2019 (8) TMI 250 - AT - Central Excise

Classification of goods - Machineries and Bulkers - classified under CSH 87042319 of Central Excise Tariff Act, 1985 or otherwise? - fabrication of bulkers which are mounted on duty paid chassis and such vehicles are used for transportation of cement and fly ash. - benefit of N/N. 6/2006-CE,dt.1.3.2006 S.No.39, (Condition No.9) - period April 2005 to March 2010 - HELD THAT - Undisputedly, the Appellants had also manufactured /fabricated bulkers fitted with tri-axle and other accessories fitted with a king pin whether be called as a semi-trailor under subheading 8716 of Central Excise Tariff Act, 1985. A plain reading of heading 8706, there cannot be any iota of doubt that building a body or fabrication or mounting or fitting of structure or equipment on the chassis falling under CH 8706 shall amount to manufacture of a motor vehicle. Thus, by the said fiction, the activity of fabrication or mounting body on the chassis falling under Chapter 8706 will deemed to be manufacture of a motor vehicle - In the present case, explaining the manufacturing process of 30 Cubic Mtrs bulkers, the learned Advocate submitted that the shells are initially fabricated and then mounted on the chassis which ultimately used for transporting cement and fly ash. Therefore, by mounting the shell on the chassis by virtue of Note 5 of Chapter 87, activity becomes manufacture and the resultant would be considered as a motor vehicle. The Appellant has rightly classified the fabricated/mounted shell on the duty paid chassis falling under CSH 87042319 of Central Excise Tariff Act, 1985. Benefit of N/N. 6/2006-CE,dt.1.3.2006 S.No.39, (Condition No.9) - HELD THAT - Appellants are eligible to the benefit of the said notification as they have also fulfilled the other condition of not availing CENVAT Credit on the inputs used in the manufacture of the bulkers. However, there is no merit in the contention of the Appellant when they advanced similar argument to 45 Cubic Mtrs bulkers, which are fabricated and attached with tri-axle tyres and other accessories and are attached to the horse by a king pin. These are semi-trailor type of motor vehicles and not covered under the scope of the said exemption notification, accordingly dutiable. Extended period of limitation - HELD THAT - Since the Appellant has not disclosed the manufacture of semi-trailor type bulkers, but considered as bulkers mounted on the chassis and claimed exemption. Therefore, extended period of limitation has been rightly applicable for recovery of duty against these semi-trailors. The demand in relation to 105 mounted bulkers is set aside and the demand in relation to 4 semi-trailors classifiable under Chapter 8716 of Central Excise Tariff Act, 1985 is hereby confirmed with interest and penalty - appeal allowed in part.

Summary

Issues Involved:
1. Classification of bulkers fabricated and mounted on duty-paid chassis.
2. Eligibility for exemption under Notification No. 6/2006-CE.
3. Applicability of the extended period of limitation for demand recovery.

Issue-wise Detailed Analysis:

1. Classification of Bulk Fabricated and Mounted on Duty-Paid Chassis:
The primary issue for determination is whether the bulkers fabricated and mounted by the Appellant on duty-paid chassis should be classified under CSH 87042319 and eligible for exemption under Sr.No.39 of Notification No.06/2006-CE. The Appellants argued that the bulkers, used for transporting cement and fly ash, are correctly classifiable under CSH 87042319 as per Chapter Note 5 of Chapter 87 of the Central Excise Tariff Act, 1985. This note states, "building a body or fabrication or mounting or fitting of structures or equipment on the chassis falling under heading 8706 shall amount to 'manufacture' of a motor vehicle." The Tribunal agreed with the Appellant, noting that the activity of mounting the shell on the chassis constitutes the manufacture of a motor vehicle. The Tribunal referenced the case of CCE Gaziabad Vs T.P.S. Mrg. & Construction Co. (P) Ltd, where similar activities were classified under sub-heading 8704.90. Thus, the Appellant's classification of the bulkers under CSH 87042319 was upheld.

2. Eligibility for Exemption under Notification No. 6/2006-CE:
The Appellants claimed the benefit of exemption under Sr.No.39 & Condition No.9 of Notification No.06/2006-CE. The condition stipulates that the vehicle must be manufactured out of chassis falling under heading 8706, on which excise duty has been paid, and no credit of duty paid on such chassis and other inputs used in the manufacture of such vehicle has been taken. The Tribunal found that the Appellant met these conditions, as they fabricated/mounted the shells on duty-paid chassis and did not avail CENVAT Credit on the inputs used. Therefore, the Appellants were deemed eligible for the exemption for the bulkers mounted on the chassis. However, the Tribunal noted that the 45 Cubic Mtrs bulkers, which are semi-trailor types, are not covered under this exemption and are dutiable.

3. Applicability of the Extended Period of Limitation for Demand Recovery:
The Appellants contended that the entire demand is barred by limitation, citing previous show cause notices issued for similar issues. They argued that the Department was fully aware of their activities, thus the extended period of limitation should not apply. The Tribunal, however, found that the Appellant did not disclose the manufacture of semi-trailor type bulkers, which are dutiable and not covered under the exemption. Therefore, the extended period of limitation was applicable for the recovery of duty on these semi-trailors. The Tribunal confirmed the demand, interest, and penalty for the 4 semi-trailors but set aside the demand for the 105 mounted bulkers.

Conclusion:
The appeal was disposed of with the Tribunal setting aside the demand for the 105 mounted bulkers classified under CSH 87042319 and confirming the demand for the 4 semi-trailors classified under Chapter 8716 of the Central Excise Tariff Act, 1985, with interest and penalty.