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TMI Blog2017 (10) TMI 554X X X X Extracts X X X X X X X X Extracts X X X X ..... indra Scorpio and Mahindra Bus, we find that the process undertaken by the appellant involves the removal of body shell of the vehicle and reinforcing the same with bullet proofing sheets from the inside, strengthening the platform by welding iron studs on the weak joints of the platform and replacement of coils and shock absorbers so as to enable the platform to bear the increased weight of the base vehicle after bullet proofing. The body shell is then reinstalled on the platform and the floor is covered with a ballistic carpet. The glass is also changed to thicker bullet proof glass. We have seen that Mahindra Scorpio remains as Mahindra Scorpio and Mahindra Bus remains as Mahindra Bus before and after the bullet proofing and the use of the vehicles also remains same to carrying the passengers and the character of vehicle also do not change on accessories being added to these vehicles - in this case the Scorpio remain Scorpio and the Bus remains the Bus after bullet proofing and therefore, it cannot be said that the activity of bullet proofing amounts to manufacture. Accordingly, the activity undertaken by the appellant does not amount to manufacture. Merely few additions do not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pearance of these vehicles and their use to which the vehicles are used for. The Scorpio remains a Scorpio; the Bolero Jeep remains a Bolero Jeep and the Bus remains a Bus. All three vehicles are used for transportation of passengers both before and after bullet proofing. The bullet proofing is merely an additional accessory to these vehicles. 3. In 2003, the Revenue started enquiries as the process of bullet proofing of the motor vehicle known as Mahindra Rakshak (Mahindra Bolero Jeep) amounts to manufacture or not. It was alleged that as the bullet proofing was done by a division of Mahindra Mahindra, the cost of bullet proofing should be included in the value of base vehicle cleared by Mahindra Mahindra in terms of Rule 10A of the Central Excise Valuation Rules, 2000 as the said activity amounts to manufacture. It was alleged that the activity amounts to manufacture and cost of bullet proofing was to be added to the cost of base vehicle paid by Mahindra Mahindra. 4. On appeal, the order of the adjudicating authority was set aside holding that the process does not amount to manufacture and duty cannot be charged on the value addition carried outside the factory of clea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or-in-title (MDS) was, by bulleting proofing the M M vehicles, manufacturing new product. Further, a mere perusal of the Order dated 17.06.2004, it is clear that the very same process of bullet proofing that has been set out by the department in the present show cause notice have been taken from the appellants letters dated 1.1.2012 and 24.7.2012. The charge of suppression is false and erroneous, therefore, on this alone ground, the order confirming the demand is to be set aside. To support his contention, he relied on the following decisions: (i) Anand Nishikawa Co. Limited - Vs. CCE-2005 (188) ELT 149 (SC) (ii) CCE Vs. Malleable Iron Steel Castings Co.Pvt.Ltd.-1988 (100) ELT 8 (SC) (iii) Prabhu Steel Industries Ltd. Vs. CCE-1997 (95) ELT 164 (SC) (iv) CCE Vs. Pioneer Scientific Glass Works-2006 (197) ELT 308 (SC) (v) Uniworth Textiles Ltd. Vs. CCE, Raiipur-2013 (288) ELT 161 (SC) 7. He further submits that the Commissioner (Appeals) and the Commissioner Nashik had held that bullet proofing does not amount to manufacture. Therefore, due to change of opinion, the extended period of limitation is not invokable. To support this contention, he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) Servo-Med Industries Pvt. Limited Vs. CCE-2015 (319) ELT 598 (SC) (3) Deputy Commissioner of Sales Tax Vs. Pio - Food Packers-1980 (6) ELT 343 (SC) (4) Crane Betel Nut Powder Works Vs. CCE-2007 (210) ELT 177 (SC) (5) VeeKalyan Industries Vs. CCE-1996 (83) ELT 262 (SC) (6) CCE Vs. Tarpaulin International -2010 (256) ELT 481 (SC) (7) Metlex (I) Pvt. Limited Vs. CCE-2004 (165) ELT 129 (SC) (8) Gujarat Steel Tubes Limited Vs. State of Kerala-1989 (3) SCC 127 (9) Sterling Foods Vs. State of Karnataka-1986 (26) ELT 3 (SC( (10) CCE Vs. Midas Techniquies Pvt. Limited -2015 (329) ELT 926 (Tri.) (11) Fram Company Vs. CCE - 1987 (30) ELT 541 (Tri.) 10. He contended that the bullet proofing/security of the passenger are just an additional feature or accessory. He relied on the decision of the Apex Court in the case of Mehra Bros Vs. Joint Commercial Offier-1991 (51) ELT 173 (SC) to say that an accessory is an object or device that is not essential in itself but adds to the beauty or convenience or effectiveness of something else or is supplementary or secondary to something of greater o primary importance. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only 2179 cc; and (ii) the said sub-heading covered Specialized transport vehicles like ambulances, prison vans, and the like . The BP Scorpio is not a specialized vehicle where the exterior and the interiors are altered for a specialized use. An ambulance is fitted with life-saving equipment, stretcher and is used for transport patients. A prison van is a minibus with the cage to transport prisoners. Such vehicles are not used for ordinary civilian transportation. The bullet proof Scorpio is not fitted with any life-saving equipment, stretcher or any prison like cage or similar kind of altered exterior/interior. 