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TMI Blog2014 (2) TMI 632X X X X Extracts X X X X X X X X Extracts X X X X ..... in compacting and setting the road due to vibrating techniques in compaction jobs. "Parts, components and Assemblies of Automobiles" is further qualified by "falling under any heading of the tariff", both in the third Schedule to the Central Excise Act as also Notification No. 11/2006. Thus the expressions used are very very wide and does not restrict to few parts or assemblies but to all parts and falling under any heading of the whole schedule to Tariff. We also note that a large number of such parts, components and assemblies are interchangeable indifferent types of vehicles (though manufacture assign their part numbers). Thus keeping in view the way the two expression "parts, components and Assemblies of Automobiles" and "Any heading" is used, we consider that Parts, components, and assemblies of Loader, Backhoe Loader and Road Roller are covered by the said entry/expression. In order to avoid the terminology automobile, (being not defined in Act/Tariff) specific heading of the Central Excise Tariff were introduced in the Notification No. 49/2008-C.E. (NT) in February 2010 vide Notification NO. 9/2010-C.E.(NT). Apparently this was done in haste and Government had to further ame ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o, fixing of MRP and selling under their own brand name. 2. Section 2 (f) (iii) of the Central Excise Act, 1944 reads as under:- "(f) "manufacture" includes any process,- (i) incidental or ancillary to the completion of a manufactured product; (ii) which is specified in relation to any goods in, the Section or Chapter notes of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as amounting to manufacture; or (iii) which, in relation to any goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer, and the word "manufacturer" shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account." 3. Vide Section 66 of the Finance Act, 2006 the Third Schedule to the Central Excise Act, 1944 was amended so as to include "Parts, components and assembli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue) No. 2/2006-Central Excise (N.T.), dated the 1 st March, 2006, G.S.R. 113(E), dated the 1 st March, 2006, namely:- In the said notification, in the TABLE, after S.No.96 and the entries relating thereto, the following shall be added, namely:- (1) (2) (3) (4) "97. Any heading Parts, components and assemblies of automobiles 33.5% 98. 3808 30 40 Plant-growth regulator 30% 99. 9603 21 00 Toothbrush 28.5%". 2. This notification shall come into force on the 1st day of June, 2006. [Notification No. 11/2006-C.E. (N.T.) dated 29.05.2006] 6. On 24 th December, 2008, above Notification was replaced by Notification No. 49/2008-C.E. (N.T.). However, there was no change in the description of entry with which we are concerned except that abatement percentage was reduced from 33.5% to 30%, and was listed as entry no. 108. The Notification No. 49/2008-C.E. (N.T.) was amended vide Notification No. 9/2010-C.E. (N.T.) dated 27.02.2010 and the said entry was replaced as:- S.No. Chapter Heading, sub-heading or tariff item Description of goods (1) (2) (3) "108. Any Chapter Parts, components and assemblies of vehicles (including chassis fitted with engines) fal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spute after May, 2010 as both Revenue and appellant agree for dutiability and assessment under Section 4A. In view of above, dispute in brief is whether or not goods dealt by the appellant are covered by the description "Parts, components and assemblies of automobiles" as appearing in Third Schedule or above mentioned Notification. The term 'Automobile' is not defined under the Central Excise Act, 1944 or the Central Excise Act. There is no dispute that goods are "Parts, components and assemblies of Loaders, Backhoe Loaders, Road Rollers." It is also a fact that numbers of such parts may be useable in other vehicles. However, since appellants assigns their own code number/ name to such parts, according to them all Parts are meant for Loaders, Backhoe Loaders, Road Rollers. 11. Two show-cause notices were issued to the appellant dated 22.12.2009 and 23.08.2010 demanding duty of Rs.9,03,39,053/- and Rs.10,09,33,274/- for the period June, 2006 to July, 2009 and August, 2009 to May, 2010 respectively. The notices inter alia stated that Loaders, Backhoe Loaders, Road Rollers, - (i) required registration with Road Transport authorities under Rule 2 (Ca) of the Central Motor Vehicles R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellants, it is clear that different types of attachments are fitted with the chassis e.g. buckets to carry loads, road sweeper /sweeper collector, grabs & grapples, backhoe, loader, muck fork & grab, patch planer, quickhitch, trencher, shovel, earthdrill, hammer, kergmaster stump grinder, concrete skip, snow blade etc. Such type of attachments appear to indicate that these goods are motor vehicles which have the capabilities to perform versatile and multiple functions on road as well as off the road. (vi) Manufacturing process of Hydraulic Loader is as