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2023 (10) TMI 873 - AT - Central ExciseProcess amounting to manufacture - activity of repacking and relabelling of imported and indigenously procured spare parts of Dumpers (Mechanical Drive and Electrical Drive), Water Sprinklers and Motor Graders at their marketing division - from January 2008 to February 2010 and March 2010 to March 2011 - Extended period of limitation. HELD THAT - The Larger Bench was constituted pursuant to a direction of the Hon ble Supreme Court, as there were conflicting views expressed by the Mumbai Bench of the Tribunal in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS M/S JCB INDIA LTD 2014 (2) TMI 632 - CESTAT MUMBAI and Chandigarh Bench of the Tribunal in the case of M/S ACTIN CONSTRUCTION EQUIPMENT LTD., SHRI VIJAY AGGARWAL AND SHRI P.K. BANSAL VERSUS CCE, DELHI-IV 2016 (10) TMI 473 - CESTAT CHANDIGARH . After analysing the scope of Sl. No.100 of the Third Schedule to the Central Excise Act, 1944, relevant material it has been observed by the Larger Bench in M/S. ACTION CONSTRUCTION EQUIPMENT LTD, SHRI P.K. BANSAL, SHRI VIJAY AGARWAL, COMMISSIONER OF CENTRAL EXCISE, M/S. JCB INDIA LTD., TATA HITACHI CONSTRUCTION MACHINERY CO. LTDM, LARSEN TOUBRO LIMITED, J. KUMAR, M/S. PROFICIENT EQUIPMENT SOLUTIONS VERSUS COMMISSIONER, CENTRAL EXCISE, CUSTOMS, DELHI-IV, M/S. JCB INDIA LTD., THE COMMISSIONER, CENTRAL EXCISE, AND CUSTOMS, NAGPUR 2023 (6) TMI 1320 - CESTAT MUMBAI (LB) that The amendment made in the Third Schedule to the Central Excise Act by Finance Act, 2011 w.e.f 29.04.2010 by adding serial No.100A to the Third Schedule is prospective in nature. Distinguishing the said ratio, the Revenue has argued that the equipment considered in the said judgment are different and hence, the principle laid down in the said judgment cannot be made applicable to the facts of the present case. It was argued that the Mumbai Bench of the Tribunal specifically considered parts of the dumpers in M/s. Komatsu India Pvt. Ltd., therefore, the said judgment be followed and applied to the present case. The said approach of the Revenue is incorrect in as much as the judgment of M/s. Komatsu India Pvt. Ltd. case rests on the principle settled by the Tribunal in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS M/S JCB INDIA LTD 2014 (2) TMI 632 - CESTAT MUMBAI which was referred to Larger Bench when the Chandigarh Bench of the Tribunal expressed doubt about the correctness of the said judgement in M/S ACTIN CONSTRUCTION EQUIPMENT LTD., SHRI VIJAY AGGARWAL AND SHRI P.K. BANSAL VERSUS CCE, DELHI-IV 2016 (10) TMI 473 - CESTAT CHANDIGARH . Secondly, the Larger Bench also in laying down the principles has held that the meaning of the word automobile occurring in Air (Prevention and Control of Pollution) Act, 1981 or the Motor Vehicles Act, 1988 cannot be adopted but the meaning has to be understood is in general sense and as used in common parlance. Further, emphasizing the said meaning as in common parlance, the Larger Bench opined that the scope and meaning of automobiles be understood as the conveyances for transportation of passengers and goods on road; also in the same manner, it has been understood by the department in various Circulars issued from time to time. Sl. No. 100 of the Third Schedule shall not be applicable to parts and spares of Dumpers repacked and relabelled by the Appellant for the period from January 2008 to February 2010. Also, the said activities do not fall within the scope of manufacture under either clause (i) or (ii) of Section 2(f) of CEA,1944, hence, not leviable to excise duty. However, for the period from March 2010 to March 2011, the said activities be considered to be deemed manufacture being covered under the amended entry at Sl. No.100 of the Third Schedule. Extended period of limitation - HELD THAT - This Tribunal in M. PITCHIAH, DIRECTOR (FINANCE) BEML LTD. AND OTHERS VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX BANGALORE-I 2014 (8) TMI 135 - CESTAT BANGALORE examined all aspects on the applicability of extended period for the said activities relating to Mysore Division and following the principle laid down by the Hon ble Supreme Court in JK. COTTON SPINNING AND WEAVING MILLS LTD. AND ANOTHER VERSUS UNION OF INDIA AND OTHERS 1987 (10) TMI 51 - SUPREME COURT held that invoking extended period of limitation for demanding duty in implementing a retrospective operation of the law for the period from April 2010 cannot be sustained - there are no reason in not following the judgment of the Tribunal in appellant s own case more or less for a similar period and show-cause notice issued in the same month i.e., April 2013. In the result, invoking of extended period of limitation is bad in law. Thus, invoking of extended period of limitation is bad in law. Accordingly, the demand be confined to the normal period of limitation. Consequently, the penalties imposed on the appellants, in the facts and circumstance of the case is unwarranted. Consequently, penalty imposed on all the appellants are set aside. Appeal disposed off.
Issues Involved:
1. Whether the activity of packing, repacking, and relabelling of spare parts constitutes 'manufacture' under Section 2(f)(iii) of the Central Excise Act, 1944. 2. Applicability of the extended period of limitation for demanding duty. 3. Imposition of penalties on the appellants. Summary: Issue 1: Definition of 'Manufacture' The appellant, a Public Sector Undertaking, engaged in the manufacture of Dump Trucks, Water Sprinklers, and Motor Graders, was also involved in repacking and relabelling spare parts. The dispute was whether these activities constituted 'manufacture' under Section 2(f)(iii) of the Central Excise Act, 1944. The Tribunal divided the period into two phases: January 2008 to February 2010, and March 2010 to March 2011. For the first period, it was determined that the parts involved were not 'automobiles' as per the Larger Bench decision in M/s. Action Construction Equipment Ltd., thus falling outside the scope of Sl. No.100 of the Third Schedule. Therefore, these activities did not amount to 'manufacture' and were not leviable to excise duty. However, for the second period, the amended entry at Sl. No.100 of the Third Schedule covered these activities under 'deemed manufacture'. Issue 2: Extended Period of Limitation The appellant argued that the extended period of limitation could not be invoked based on the Tribunal's decision in their own case, M/s. BEML & Ors. vs. CCE, where it was held that extended period could not apply for recovery of duty on the basis of retrospective legislation. The Tribunal agreed, noting that the appellant's activities commenced in 2006, and the retrospective amendment was only applicable from March 2010. Thus, invoking the extended period of limitation was deemed unsustainable, confining the demand to the normal period of limitation. Issue 3: Imposition of Penalties Given the findings on the non-applicability of the extended period of limitation and the nature of the activities not amounting to 'manufacture' for the first period, the Tribunal found the imposition of penalties on the appellants unwarranted. Consequently, all penalties imposed were set aside. Conclusion: The appeal was partly allowed, limiting the demand to the normal period of limitation and setting aside all penalties imposed on the appellants.
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