15. He further submits that the Commissioner has purported to classify the vehicle under a third heading not proposed in the show cause notice. The Commissioner has therefore clearly travelled beyond the scope of show cause notice which is not permissible in the light of the decision of Tribunal in the case of Aurobindo Pharma Limited Vs. CCE-2008 (10) STR 611 (T). He further submits that this sub-heading is not applicable for the reasons set out hereinabove. 16. He further submits that the Scorpio manufactured by M M classified under sub heading 8703 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt is doing manufacturing activity on behalf of the principal manufacturer M/s. Mahindra Mahindra who is the actual person receiving the orders from the ultimate user and also receiving the final price from the ultimate users. As per judicial pronouncements of the Hon ble Apex Court, an activity to be called as manufacture under Central Excise law, a new commercial product should emerge, different from the one with which the process started. After bullet proofing done by the appellant, a new product comes into existence because inserting bullet proof layers by using specific frames, by removing the body of the base vehicle, strengthening the platform by welding iron studs on the weak joints of the platform and by replacing the normal windows and tyres with specialized bullet proof windows and tyres, by inserting a ballistic carpet, changing the coil and shock absorbers, bullet-proofing sheets are reinforced in the front wall, doors, tail gate and roof, the stripped interiors are reassembled, etc. to an extent that the value of the manufactured vehicle becomes more than double of the normal vehicle. Thus, the normal vehicles and the bullet proof vehicles have a commercially differe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mahindra Mahindra Limited (supra) wherein the this Tribunal held as under:- 4. The Revenue heavily relied upon the Hon ble Supreme Courts decision in the case of Siddhartha Tubes Ltd. v. Commissioner of Central Excise, Indore - 2006 (193) E.L.T. 6 (S.C.) to submit that as there is a value addition to the base vehicle, therefore, the appellants are liable to pay the duty after taking into consideration the cost of value of bullet-proofing. The Revenue also submitted that as the appellants received the order of Bullet Proof Jeep and supplied the vehicle as per the order, therefore, the duty is to be paid on the Bullet Proof Jeep and not on the base vehicle. It is also submitted that when the base vehicle is supplied to job-worker, the responsibility of supply of Bullet Proof Jeep to the police departments remained with M/s. Mahindra Mahindra ltd. Hence the demand is rightly made. 5. We find that the Tribunal in the appellantsown case where the Bullet Proof Jeep was supplied to J K Police and the process of bullet proofing was undertaken by the job-worker, the Tribunal after relying upon the Boards Circular No.139/08/2000-CX, dated 4-1-2001 whereby the Revenue o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds have to be assessed at the place of removal and if the value cannot be determined under main provisions of Section 4(1)(a) of the Act, rules for valuation have to be resorted.' 7. A hypothetical example makes the position clear. Let us take an assessee who has 4 divisions in different parts of the country, each making plastic granules, plastic films, plastic bags and printed bags. For the finished product of one division, the finished product of another division is the raw material. If a purchase order is placed on the division for printed plastic bag, question arises whether the division clearing the granule can be asked to pay duty on the value of printed bags or any of other two divisions can be asked to do so. If the product undergoes a process which does not amount to manufacture, department cannot demand duty including cost of each process just because the unit making raw material belongs to the same company. Legal provisions remain the same irrespective of who takes up the process. If there is no sale or if value cannot be determined under Sec. 4(1)(a) value has to be determined under Sec. 4(1)(b). 8. We also find that Commissioner(Appeals) in her order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal, in Castrol India Ltd. v. C.C.E, New Delhi - 2000 (118) E.L.T. 35 (Tribunal) = 2000 (41) RLT 652 (CEGAT). In that case blended lubricating oil was removed from the place of manufacture in bulk in tankers to the depots/packing place from where oil was sold after repacking in smaller quantities. The cost of packing done at the depot/packing place was sought to included in assessable value even after amendment of Section 4, effective from 28-9-1996, but the same was disallowed by the Tribunal and it was observed as under :- In the case of removal of goods from the depot the time of removal shall be the time at which such goods were cleared from the factory as per definition of time of removalprovided by sub-clause(b)(a) to clause (iv) of Section 4 of the Act. The same view had also been taken by the Western Bench of the Tribunal in Sarita Chemicals Ltd. v. C.C.E., Mumbai IV - 2000 (119) E.L.T. 394 (Tribunal) = 1999 (34) RLT 573 (CEGAT). 