2024 (7) TMI 544 - AT - Central Excise

Process amouting to manufacture or not - appellants import the filters and affix the labels and supply to various manufacturers of earth moving equipment etc. - HELD THAT - The amendment carried out w.e.f. 29.04.2010 makes it abundantly clear that a legislature did not intend to tax the parts, components and assemblies of earthmoving equipment etc. under the Head Automobiles ; therefore, to this extent, the demand for the period prior to 29.04.2010 cannot be sustained. The demand for the period prior to 29.04.2010 is not sustainable - The demand for the period from 29.04.2010 is sustainable and it is reported that the appellants have paid duty from the said date. The penalties imposed on the appellant and their Director (Finance) are also not sustainable. Appeal disposed off.

Issues Involved:
1. Classification of air/liquid filters as parts of automobiles.
2. Applicability of Central Excise duty prior to and post 29.04.2010.
3. Validity of penalties imposed on the appellant and their Director (Finance).
4. Verification of duty paid by the appellants from 29.04.2010 onwards.

Detailed Analysis:

1. Classification of Air/Liquid Filters as Parts of Automobiles:
The appellants argued that the filters they imported were used in earthmoving equipment, loaders, and excavators, not in automobiles. They contended that these goods should not be classified under Entry No.100 of the Third Schedule, which pertains to "Parts, Components & Assemblies of Automobiles." The Larger Bench in the case of M/s Action Equipment Ltd. & Others clarified that "Automobiles" under Entry No.100 does not include earthmoving equipment. This was further supported by the amendment on 29.04.2010, which introduced Entry No.100A covering parts for earthmoving equipment, thus reinforcing the appellants' stance that their goods were not parts of automobiles.

2. Applicability of Central Excise Duty Prior to and Post 29.04.2010:
The amendment effective from 29.04.2010 clarified that parts, components, and assemblies of earthmoving equipment were not intended to be taxed under the category of "Automobiles." Consequently, the demand for the period prior to 29.04.2010 was deemed unsustainable. The appellants had started paying duty from 29.04.2010, and the adjudicating authority was tasked with verifying the correctness of these payments.

3. Validity of Penalties Imposed on the Appellant and Their Director (Finance):
The penalties imposed on the appellant and their Director (Finance) were considered unsustainable. The Tribunal noted that the issue involved was one of interpretation of legal provisions, and there was no clarity until the amendment and the Larger Bench decision. Thus, invoking the extended period and imposing penalties were not justified.

4. Verification of Duty Paid by the Appellants from 29.04.2010 Onwards:
The Tribunal remanded the case to the Original Authority to verify the correctness of the duty paid by the appellants from 29.04.2010. The demand for the period prior to this date was set aside, and penalties were also annulled.

Conclusion:
The Tribunal concluded that the demand for the period prior to 29.04.2010 was not sustainable, and the penalties imposed were also set aside. The appeal by the Department was rejected, while the appellants' appeal was partly allowed, remanding the case for verification of duty payments from 29.04.2010 onwards.

Orders:
1. Appeal No. E/51019/2014 is rejected.
2. Appeal No. E/53074/2015 is allowed.
3. Appeal No. E/53073/2015 is partly allowed by way of remand for verification of duty paid from 29.04.2010; duty confirmed for the period prior to 29.04.2010 is set aside, and penalties are also set aside.

Order Pronounced in Open Court on 09/07/2024.

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