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TMI Blog2011 (10) TMI 538X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacturer is required to obtain a licence from the Central Excise department under Rule 174 of the Central Excise Rules and if any manufacturing activity is undertaken without a licence from the department, there is a contravention of the Central Excise Rules and the excisable goods so manufactured are liable for confiscation under Ruled 173Q(1)(c). This is also a fact that Section 11AC was not in existence at the time of this manufacturing activity undertaken by the appellant. Therefore, the absence of the condition of Section 11AC will not have any effect on the confiscation of the goods in this case - order of confiscation of the impugned cars and the consequential imposition of redemption fine and penalty is upheld - Decided against assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... erred to settle the matter under the Kar Vivad Samadhan Scheme and offered to discharge the duty liabilities as per the said scheme. Their application for settlement under the Kar Vivad Samadhan Scheme was accepted and they were directed to deposit 50% of the duty, penalty and fine adjudged in the customs order vide order No. F. No. MCH/KVSS-116/98 and MCH/KVSS-117/98 both dated 15-2-1999. Since the customs dispute was settled under the Kar Vivad Samadhan Scheme, they had withdrawn the appeals before this Tribunal against the order of the Collector of Customs which was dismissed as withdrawn by the Tribunal. It is their contention that on the same set of 15 Honda Cars, both Central Excise duty and Customs duty cannot be demanded as it would amount to double taxation. Since, they have discharged customs duty liability which includes excise duty by way of CVD, they are not liable to pay any further excise duty and, therefore, the Central Excise duty demand adjudged by the Collector of Central Excise Vide Order dated 25-11-1986 is not legally sustainable. It is their further contention that as early as 15-12-1983, they had written a letter seeking guidance as to whether they were liab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y misplaced. The taxable event in respect of Customs duty is "import" or "export" of goods. Therefore whenever goods are 'imported' or 'exported', Customs duty liability is attracted under the provisions of Section 12 of the Customs Act, 1962 at the rate specified for the product in the Customs Tariff Act, 1975. In the case of Central Excise duty, the taxable event is manufacture of excisable goods. Once manufacture is undertaken of an excisable item, excise duty liability is attracted and notwithstanding the fact that the appellant might have paid Customs duty on the imported components, he is liable to pay excise duty on the activity undertaken by him. In the instant case, the product is motor cars of Honda brand and motor cars were specified in Item No. 34 of the Central Excise Tariff as it stood at the relevant time. Assembly of cars from various components brings into existence an excisable item namely, car, which is distinct and different from the parts from which it is assembled. Therefore, assembly of cars from components parts amounts to manufacture under Section 2(f) of the Central Excise Act, 1944 and excise duty is liable to be charged, on such assembly. As held by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral Excise Act, a show-cause notice has to be issued within 6 months from the date of seizure failing which the seized goods have to be released to the person from whose possession the goods have been seized. Since the goods have been released provisionally to the appellant much before the said time-limit of six months, these provisions have no application in the instant case. Further, the show cause notices have been issued before the expiry of six months from the date of seizure in both the cases. Therefore, the appellant cannot plead that it is barred by limitation of time. The appellant's contention that they had written to the Central Excise Department sometime in 1983 seeking clarification as to whether assembly of cars from parts would amount to manufacture and the department did not choose to take note of the said letter or reply thereto and, therefore, the department is precluded from demanding duty or the demand is time-barred does not have any force. Merely because the appellant had sought some information/clarification in respect of an activity, it does not protect the appellant from the legal consequences, which is stipulated in respect of that activity. The law envisa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the motor vehicles without obtaining a licence and for contravention of other procedural Rules in respect of the 15 cars and a penalty of Rs. 1,00,000/- on the appellant for removing the cars without payment of duty. Considering the facts and circumstances of the case, we reduce the redemption fine from Rs. 10,000/- to Rs. 1,000/- per car. Further, we reduce the penalty on the appellant from Rs. 50,000/- and Rs. 1,00,000/- to a total penalty of Rs. 25,000/. 9. Since the duty liability has to be re-quantified, taking into consideration the eligibility to proforma/modvat credit of the countervailing duty of the Customs paid at the time of importation of the automobile parts, we remand the matter to the adjudicating authority to re-quantify the duty demand subject to the condition that the appellant leads evidence before the adjudicating authority to establish their claim for eligibility for proforma/modvat credit with necessary documentary evidence. On submission of such evidence, the adjudicating authority shall consider their claim in terms of the provisions of Rule 56A or Rule 57A of Central Excise Rules, 1944 as they stood at the relevant time and allow such credit if it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he department on 15-12-1983 to know whether the excise duty is payable on the assembled car bodies (chassis) which he has purchased from Bombay Port Trust in public auction and imported parts of the motor cars on import licence and have paid import duty and CVD thereon. In fact, the appellant informed the department on 15-12-1983 on an advice obtained from Shri Kamal Parsurampuria, Advocate, Supreme Court who had clarified that "in his opinion the cars assembled in India does not attract any duty of excise" relying on the decision of Hon'ble Supreme Court in the case of R.C. Jall v. AIR 1962 S.C. 1281 in reply to the query made by the appellant. The department sought various information from the appellant and seized the vehicles without answering the query of the appellant "whether their activity of assembling the car out of imported parts and chassis purchased in auction from the Bombay Port Trust is an activity of manufacturing or not and liable to pay Central Excise duty". Moreover, the appellant has also relied on the decision of the Hon'ble Apex Court in the case of T.S. Cycles of India, Ambattur, Madras v. Union of India and Another - 1983 (12) E.L.T. 681 (Mad.) wherein it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lf in carrying out repairs of motor vehicles without the aid of power. The appellant had purchased chassis of motor vehicles in an auction from the Mumbai Port Trust and had imported some of the parts and components of the motor vehicles and some parts were also indigenously purchased. After assembling these parts and components and the chassis, the appellant had assembled or rebuilt automobile cars. These cars were registered with the Regional Transport Officer under different registration numbers. He submitted that he, on his own, wrote a letter to the Assistant Collector of Central Excise requesting him to intimate whether any excise duty was payable if the said cars were sold by him. Along with this letter he also enclosed a legal opinion by his Advocate, wherein it was opined that this activity would not amount to manufacture. He submitted that from the very beginning the appellant had no intention to evade any payment of duty. After this letter, there was some correspondence between the Central Excise authorities and the appellant and finally the goods were seized by the department, which resulted in the show-cause notice and the adjudication order. He submitted that since he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the bona fide belief that the activity undertaken by him does not amount to manufacture. The learned SDR contended that Section 11AC of the Central Excise Act came into existence only on 28th September, 1996 whereas the present case pertains to the period prior to this period. Therefore, the provisions of Section 11AC will not be applicable to the facts of the present case. He submitted that after the appellant wrote a letter to the department, there was a correspondence between the Superintendent and the Assistant Collection with the appellant. The Assistant Collector vide his letter dated 12th/13th July, 1984 intimated the appellant that the activity undertaken by the appellant amounts to manufacture. In spite of this letter, the appellant had not applied for a licence to manufacture the goods. He submitted that under Rule 173Q(1)(c) of the Central Excise Rules, it is stated that if any manufacturer, producer or a licensee of a warehouse engages in the manufacture or production or storage of any excisable goods without having applied for the licence required under Section 6 of the Act, then all such goods shall be liable to confiscation. He, therefore, submitted that since ..... X X X X Extracts X X X X X X X X Extracts X X X X
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