2000 (12) TMI 292 - AT - Central Excise

Summary

Issues Involved:
1. Classification of Plough Lamp: Part of Tractor or Accessory?
2. Eligibility for Exemption under Notification No. 239/86-C.E., dated 3-4-1986.

Detailed Analysis:

1. Classification of Plough Lamp: Part of Tractor or Accessory?
The primary issue is whether the Plough Lamp should be classified as a part of the tractor or as an accessory. The classification is crucial because if the Plough Lamp is considered a part of the tractor, it would be eligible for exemption under Notification No. 239/86-C.E., dated 3-4-1986. Conversely, if it is deemed an accessory, it would not qualify for the exemption.

The Revenue argued that the Plough Lamp is merely an accessory, enhancing the tractor's effectiveness during night ploughing but not essential for the tractor's primary function. The tractor is complete and functional without the Plough Lamp. The Plough Lamp, classified under sub-heading No. 8512.00 of the Central Excise Tariff, is distinct from the tractor, which falls under Heading No. 87.01.

The Tribunal referred to several judicial precedents to determine the nature of the Plough Lamp. The Kerala High Court's decision in the case of Dy. Commissioner of Agricultural Income-tax and Sales Tax (Law), Board of Revenue (Taxes) Ernakulam v. Union of India, Madras, 1976 (38) STC 198, was particularly influential. The principle established is that a part is essential for the completion of the machine, whereas an accessory enhances convenience or effectiveness but is not essential.

Applying this principle, the Tribunal concluded that the Plough Lamp is an accessory, as the tractor can operate without it. The Plough Lamp facilitates night-time ploughing but is not necessary for the tractor's basic function.

2. Eligibility for Exemption under Notification No. 239/86-C.E., dated 3-4-1986
Notification No. 239/86-C.E. provides exemption from excise duty for parts of motor vehicles and tractors. The respondents argued that since the Plough Lamp is fitted to the tractor, its value should be included in the tractor's assessable value, implying it is a part of the tractor.

However, the Tribunal differentiated between classification and valuation. The inclusion of the Plough Lamp's value in the tractor's assessable value does not change its classification as an accessory. The Tribunal cited the Bombay High Court's decision in Union of India v. International Tractor Company of India Ltd. - 1985 (22) E.L.T. 780, where accessories like hour meters and wheel weights were not considered essential parts of the tractor.

The Tribunal also referred to the Ahmedabad Central Excise Collectorate Trade Notice No. 238/90 dated 3-1-1991, which clarified that accessories' costs should be included in the tractor's assessable value but did not classify them as parts.

Conclusion:
The Tribunal concluded that the Plough Lamp is an accessory, not a part of the tractor. Consequently, it is not eligible for the exemption under Notification No. 239/86-C.E., dated 3-4-1986. The Tribunal set aside the orders of the Collector of Central Excise (Appeals) and allowed the Revenue's appeal.