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TMI Blog1976 (6) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... ors so manufactured were supplied with certain parts and accessories as standard equipment, being a hydraulic lift, a three point linkage, power take off, lighting equipment, a set of tools and electric horn. The Government of India under powers confirmed under the Essential Commodities Act, 1955, promulgated an order known as the Tractors (Price Control) Order 1967. The said order defined a 'tractor' to mean "an agricultural machinery known by that name and fitted with the diesel engine of a capacity not exceeding 50 H.P.S." and defined the sale price `to mean' the amount payable to a manufacturer as consideration for the sale of a tractor excluding tax. It empowered the Central Government to fix the sale price of tractors manufactured in India and provided that no manufacturer could sell a tractor for a sale price exceeding the sale price fixed by the Government of India and made a sale in contravention thereof criminal offence against the manufacturers. 3. In pursuance of the said order, the Central Government by notifications (Ex. A collectively to the petition) issued from time to time, fixed the price of tractors of different manufacture. The said notification while fix ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation - "For the purpose of this item, where a motor vehicle is mounted, fitted or fixed with any weight lifting, earth moving and similar specialised material handling equipment, other than the chassis shall not be taken into account." Item 34A Excisable Parts and Accessories of Motor Vehicles, not otherwise specified. Explanations - The expression 'motor vehicles' has the meaning assigned to it in Item No. 34". Under the said Tariff Item 34(3a) excise duty applicable to tractors, including agricultural tractors, was 15% ad valorem. As a result of the subsequent notification tractors manufactured by the petitioners were to bear excise duty of 10% only. 7. By a notification dated 29th May, 1971 issued under sub-rule (1) of Rule 8 of the Central Excise Rules, 1944 the Central Government wholly exempted from excise duty all motor vehicles parts and accessories under the said Item 34A except those specified in the notification they were wholly exempted from excise duty. 8. According to the prevalent procedure, the petitioner had filed with the authorities from time to time for their approval a price list, showing the price of the said tractors, without including therein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioners in respect of the said show cause notices as well, by the Assistant Collector of Excise, who by his order dated 8th April, 1974 confirmed the said demands. 12. The petitioners have therefore filed this petition, challenging the said orders both of the Assistant Collector of the Central Excise and also of the Appellate Authority viz., the Collector of Central Excise on several grounds mentioned in paragraph 22 of the petition. The main ground of attacks is that (1) under the tariff Item 34 (3a) of the Central Excises Act, excise duty could be levied only on 'tractors' and since neither the hour meters nor the wheel weights were essential components of tractors manufactured by the petitioners, orders passed for levying the duty on the petitioner's said tractors after taking the value of the said two parts into consideration was wrong, (2) that `a tractor' generally known in the trade does not mean a tractor fitted with additional special components or accessories such as hour meters and/or wheel weights and therefore their value should not be taken into consideration while levying excise duty, (3) that under the provisions of section 4 of the said Act assessabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd weights and hour meters were in his opinion, not essential parts of a tractor, that the weights were detachable and require to be used only in abnormal conditions, that wheel weights and front end weights were supplied by manufacturers of tractors separately as and when required by the agriculturists and that they could be bought separately from the market by dealers and agriculturists. Further according to him, hour meter was an aid to an agriculturist who wished to find out the number of hours his tractor had worked in the field, and that, the tractor as understood in the trade did not include accessories such as wheel weights and hour meter. 15. Habibulla in his supporting affidavit has pointed out that he had contacted certain representatives in trade and persons amongst agriculcurists to find out according to them whether wheel weights and hour meter formed essential components of the tractors and accordingly he had filed affidavits of 3 persons (l) Sharma, (2) Virendra Mohan Roy, and (3) Dr. R.K. Srivastava Professor of Agricultural Engineering in Punjab Agricultural University. Sharma in his affidavit has stated that in his experience of 15 years of working with tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ractors. According to them rule 49 of the Central Excise Rules, 1944 inter alia provided that payment of duty shall not be required in respect of excisable goods made in a factory until they were about to be issued out of the place or premises specified in Rule 9. The premises mentioned in Rule 9 are those where excisable goods were produced, cured or manufactured. Since the tractors manufactured by the petitioners were cleared from the licensed premises with hour meters and/or wheel weights attached to them, the value of hour meters and/or wheel weights were included for the purpose of determing the assessable value of the tractors. In paragraph 25 of the said affidavit they have admitted that the price fixed by the Government under the Tractors (Price Control) Order, 1967, was without taking into consideration certain accessories which were not normally supplied along with the tractors. According to them, however, if the tractors were fitted with additional accessories and there was an enhancement of value of account of such addition, it could not be contended that the value of such additional accessories should not be taken into account for the purpose of determining the assessa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that a 'tractor' fitted with the said two accessories was still a tractor and since it left the petitioner's premises with the said two parts fitted to it, the respondents would be entitled to take into consideration the value thereof while assessing the value of the tractor for ascertaining the excise duty leviable on it under Item 34(3a). 20. The said rival contentions may be considered in the background of certain admitted facts in this case. They are as under (1) Tractors manufactured by the petitioners fall within Item 34(3a) for the purposes of excise duty. (2) The price of the tractors of the type manufactured by the petitioners are fixed by the Central Government under several notifications issued from time to time in pursuance of the powers under clause 4 of the Tractors (Price Control) Order. (The said notifications are annexures I to Ex. A to the petition) (3) The sale price of the tractors fixed under the said notifications included the following accessories/attachment which were required to be supplied with every tractor viz - (a) Hyd-lift, (b) 3.pt. Linkage (c) Power take-off, (d) Lighting equipment, consisting of hd. light, tail light and plough light, (e) A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not disputed before me. On the aforementioned admitted facts it is clear that a manufacture of a 'tractor' is complete when it is brought into existence with all its essential components. The said two accessories viz., hour meters and wheel weights, are not its essential parts, and the manufacture of a tractor would be complete without they or any of them being fitted to a tractor nor would the people in the trade reject the same as a tractor without the said accessories or one of them being fitted to it. 22. The real test would be to find out at what point of time the petitioners could be said to have manufactured a tractor with all its essential parts, it would be at that point of time that it would be excisable to attract excise duty. In this case that could be even without any of the said accessories being fitted on it, for admittedly they are fitted to the tractor at the option of the purchaser subsequent to the tractor as such being manufactured by the petitioners. In that event, the excise duty could be ascertained only after assessing the value of the tractor as such excluding the price of the said two accessories, or to do otherwise, it would amount to levying excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in this case that the said two accessories were not essential for the purpose of the manufacture of a 'tractor' as such, the price of the said parts, though fitted to the tractor before leaving the petitioner's licensed premises, cannot be included in the assessable value of the tractor. This would be more so in this case because the price of the tractors manufactured by the petitioners, along with the specified accessories supplied or to be supplied by them along with the tractor, is fixed by the Government from time to time and the said two accessories fitted by the petitioners to their tractors at the option of the purchasers are exempt from excise duty. The said contention of the learned counsel for the respondents therefore cannot be accepted. 26. In my view, therefore, on the aforementioned admitted facts and other circumstances of this case the said impugned orders both of the Assistant Collector and the Collector of Central Excise cannot be sustained. 27. In the view that I am taking, it is not necessary to consider the other contentions of the petitioners. 28. The result, therefore, is that the petition is allowed. The rule is made absolute in terms of p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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