under:- (a) Stage-1 covers following activities like from axle oil filling, drop front axle on front chassis trolley, GA front axle, grease hose fitment from rear axle to rear chassis, engine dropping & fitment, hose fitment, transmission hose one side fitment, rear propeller shaft transmission side fitment; (b) Stage-II covers the activities like engine main harness fitment, front axle fitment with front chassis, centre pivoting fitment, front propeller shaft fitment, PVB & pump hoses fitment, intermediate shaft fitment, steps sub-assembly & fitment to the side of rear chassis' (c) Stage-III covers the activities like steeri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, the types of attachments like bucket, lifter etc. which are fitted to the said motor vehicles enable them to dump the materials at the desired place. Similarly the Road Rollers also are capable of moving on road and same are vehicles powered by internal combustion engine to drive by burning fuel. Therefore, the Loaders and Backhoe Loaders appear to fall under the category of motor vehicle which transport and dump the materials. Further, Road Rollers are powered by the IC engine and are capable of moving on road. As such, they also appear to fall under the category of motor vehicle. 12. Revenue also relied upon the following case laws to support that goods in question are Parts, components and assemblies of automobile. (i) M/s Central Coal Fields Ltd. Vs. State of Orissa & Ors. -1992 AIR SC 1366 (ii) Apex Court's judgement in the case of Bose Abraham Vs. state of Kerala & Anr. Dated 01.02.2001. (iii) Ashok Leyland Ltd. Vs. UOI - 1991 (62) ELT 32 (Mad.) (iv) Krishna Fabricators P. Ltd. Vs. CCE, Bangalore -1994 (69) ELT 729 (T) (v) Hi-Tech Engineering Sales And Services Vs. CCE, Ranchi - 2008 (221) ELT 298 (T) (vi) Sociedade De Fomento And Others Vs. CC, Bombay - 1987 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examined in consultation with the Ministry of Law which has opined that since Earthmoving machinery including dumpers fall under Item 11 of the 1st Schedule to the I (D & R) Act, 1951 and not under Heading 7(5) of the said schedule, no cess would be chargeable on the same under the Automobile Cess Rules, 1984. The opinion of the Law Ministry has been accepted by the Board." Ld. Special Counsel also took us through the definition of Automobile under the Automobile Cess Rules, 1984 which defines as :- "Automobile' means motor cars, buses, trucks, jeep type vehicles, vans scooters, motorcycles, mopeds, and the like" Ld. Special Counsel further stated that Automobile Cess is collected form vehicle used in transportation sectoralone. 15.2 Ld. Special Counsel also took us through the Board's Circular No. 22/90-CX.4 dated 11.07.1990 which reads as:- Circular No.22/1990-CX.4, Dated : July 11, 1990 [From F.No.156/15/90-CX.4] Government of India Ministry of Finance (Department of Revenue) Central Board of Excise & Customs, New Delhi Subject: Whether benefit of Notification No. 61/86-C.E., dated 10-2-1986, as amended would be extended to Driver's Seats of Hydraulic Excavators or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said judgement and therefore the Circular dated 11.07.1990 is no more valid and this does not represent the correct legal position. Any reliance on the said circular would be contrary to judicial verdict. 15.4 Ld. Special Counsel thereafter submitted that Board's Circular No. 167/38/2008-CX.4 dated 16.12.2008 is as under:- "Automobile parts, components and assemblies- Scope, for MRP based valuation F.No. 167/38/2008-CX4,dated 16-12-2008 Government of India Ministry of Finance (Department of Revenue) Central Board of Excise & Customs, New Delhi Subject: MRP based assessment-Clarification regarding the scope of entry No.97 of the Notification No. 2/2006-CE(N.T.) inserted vide the amending Notification No.11/06-CE(N.T.)(present entry no 107 in the notification No.14/08-CE (NT))-reg. References have been received from the field formations regarding the scope of abovementioned entry. The entry reads as under: S.No. Chapter, heading, subheading or tariff item of the First Schedule Description of goods Abatement as a percentage of retail sale price "97. Any heading Parts, components and assemblies of automobiles 33.5% 2.1 The first issue is regarding interpretatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngines, ball bearing, etc. 4. The contents of this clarification may be brought to the notice of trade and industry." 