2023 (11) TMI 305 - AT - Central Excise

Exemption from payment of National Calamity Contingent Duty (NCCD) as per notification 67/95-CE dt. 16.03.1995 - Manufacture of Dumper trucks and Dumper trucks without body (Chassis with Cabin) - Captive consumption/intermediate product - Classification of the impugned chassis. The Dumper Truck was manufactured by fixing the load body on the chassis with cabin - exemption from NCCD denied on the ground that the chassis is thus captively consumed in the production of final product, viz., Dumper Truck. Whether the appellant is liable to pay NCCD on Dumper chassis as an intermediate product? HELD THAT - The Dumper without the body cannot be treated as a chassis of a dumper, for the reason that it appears to have all the essential features of a dumper, except for that it is not fitted with the body. As per Note (2) of the Interpretative Rules to the Central Excise Tariff Act, 1985 which has been already noticed in para 6.1 of this order, when the incomplete or unfinished article has the essential character of the complete or finished article, such unfinished article merits classification under the heading of the complete or finished article. The Ld. Counsel for the appellant has emphasized that there is no practice in the market to sell a chassis of a Dumper. The reason in the impugned order to hold that an intermediate marketable product emerges is not based on the process/ stages of manufacture. The reason is that the appellant while making some exports had described the product as chassis with cabin assembly in the export documents. The exigibility to duty of a product cannot merely be based on how the assessee described the product in a document. In case of dispute, the department has to clearly state in the SHOW CAUSE NOTICE the nature, classification and dutiability of the product - The Tribunal in the case of COMMISSIONER OF C. EX., MYSORE VERSUS BHARAT EARTH MOVERS LTD. 2009 (10) TMI 748 - CESTAT BANGALORE has categorically held that the demand of NCCD cannot sustain as there is no intermediate, identifiable and marketable product viz. Dumper chassis emerging in the process of manufacture of dumpers. The issue as to whether NCCD is payable on dumper chassis was also held in favour of assessee by the Tribunal. In the case of BAJAJ AUTO LIMITED VERSUS UNION OF INDIA OTHERS 2019 (3) TMI 1427 - SUPREME COURT the Hon ble Apex Court was considering the issue as to whether the area-based exemption notification no.50/2003-CE dated 10.06.2003 issued under Section 5A of CE Act, 1944, would be applicable to NCCD also. The Hon ble Apex Court held the issue in favour of assessee and that the appellant would not be liable to pay the NCCD. Thus, the issue as to whether the exemption under notification 67/95 is available to NCCD is to be answered in the affirmative and in favour of the assessee. The demand of NCCD therefore cannot sustain and requires to be set aside. Classification of the impugned chassis, the alleged intermediate product - HELD THAT - As the issue is decided on merits as to whether the exemption under notification 67/95 is available to NCCD in favour of assessee, it is not necessary to delve into these arguments on classification. It is clarified that no decision rendered on the classification of the impugned goods the findings are confined as to whether the demand of NCCD is sustainable or not. The impugned order is set aside - The appeal is allowed.

Summary

Issues Involved:
1. Liability to pay National Calamity Contingent Duty (NCCD) on chassis captively consumed in the manufacture of dumper trucks.
2. Applicability of Notification No. 67/95-CE for exemption from NCCD.
3. Classification of the impugned dumper chassis under Chapter Heading 8706.

Summary:

1. Liability to pay NCCD on Captively Consumed Chassis:
The appellant, engaged in the manufacture of dumpers, did not pay NCCD on chassis captively consumed in the production of dumper trucks. The department issued a Show Cause Notice (SCN) for the period from April 2010 to January 2016, alleging suppression of facts with intent to evade payment of duty. The original authority confirmed the demand of NCCD along with interest and penalties.

2. Applicability of Notification No. 67/95-CE:
The appellant argued that the benefit of exemption under Notification No. 67/95-CE, which exempts the whole duty of excise for goods captively consumed, should apply to NCCD as well. The appellant relied on several Tribunal decisions, including Filatex India Ltd. and Indorama Synthetics India Ltd., which held that NCCD is a duty of excise and the exemption under Notification No. 67/95-CE is applicable. The Tribunal agreed with the appellant, stating that the entire provisions of the Central Excise Act, 1944, are applicable to NCCD as per Section 136(3) of the Finance Act, 2001. Therefore, the demand of NCCD was found to be unsustainable.

3. Classification of the Impugned Dumper Chassis:
The appellant contended that no identifiable and marketable intermediate product (chassis) emerges during the continuous assembly line of manufacturing dumpers. The Tribunal, referencing the decision in Bharat Earth Movers Ltd., supported the appellant's claim that no intermediate product like chassis emerges during the manufacturing process. The Tribunal concluded that the dumper without a body has all the essential features of a finished dumper and should be classified as such.

Conclusion:
The Tribunal set aside the impugned order, holding that the demand for NCCD on the captively consumed chassis is not sustainable. Consequently, the interest and penalties imposed on the appellant were also set aside. The appeal was allowed with consequential reliefs.