9911796707
TMI Blog2011 (7) TMI 201X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 and in not imposing penalties on the respondents - Decided in favour of assessee. - 2619 & 3017/2005- Ex(BR) - - - Dated:- 8-7-2011 - Shri Justice R.M.S. Khandeparkar, Shri M. Veeraiyan, JJ. Shri B.K. Singh, Jt.CDR and Shri Sunil Kumar, DR for the Appellants Shri V. Lakshmi Kumaran, Advocate for the Respondent Per M. Veeraiyan (for the Bench): Both these appeals are by the Department against the order of the Commissioner No. 30/COMMR/CEX/IND/2004 dated 24.6.2004 by which the Commissioner dropped proceedings initiated against both the respondents vide show cause notice dated 25.3.2004. 2. Heard both sides extensively. 3. The relevant fact, in brief, are as follows: a) Eicher Motors Ltd., (hereinafter referred to as respondent 1) is a manufacturer of motor vehicle chassis and motor vehicles falling under Chapter 8706, 87.02 and 87.04. They were, during the relevant period availing Cenvat credit of duty paid on inputs / capital goods in terms of Rule 3 of Cenvat Credit Rules, 2002. Respondent 1 was sending motor vehicle chassis and motor vehicle chassis fitted with cabin falling under sub heading No. 8706.42 for the purpose of fabrication and m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on respondent 2 under Rule 13 of Cenvat Credit Rules, 2002 and under Rule 26 of Central Excise Rules, 2002. g) Commissioner, after considering the reply given by the respondents, dropped the proceedings initiated under show cause notice and hence the department is in appeal. 4.1 Learned DR for the department submits that motor vehicle chassis has been assembled by the respondent 1 using hundreds of parts and components and sub assemblies and the same is a final product in the hands of respondent 1. Clearance of such chassis with or without a cabin to the respondent 2 can by no stretch of imagination be treated as removal of inputs or partially processed inputs by respondents 1 in terms of Rule 4(5)(a) of the Cenvat Credit Rules. 4.2 The chassis cleared by the respondent 1 for body building has undergone manufacturing process and identifiable final product has emerged and the same were marketable. Infact, prior to 1.3.2003, the respondent had been clearing such chassis only on payment of duty. Such assembled chassis is clearly a final product and stock in trade as far as the respondent 1 is concerned. The chassis cleared by the respondent cannot be considered either as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .87), on the ground that commodities availing of modvat will then have to be cleared even in a semi finished stage on payment of duty or alternatively provision of 57F may be availed of . The Rule 4(5)(a) of Cenvat Credit Rules is actually a successor to erstwhile Rule 57F. Therefore, the chassis should be treated as partially processed inputs or semi-finished goods eligible for clearance in terms of Rule 4(5)(a) of Cenvat Credit Rules. In this regard, he relies on the decision of Tribunal in the case of Eveready Industries Ltd. vs. CCE, Hyderabad reported in 2005(186) ELT 570 by which carbon electrodes manufactured using inputs on which modvat credit was availed was held permissible to be removed under Rule 57F(4). He also relies on the decision of the Tribunal in the case of Commissioner of Central Excise, Indore vs. Gajra Gears Ltd. reported in 2003 (152) ELT 367 by which tools manufactured using alloy steel bars were permitted to be cleared under Rule 57F(4). 5.3 Learned Advocate submits that the respondent 1 cleared chassis and other parts and components on which credit has been taken in terms of Rule 4 (5)( a) of the Cenvat Credit Rules. Respondent 1 also gave undertaking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduct and specifically classifiable under Tariff, the clearance of the same should have been only on payment of duty in terms of Rule 4 of the Central Excise Rules and the same could be treated as inputs only at the hands of the respondent 2. If this was the view of the Department, the Department should not have allowed the respondent No.2 to operate under Notification No. 214/86 and send back the body built vehicle without payment of duty to respondent 1. It is to be noted that, though respondent 2 was also issued notice, no demand of duty was proposed on the respondent 2 in the show cause notice. Having issued the show cause notice holding that the chassis cleared by the respondent 1 should have paid duty at the time and place of removal of chassis, there is a clear contradiction in not demanding the full duty in terms of Rule 4 of the Central Excise Rules . There is no valid reason apparent in not demanding 16% BED at the time of clearance of the chassis No.1. Undoubtedly, the duty at 16% would have been paid only at the lower value applicable to chassis. The department has taken 16% duty paid at the enhanced value of the body built vehicle towards the duty at 16% payable at the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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