants - Whether tractors fall under the category of Agriculture Machinery or Transportation Machinery.

Analysis:

1. Levy of Cess under Section 9 of the Industries (Development and Regulations) Act, 1951:
- The show cause notices were issued to the respondents for the levy of cess on tractors exceeding 25 horsepower manufactured and cleared for home consumption. The Assistant Commissioner confirmed the demand, which was later set aside by the Commissioner (Appeals).
- The Commissioner (Appeals) remanded the matter back to establish if the appellants are engaged in the manufacture of goods falling in the Scheduled Industry of Agriculture Machinery as required by Ministry of Industries Order No. 662(E) dated 9-9-85. It was emphasized that if the tractors manufactured by the appellants are identified as agricultural tractors, then the cess is leviable.

2. Interpretation of Remand Order and Notification S.O. 247(E):
- Following the remand order, the Dy. Commissioner confirmed the demand based on Notification S.O. 247(E) dated 22-3-1990, which makes cess leviable on automobiles governed by the scheduled industry of transportation.
- The Commissioner (Appeals) set aside the confirmation, stating that since the tractors manufactured were not under the scheduled industry of agriculture, the demand for cess could not be upheld. The basis of demand could not be shifted to the scheduled industry of transportation.

3. Decision and Upholding of Impugned Order:
- The Tribunal examined the show cause notices and the remand order, noting that the demand for cess was based on the tractors falling under the scheduled industry of agriculture. There was no ground in the notices for proposing recovery based on the scheduled industry of transportation.
- Upholding the decision of the Commissioner (Appeals), the Tribunal rejected the appeal, stating that there was no reason to interfere with the impugned order as the demand for cess was not justified based on the scheduled industry of transportation.

In conclusion, the judgment clarifies the criteria for levy of cess under the Industries (Development and Regulations) Act, 1951, emphasizing the need to establish whether the manufactured goods fall under the Scheduled Industry of Agriculture Machinery to determine the applicability of cess. The interpretation of the remand order and relevant notifications played a crucial role in deciding the liability for cess, ultimately leading to the rejection of the appeal by the Tribunal.