1980 (6) TMI 39 - CGOVT - Central Excise

Summary

Issues involved:
Interpretation of explanation below Item 34, Central Excise Tariff for determining the value of Tippers manufactured by the petitioners.

Detailed Analysis:
The judgment involves the interpretation of the explanation below Item 34 of the Central Excise Tariff to determine the assessable value of Tippers manufactured by the petitioners. The petitioners excluded the value of specialized material handling equipment from the price list of their Tippers and sought deduction based on the explanation provided in the Tariff. The lower authorities had varied decisions on allowing deductions for different components of the specialized equipment, with a common feature being the disallowance of deductions for the steel body used for transporting materials. The authorities argued that the equipment primarily designed for transporting loads on roads falls under Central Excise Tariff Item 34 and is liable for duty as a whole. They contended that the specialized equipment did not qualify as material handling equipment as per the explanation in the Tariff. The petitioners, on the other hand, claimed that the specialized equipment fitted to their ordinary chassis transformed it into different types of Tippers, and they should be allowed to exclude the value of the tipper mechanism from the assessable value for duty under Item 34.

The petitioners argued that their ordinary chassis, when fitted with specialized handling equipment, becomes a distinct type of Tipper, and they should be entitled to exclude the value of the tipper mechanism from the duty assessment under Item 34. They contended that the specialized equipment merely strengthened a portion of the chassis to mount the tipper mechanism and did not alter the nature of the chassis as a motor vehicle. The government, after considering the submissions, disagreed with the lower authorities' reasoning for disallowing total deductions claimed by the petitioners. The government agreed with the petitioners that the value of specialized material handling equipment should be excluded from the assessable value as per the explanation in Item 34 of the Central Excise Tariff. They emphasized that the concept of material handling is inherent in the idea of a tipping mechanism and that the value of the ordinary vehicle should be the basis for assessment, even when fitted with specialized equipment. The government found no justification for including the value of the steel body used for handling materials in the assessment of Tippers under Item 34 and set aside the orders-in-appeal covered by the revision applications, providing consequential relief to the petitioners.

Additionally, the judgment mentioned two more Revision Applications involving separate issues, which the government decided to dispose of separately after further personal hearings to clarify certain points. The government's decision in the main issue was based on the clear wording of the explanation in the Tariff and the understanding that the value of specialized material handling equipment should not be considered for assessing the value of Tippers under Item 34 of the Central Excise Tariff. The judgment emphasized that the nature of the tipping mechanism implied material handling and that the assessable value should focus on the ordinary vehicle without the specialized equipment, as marketed by the petitioners.