2000 (5) TMI 129 - AT - Central Excise

Summary

Issues:
1. Classification of Self-Propelled Tramway Coaches under excise law.
2. Determination of duty, penalty, and confiscation.
3. Legislative intent regarding excisability of assembled products.
4. Applicability of Supreme Court decisions on excisability.
5. Reassessment of duty value and benefit of Modvat credit.

Classification of Self-Propelled Tramway Coaches:
The case involved the classification of Self-Propelled Tramway Coaches under excise law. The Commissioner found the activity to be exigible based on the classification of the products. The appellant argued that excisability should only apply when propelled cars are separately made and not in a workshop. However, the Tribunal upheld the classification under 8605.00, confirming the exigibility of the products. They emphasized that if the resultant product, due to the use of technology, results in a distinct new commercial commodity, excisability would arise. They relied on previous Supreme Court decisions to support their conclusion, highlighting the importance of the new commercial item meeting the description of a new tariff item for fresh levy of duty.

Determination of Duty, Penalty, and Confiscation:
The Commissioner demanded duty on the 10 cars under Rule 9(2) read with the proviso to Section 11A(1), imposed a penalty of Rs. 3,50,000, and ordered confiscation under Rule 173Q(2). The Tribunal set aside the penalty and confiscation imposed on the Government of West Bengal undertaking. They remanded the determination of the quantification of duty for a de novo assessment after considering the benefit of Modvat credit as eligible. The classification under 8605 and the exigibility of the products were confirmed, partially allowing the appeal.

Legislative Intent Regarding Excisability:
The appellants argued that mere assembly and installation of electrical equipment in not Self-Propelled Tram Cars should not be excisable. They contended that the legislative intent is to tax only when such propelled cars are separately made and not in a workshop. The Tribunal considered these arguments but ultimately upheld the excisability of the products based on the classification and the resultant distinct new commercial commodity.

Applicability of Supreme Court Decisions on Excisability:
The Tribunal found that excisable manufacture would take place if items of a certain classification are converted into other items. They supported the Commissioner's order based on previous Supreme Court decisions and rejected the argument that the classification only applies to products manufactured separately. The Tribunal emphasized that technology used does not determine excisability; instead, the focus is on whether the use of technology results in a distinct new commercial commodity, leading to the confirmation of the classification under 8605.

Reassessment of Duty Value and Benefit of Modvat Credit:
The Tribunal ordered the reworking of the value and duty by giving the benefit of Modvat credit on the inputs. They directed the consideration of deductions as per relevant Supreme Court decisions and the grant of Modvat. The Tribunal emphasized the need for a speaking order after justifying the loading of profit as proposed, highlighting the importance of a thorough assessment in determining the duty value accurately.