2014 (4) TMI 580 - AT - Central Excise

Classification of the goods - Denial of benefit of SSI exemption - clubbing of clearances - Held that - as far as clubbing of clearances of M/s Royal Engineering by holding the said unit as dummy of M/s Super Industries is concerned, the allegations and findings were mainly based upon the investigation conducted by the Income Tax department and statements recorded therein. However, from the perusal of the Income Tax assessment orders of the respective units subsequent to investigation undertaken by the Income Tax Department, we find that M/s Super Industries and Royal Engineering and other units were separately assessed. We also find that both these units were granted separate central excise registration and were thus separately filing their declarations as well as RT-12 returns. The central excise authorities never questioned the activities of these firms until investigation was undertaken by the Income Tax authorities. We find from records that M/s Royal Engineering was consuming electricity which shows that the units were engaged in manufacturing activity. Also, in the records of Department of Explosives, the vehicles/goods were shown to have been manufactured by M/s Royal Engineering. Taking into account all these facts, we are of the considered view that M/s Royal Engineering cannot be held as dummy of M/s Super Industries and their clearances cannot be clubbed into the clearances of M/s Super Industries. Classification of goods manufactured for use of transport of compressed or liquefied gas - Adjudicating authority has held that the vehicles are classifiable under chapter sub heading 8707 and thus liable for duty. However from the registration details of some of the vehicles produced before us we find that the chassis of such motor vehicle i.e. the prime mover and the number of running gear on which tank is placed, are different. Also from the perusal of the photographs, find that the tanks of transportation of gas were mounted on semi trailers/ running gears and the same were coupled with the prime movers i.e. the Motor Vehicle for transportation of such tanks. We are of the view that since the tanks of such vehicles were not manufactured/ fabricated on chassis of Motor Vehicles but on semi trailer/ running gear, consequentially the goods merits classification under chapter sub heading 87.16 - Following decision of Mitusha Vessels & Engineers Pvt. Ltd Vs. Comm. 1997 (1) TMI 360 - CEGAT, MUMBAI . While computing the duty demand, the Appellant needs to be extended the benefit of relevant SSI Exemption Notifications as per the conditions contained therein - demand of duty has been made twice or thrice on the same vehicles due to various reasons such as change of ownership of vehicle, clearance of vehicle in name of some person and registration of same vehicle in name of another person etc. as appearing in the record of Department of Explosives. We thus hold that while computing duty demand such repetition/ duplication of demand should be reduced - when duty has not been collected, the price has to be treated as cum-duty price. Therefore the amount realized by the assessee has to be treated as cum-duty price has to be sustained and accordingly the duty demand has to be computed by treating the value as cum duty price - Decided partly in favour of assessee.

Issues Involved:
1. Clubbing of clearances of M/s Royal Engineering with M/s Super Industries.
2. Classification and duty exemption of tank bodies manufactured by M/s Super Industries.
3. Classification and duty exemption of tank bodies for transportation of compressed or liquefied gas.
4. Time-bar of the demand raised.
5. Imposition of penalties on M/s Super Industries and individuals.

Issue-wise Detailed Analysis:

1. Clubbing of Clearances:
The Tribunal examined whether M/s Royal Engineering could be considered a dummy unit of M/s Super Industries. The adjudicating authority based its findings on an investigation by the Income Tax Department. However, the Tribunal found that both units were separately assessed by the Income Tax Department, had separate central excise registrations, and filed separate declarations and returns. Additionally, M/s Royal Engineering consumed electricity and was recognized by the Department of Explosives as a manufacturer. Therefore, the Tribunal concluded that M/s Royal Engineering could not be considered a dummy unit of M/s Super Industries, and their clearances should not be clubbed together.

2. Classification and Duty Exemption of Tank Bodies:
The Tribunal addressed the demand on 1197 tank bodies classified under heading 87.07, which were manufactured and consumed within the same factory for mounting on motor vehicle chassis. The Tribunal found that these tank bodies were exempt from duty under serial No. 253 of Notification No. 6/2000-CE and subsequent analogous notifications. This view was supported by previous judgments in CCE Vs. Andhra Sugars Ltd. and CCE (A) Guntur Vs. Andhra Sugars. Consequently, the demand for duty on these tank bodies was set aside.

3. Classification and Duty Exemption of Tank Bodies for Compressed or Liquefied Gas:
The Tribunal examined the classification of tank bodies used for transporting compressed or liquefied gas. It found that these tanks were mounted on semi-trailers or running gears, not on motor vehicle chassis, and thus should be classified under heading 87.16. This classification made them eligible for SSI Exemption under relevant notifications. The Tribunal also noted instances of duplication in the demand due to changes in vehicle ownership and other reasons, which should be rectified during re-quantification of the demand.

4. Time-bar of the Demand:
The Tribunal considered the issue of time-bar, noting that the appellant had been filing declarations and returns, and the fact of manufacture was known to the revenue authorities. The demand was based on the classification of goods, which involved interpretation issues. Therefore, the Tribunal held that the demands raised beyond one year were time-barred, and only demands within the one-year period prior to the show cause notice were sustainable.

5. Imposition of Penalties:
Given the findings on the merits and the time-bar issue, the Tribunal found no basis for upholding the penalties imposed on M/s Super Industries under Section 11AC or on the individuals under Rule 26. The issues involved were related to classification and interpretation of exemption notifications, and there was no evidence of mala fide intent. Consequently, all penalties were set aside.

Conclusion:
The appeals were disposed of in favor of the appellants, with directions for re-quantification of the demand by the adjudicating authority, observing the principles of natural justice. The penalties imposed were set aside, and the Tribunal emphasized the need to correct any duplication in the demand.

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