15.5 Ld. Special Counsel stated that Board in this Circular has reiterated circular dated 11.07.1990 which has already been negated by this Tribunal based upon detailed discussion and various case Laws of Hon'ble Supreme Court and therefore needs to be ignored. Ld. Special Counsel further submitted that is settled law that interpretation given by Supreme Court/High Court/Tribunal has to prevail over Board's interpretation. Ld. Special Counsel further argued that the said circular is specified to hydraulic excavators while the goods in question are Loader, Bockhoe Loader & Road Roller. In any case, hydraulic excavators are in various forms such as on its own track (which are not vehicles/automobiles) etc. 15.6 Ld. Special Counsel also submitted that the terms "automobile" is defined in the Air (Prevention and control of pollution) Act, 1981 to mean any vehicle powered either by internal combination engine or by any method of generating powers to drive such vehicle by burning fuel. This definition of automobile covers the goods in question. Ld. Counsel, further st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ains automobile as a self-propelled passenger vehicle that usually has four wheels and an internal combustion engine, used for land transport. The new Encyclopaedia Britannica explains automobile as a usually four-wheeled automotive vehicle designed primarily for passenger transportation and commonly propelled by internal-combustion engine using a volatile fuel. Dictionary of Automobile Engineering explains automobile - dated or formal work for motor car in British English, but still widely used in American English. Similarly, other dictionaries explains automobiles in similar way. Ld. senior advocate submitted that from the dictionary meaning it is clear that items like loader, backhoe loader and road rollers are not automobiles. 16.2 Ld. Senior Advocate's other contention was that department's understanding as is clear from Circular dated 14.07.1987, 11.07.1990 and particularly dated 16.12.2008(which was issued in the context of present Notification/entry) that construction/earth moving machinery are not automobile and therefore department now cannot take a contrary stand. 16.3 Ld. Senior Advocate further argued that Tribunal's judgment in the case of Krishna Fabricators P. Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kerala Tax on Entry of Motor Vehicles into Local Areas Act [hereinafter referred to as the Act]……. We hold that the excavators and road rollers are motor vehicles for the purpose of the Motor vehicle Act and they are registered under that Act. The High Court has noticed the admission of the appellants that the excavators and road rollers are suitable for use on roads. However, the contention put forth now is that they are intended for use in the enclosed premises. Merely because a motor vehicle is put to a specific use such as being confined to an enclosed premises, will not render the same to be a different kind of vehicle. Hence, in our view, the High Court has correctly decided the matter and the impugned order does not call for any interference by us. However, the question whether any motor vehicle has entered into a local area to attract tax under the Entry Tax Act or any concession given under the local Sales Tax Act will have to be dealt with in the course of assessment arising under the Entry Tax Act. Appeals are accordingly dismissed." 17.5 We note that Hon'ble Supreme court in the case of M/s. Central Coal Fields Ltd. (supra), while considering the issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... engaged in the transport of goods. 9. It would be appropriate now to mention that some documentary material was sent to us by the appellants by means of an affidavit after we had reserved judgment. That material is suggestive of the fact that Dumpers in some States are granted permission to run on public roads at a speed not exceeding 10 kms. Per hour and on bridges and culverts at a speed not exceeding 8 kms. Per hour. From this it is suggested that they have a minimum weight and safe laden weight fixed on some principles. Pictures of various types of Dumpers have also been sent to us which indicate prominently one factor that these Dumpers run on tyres, in marked contrast to chain plates like cater pillars or military tanks. By the use of rubber tyres, it is evident that they have been adapted for use on roads, which means they are suitable for being used on public roads. The mere fact that they are required at places to run at a particular speed is not to detract from the position otherwise clear that they are adapted for use on roads. The very nature of these vehicles make it clear that they are not manufactured or adapted for use only in factories or enclosed premises. The m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances under Item 75 of the Indian Tariff Act, 1934 or a mining machinery under item 72(18) ibid has held that Dumpers, Loaders and Tractors are conveyances and not a mining machinery. 17.8 Ld. Senior Advocate for the appellant has relied upon Hon'ble Supreme Court judgement in the case of Goodyear India Ltd. Vs. U.O.I reported in 1997 (92) ELT 14 (S.C.). We have gone through the said judgment. The issue before the Hon'ble Supreme Court was whether tyres of the size 1800 mn and above meant for fitment to heavy moving vehicles such as dumpers and earthmovers mainly used at construction site is to be classified as "tyres for motor vehicle". At the relevant time tyres were classified under three categories viz. for motor vehicles, for cycles & all other tyres. Further, Item NO. 34 defined motor vehicles. It is in this context that Hon'ble Supreme Court has held that such tyres cannot be considered tyres of motor vehicles. In present case issue is whether parts, components and assemblies of Loader, Backhoe Loader & Road Roller can be considered as Parts, components and assemblies of automobiles. In our view, Hon'ble Supreme Court judgement does not help the cause of Respondents. 