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TMI Blog2000 (9) TMI 548X X X X Extracts X X X X X X X X Extracts X X X X ..... cycle they started selling the same; that a show cause notice dated 29-11-96 was issued by the Asstt. Commissioner for demanding duty amounting to Rs. 29,47,738.69 in respect of 26 BMW motor cycles cleared by them; that another show cause notice dated 19-12-97 was issued by the Additional Commissioner for demanding duty amounting to Rs. 10,16,307/- in respect of 18 BMW motor cycles cleared during the period from July, 1996 to November, 1997; that the Additional Commissioner under the Adjudication order dated 27-3-98 confirmed the demand and imposed penalty under Section 11AC and separate penalty under Section 9(2) of the Central Excise [Act] on them holding that the activity of assembling the motor cycle from SKD kits amounts to manufacture in terms of Note 6 to Section XVII of the Tariff; that the Commissioner (Appeals) under the impugned order rejected their appeal. The learned Advocate further submitted that motor cycles imported in SKD condition were assessed to duty as complete motor cycles in accordance with Rule 2(a) of the Interpretative Rules which provides that incomplete goods having essential character of the complete goods are to be classified as complete goods; that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 29-9-95 on payment of customs duty; that they would sell the aforesaid motor cycle after final assembly and as the goods had already assessed to duty/Cess as motor cycle they would not be paying again the excise duty on their sale; that this letter was duly received by the Assistant Commissioner s office which is apparant from the acknowledgement on the letter itself; that a copy of the said letter was also sent to the Range Suptd., who under letter dated 16-10-95 enquired from them as to why no permission had been taken under Rule 51A of the Central Excise Rules to bring duty paid goods into factory premises; that under their letter dated 19-10-95 they provided necessary information to the queries raised by the Supdt. and also furnished the documents desired by him; that again under letter dated 26-10-95 they mentioned that since assembly did not bring into existence any new commodity, no excise duty would be chargeable and they also referred to the decision in Walchand Nagar Industries case; that on query made from Supdt. under letter dated 4-12-95 about Bill of Entry not indicating import of 100% components, the Appellants under their letter dated 6-12-95 informed the Assistan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... greement entered into between the Appellants and BMW and submitted that the tenure of agreement support the view of the department that motor cycles were to be manufactured by the Appellants. He specifically referred to paragraphs 1.1, 2.2 and 9.8 which are extracted below :- 1.1 BMW shall supply and MAL shall purchase, import and assemble SKD/CKD-kits of F650 motorcycle in accordance with the provisions of this Agreement, the Importer Contract attached as Appendix 1 and the terms of the separate orders for the SKD/CKD-kits placed by MAL and accepted by BMW. 2.2 ...................................................... A minimum of 300 F650 motorcycles shall be delivered as SKD-kit to MAL in the period from September 1, 1995 to December 31, 1995. 100 of such SKD-kits shall be produced in July, 1995, 100 in September, 1995 and 100 in October, 1995, provided that the necessary letter of credit stipulated in Article 3.2 of this Agreement is confirmed to BMW not later than May 31, 1995 for the production in July, 1995, not later than July 31, 1995 for the production in September, 1995 and not later than August 31, 1995 for the production in October, 1995. 9.8 Shou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Hindustan Playcards v. C.C.E., 1993 (68) E.L.T. 906 (T). Regarding competence of the Additional Commissioner the learned SDR submitted that he was competant to adjudicate the cases up to Rs. 20 lakhs and as in the show cause notice adjudicated by him the demand of duty is less than Rs. 20 lakhs. It cannot be said that if this show cause notice is clubbed with the earlier show cause notice the Additional Commissioner would not be competent to adjudicate the matter; that in the earlier show cause notice no extended period of limitation was invoked and as such issue involved in both the show cause notices were not the same. 6. In reply learned Advocate submitted that the word production in the Agreement has been used in the commercial sense only; that assembly of parts does not amount to manufacture; that in Maruti Udyog case, adjudicating authority had treated the cars imported in CKD condition as motor car in terms of Rule 2(a) of the Interpretative Rules. He finally submitted that at least on 29-11-96 when the first show cause notice was issued the department was aware about the sale of the motor cycle by them and from that date they cannot claim that they were not aware of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ote like Note 6 to Section XVII. As per Section 2(f) of the Central Excise Act, manufacture includes any process which is specified in relation to any goods in the Section or Chapter Note of the Schedule to the Central Excise Tariff Act as amounting to manufacture. Such a definition was not in existence at the relevant time for deciding the matter in the case of Indian Xerographic System Ltd. Similar was the situation in the case of Walchand Nagar Industries as the goods were manufactured and cleared during the period August, 1984 to January, 1986 when the definition of manufacture under Section 2(f) of the Central Excise Act did not provide that the process mentioned in Section or Chapter Note would amount to manufacture. Further, our views are strengthened by the decision of the Appellate Tribunal in the case of C.C., Mumbai v. Maruti Udyog Ltd., 1996 (16) RLT 646 wherein it was held that for customs assessment purpose the goods have been deemed to be cars as a result of legal fiction. The imported goods, however, remain to be components assemblies or sub-assemblies. Similar views were also held by the Tribunal in the case of Wipro G.E. Medical Systems Ltd. v. C.C., Bangalore, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditional Commissioner had decided both the show cause notices it cannot be said that he has exceeded his monetary limit as in the show cause notice dated 26-11-96 the amount of duty involved is more than Rs. 2 lakhs which he is competent to decide as per Board s circular. For determining the competence the duty involved in different show cause notice has not to be clubbed as the competence is on case to case basis. We, however, find substance in the submissions of the learned Advocate for the appellants that part of the demand is time-barred. The various correspondence exchanged between department and the appellants clearly reveals that the department was aware that the appellants imported components of motor cycle in SKD condition which are being assembled and sold without payment of central excise duty. In view of this extended period of limitation is not invokable in the present matter. As the show cause notice has been issued on 19-12-1997 for demanding duty for the period July, 1996 to November, 1997, the demand for the period from July, 1996 to May, 1997 is hit by time-limit specified in Section 11A(1) of the Central Excise Act. The Adjudicating authority will re-determine th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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