18. It is seen from the aforesaid observations of the Tribunal that the goods should be assessed in the condition in which the same are cleared from the factory and the value addition on account of the processing carried out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ired to pay. The said issue has been examined by this Tribunal and this Tribunal has held as under:- 6. In all the appeals the issues to be decided by us are as under : (a) Whether customisation of the motor vehicles as per requirements of customers amounts to manufacture as per Section 2(f) of Central Excise Act, 1944 and/or Chapter Note 3 of Chapter 87 of Central Excise Tariff. (b) Whether dropping of demand by the Commissioner on alleged removal of add on kits and parts from Powai and Silvassa units are correct. (c) Whether the Respondents are entitled for SSI Exemption Notification No.8/2001-C.E., dated 1-3-2001 during the year 2001-2002. (d) Whether personal penalty imposed for ₹ 5000/- each in two OIO on Shri B.D. Bajaj is correct or to be increased to ₹ 10,000/- each. As regard demand of duty on customization of motor vehicle we find that the respondent is carrying out the activity of cosmetic changes on the duty paid cars and vehicles these duty paid vehicles are completely ready for use with its body. They are doing cosmetic changes as per the requirement of the customer inside and outside of the vehicle. In our considered view t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e impugned orders. The ld. Counsel also made submissions that due to claim of SSI Exemption demand is not sustainable and also it is time bar. We therefore find that as regard demand of excise duty on alleged removal of add on kits and parts from Powai and Silvassa unit needs re-consideration. Therefore for this part of the demand we remand the matter to the Original Adjudicating Authority for passing a fresh order after appreciating the facts, considering the representation, if any, made by the respondent, issue of time bar etc. As regard the duty demand related to clearances claimed to be covered under SSI Notification No.8/2001-C.E., dated 1-3-2001 during the year 2001-02 it is observed that Ld. Commissioner while computing the aggregate value of ₹ 3 Crores during the year 2000-01 made an error that value of ₹ 1,03,04,873/- towards clearances of bus/tempo traveler was not taken into account therefore aggregate value remained below ₹ 3 crores, accordingly extended the benefits of SSI Exemption Notification No.8/2001-C.E., dated 1-3-2001. We find that there is no dispute particularly when the Hon ble Bombay High Court in the appellants own case held the clearance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27. The case law discussed above falls into four neat categories. (1) Where the goods remain exactly the same even after a particular process, there is obviously no manufacture involved. Processes which remove foreign matter from goods complete in themselves and/or processes which clean goods that are complete in themselves fall within this category. (2) Where the goods remain essentially the same after the particular process, again there can be no manufacture. This is for the reason that the original article continues as such despite the said process and the changes brought about by the said process. (3) Where the goods are transformed into something different and/or new after a particular process, but the said goods are not marketable. Examples within this group are the Brakes India case and cases where the transformation of goods having a shelf life which is of extremely small duration. In these cases also no manufacture of goods takes place. (4) Where the goods are transformed into goods which are different and/or new after a particular process, such goods being marketable as such. It is in this category that manufacture of goods can be said to take p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 cc 8703 32 92 ---- Specialized transport vehicles such ambulances, prison vans and the like 8703 33 -- Of a cylinder capacity exceeding 2,500 cc 8703 33 92 ---- Specialised transport vehicles such as ambulances, prison vans and the like We find that Chapter heading 8703 33 proposed in the show cause notice is applicable to the vehicles having capacity of 2500cc whereas the Scorpio is having Cylinder Capacity of 2179cc. In that circumstances, the classification proposed in the show cause notice under heading 8703 33 92 is not applicable to Scorpio and Bolero. We further find that in the case of Bus, the correct classification would be under Chapter 8702, as applicable to the motor vehicles having capacity of 10 or more persons including driver. Admittedly, the Bus carries more than 10 persons and the classification proposed in the show cause notice under Chapter 8703 is not applicable to the Bus. In that circumstances, we hold that the classification proposed in the show cause notice is contrary to the facts of the case in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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