17.9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion equipment vehicle etc. The term automobile, therefore might have started with car to carry few person but as on day extends to whole range of motor vehicles. 18.3 In fact, almost similar issue arose before this tribunal in relation to seats of tractors and earthmoving machinery, to be considered as seats of automobile or not in the case of Krishna Fabricators P. Ltd.(supra). In the said case, this tribunal observed:- "38. The expression 'automobile' has a wider connotation - one which runs by its own motor - internal combustion engine. 39. Motor vehicle has been defined as a motor driven vehicle for use on roads and highways. 40. In both the exemption Notifications No. 91/68-C.E. and No. 61/86-C.E., the expression "automobiles" has been used along with the "railway carriages" and the "air-crafts". 'Railway carriages' move on fixed rails, and the 'aircrafts' fly in the air and run on the runways. Taken all the three - automobiles, railway carriages and aircrafts - together, they cover a very wide area. 41. The word 'automobile' was first used in France in the late 1880s. It comes from the Greek word Auto meaning self, and the French word Mobile meaning moving. Literall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e interchangeable indifferent types of vehicles (though manufacture assign their part numbers). Thus keeping in view the way the two expression "parts, components and Assemblies of Automobiles" and "Any heading" is used, we consider that Parts, components, and assemblies of Loader, Backhoe Loader and Road Roller are covered by the said entry/expression. 18.6 We also find that this conclusion of ours also get support from the changes made in February/April 2010. In order to avoid the terminology automobile, (being not defined in Act/Tariff) specific heading of the Central Excise Tariff were introduced in the Notification No. 49/2008-C.E. (NT) in February 2010 vide Notification NO. 9/2010-C.E.(NT). Apparently this was done in haste and Government had to further amend the amendment made in February, 2010 within two months to specifically include headings relating to earth moving machinery. Not only this, corresponding amendment in Third Schedule was forgotten and the next year retrospectively amendment had to be brought with effect from 27.02.2010/29.04.2010. Thus a holistic look of these amendments, only supports that Parts, components and assemblies of automobiles included that of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "6. We have noticed that Para 9 of Dhiren Chemical's case is being misunderstood. It therefore becomes necessary to clarify Para 9 of Dhiren Chemical's case. One of us (Variava, J.) was a party to the Judgment of the Dhiren Chemical's case and knows what was the intention in incorporating Para 9. It must be remembered that law laid down by this Court is law of the land. The law so laid down is binding on all Courts/Tribunals and Bodies. It is clear that circulars of the Board cannot prevail over the law laid down by this Court. However, it was pointed out that during hearing of Dhiren Chemical's case because of circulars of the Board in many cases the Department had granted benefits of exemption Notifications. It was submitted that on the interpretation now given by this Court in Dhiren Chemical's case, the Revenue was likely to reopen cases. Thus Para 9 was incorporated to ensure that cases where benefits of exemption Notification had already been granted, the Revenue would remain bound. The purpose was to see that such cases were not reopened. However, this did not mean that even in cases where Revenue/Department had already contended that the benefit of an exemption Notificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of constitutional mandate while adhering to a statutory mandate? Even after the reason and rationale underlying the circular disappears, is it obligatory to continue to follow the circular? These are the questions which puzzle me and these are the conclusions which follow if the observations of this Court in the two cases of Dhiren Chemicals Industries are taken to their logical conclusion. 26. I am of the view that in a situation like this, the Customs authority should obey the constitutional mandate emanating from Article 141 read with Article 144 rather than adhering to the letter of a statutory provision like Section 151A of the Customs Act. The Customs authority should act subservient to the decision of the highest constitutional Court and not to the circular of the Board which is denuded of its rationale and substratum under the impact of the authoritative pronouncement of the highest Court. Alternatively, Section 151A has to be suitably read down so that the circulars issued would not come into conflict with the decision of this Court which the Customs authorities are under a Constitutional obligation to follow." 18.10 In view of above case laws, we are of the view t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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