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TMI Blog2023 (11) TMI 305X X X X Extracts X X X X X X X X Extracts X X X X ..... ready noticed in para 6.1 of this order, when the incomplete or unfinished article has the essential character of the complete or finished article, such unfinished article merits classification under the heading of the complete or finished article. The Ld. Counsel for the appellant has emphasized that there is no practice in the market to sell a chassis of a Dumper. The reason in the impugned order to hold that an intermediate marketable product emerges is not based on the process/ stages of manufacture. The reason is that the appellant while making some exports had described the product as chassis with cabin assembly in the export documents. The exigibility to duty of a product cannot merely be based on how the assessee described the product in a document. In case of dispute, the department has to clearly state in the SHOW CAUSE NOTICE the nature, classification and dutiability of the product - The Tribunal in the case of COMMISSIONER OF C. EX., MYSORE VERSUS BHARAT EARTH MOVERS LTD. [ 2009 (10) TMI 748 - CESTAT BANGALORE] has categorically held that the demand of NCCD cannot sustain as there is no intermediate, identifiable and marketable product viz. Dumper chassis emergin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith Cabin) and classified the goods under CTEH 87041010 and 87060043 respectively. On further enquiry, it revealed that the Dumper Truck was manufactured by fixing the load body on the chassis with cabin. According to the department, the chassis is thus captively consumed in the production of final product, viz., Dumper Truck. However, no NCCD was paid by the appellant in respect of the Chassis captively consumed in the production of Dumper Trucks. While chassis are fully exempt from excise duty vide notification no. 67/95-CE dated 16/03/1995, there is no exemption in respect of NCCD. The department was of the view that as there is no exemption from payment of NCCD, as per notification 67/95, the appellant is liable to pay NCCD in respect of chassis, the intermediate product which is captively consumed. 3. The appellant was issued Show Cause Notice dated 28/10/2014 proposing to demand the short-paid amount being NCCD on the value of dumper chassis captively consumed in the manufacture of dumper trucks during the period from 1/4/2010 to 28/2/2014. The Show Cause Notice was issued invoking the extended period, alleging suppression of facts with intent to evade payment of duty. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the rules made thereunder, including those relating to refunds and exemptions from duties and imposition of penalty, shall, as far as may be, apply in relation to the levy and collection of the National Calamity duty leviable under this section in respect of the goods specified in the Seventh Schedule as they apply in relation to the levy and collection of the duties of excise on such goods under that Act or those rules, as the case may be. 5.2. The demands are confirmed alleging that during the manufacture of Dumper Trucks by the appellant, Dumper chassis are emerging as an intermediate product, which is classifiable under heading 8706 0043 on which NCCD is payable and the benefit of exemption available for Excise Duty under Notification 67/95 C.E. Dt. 16.03.1995 is not applicable to NCCD. 5.3. The Ld. counsel submitted that the benefit of exemption under Notification 67/95- CE is available for the whole duty of excise leviable thereon which is specified in the schedule to the Central Excise Tariff Act, 1985 (5 of 1986) for the goods manufactured and captively consumed in a factory. The provisions of the Central Excise Act (1 of 1944) and the rules made including refun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essential character of the finished product, the Dumper. Only the body is absent. In this connection, the Ld. counsel invited our attention to Note 2 (a) of the General Rules of Interpretation to the Central Excise Tariff, which is reproduced below. 2. (a) Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), presented unassembled or disassembled. 6.2. Accordingly, since the dumper without body has all attributes and essential character of the finished product viz; Dumper, the same shall merit to be considered only as Dumper. The fact that the appellant had described the same as Chassis whenever such Dumpers without body are sold / exported, cannot be the sole reason to conclude that during the manufacturing process, Chassis emerge as an intermediate product. It is settled law that there is no estoppel in taxation matt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Note 3 of Chapter 87 was substituted as 3. Heading 8706 shall include chassis, whether or not fitted with a cab. 8.2. From Section 3 it can be seen that under the emergency powers available to the Central Government, the only amendment that is possible is change in the rate of duty of excise as specified in the First Schedule and Second Schedule to the Act and an amendment by way of substitution of a new Chapter note is not at all contemplated in the said section. Hence the amendment carried out in Chapter Note 3 of Chapter 87, vide Notification 14/2005 C.E. Dt. 07.03.2005 is ultra vires of Section 3 (1) of the Central Excise Tariff Act and hence non est. As per the unamended Note 3 of chapter 87, the subject goods merit classification only under Chapter 8704. Hence, the demand of NCCD by classifying the subject goods under chapter 8706 is not at all sustainable. 8.3. In the impugned order, the Commissioner has held that the exemption under Notification 67/95 ibid is not available for NCCD on the basis of the decision of the Hon ble Supreme Court in the case of Union of India Vs Modi Rubber Ltd 1986 (25) ELT 849 SC. 8.4. The Learned Counsel submitted that the ratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndertaking shall have the same meanings as in Explanation 2 to sub-section (1) of Section 3. (1A) For the removal of doubts, it is hereby declared that where an exemption under sub-section (1) in respect of any excisable goods from the whole of the duty of excise leviable thereon has been granted absolutely, the manufacturer of such excisable goods shall not pay the duty of excise on such goods. (2) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by special order in each case, exempt from the payment of duty of excise, under circumstances of an exceptional nature to be stated in such order, any excisable goods on which duty of excise is leviable. (2A) The Central Government may, if it considers it necessary or expedient so to do for the purpose of clarifying the scope or applicability of any notification issued under sub-section (1) or order issued under sub-section (2), insert an explanation in such notification or order, as the case may be, by notification in the Official Gazette at any time within one year of issue of the notification under sub-section (1) or order under sub-section (2), and every such expla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... austive definition of the term duty under Rule 2 (v) of the old Central Excise Rules (which was considered by the Hon ble Supreme Court in Modi Rubber Case), the term duty of excise used in Section 5A of the Act has an inclusive definition, the scope of which is not limited to basic excise duty levied under Section 3 alone. Once NCCD is declared as a duty of excise under Section 136 (1) of the finance Act, 2001, the power to grant exemption from the levy of NCCD can be traced back to Section 5A of the Central Excise Act, 1944 and there is no necessity to draw such power from Section 136 (3) of the Act. Hence the ratio of the Hon ble Supreme Court in the case of Modi Rubber Ltd., (supra) is not applicable to the case in hand, in view of the change in law. Further, in the case of Tatra Trucks India Ltd., (supra) the decision of the Hon ble Supreme Court in Modi Rubber Ltd. has been considered by Tribunal and distinguished. For the same reasons, the decision of the Hon ble Supreme Court in the case of Unicorn Industries Vs UOI 2019 (370) ELT 3 (SC), which is solely based on its earlier decision in Modi Rubber supra, is also distinguishable. 9.4. Further, the appellant also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excise, credit of the same is admissible. When the said decision was cited for a similar claim for CENVAT Credit of Clean Energy Cess paid on coal, the Hon ble CESTAT, Hyderabad, in the case of Deccan Cements Ltd. Vs CCE 2020 (371) ELT 795 (Tri-Hyd.) has distinguished the decision of the Karnataka High Court in the context of Sugar Cess, as below. 14. We have also considered the argument of the appellants that the ratio of judgment of Hon ble High Court of Karnataka in the case of Shree Renuka Sugars (supra) not being overturned by any superior judicial forum, must apply. On going through the judgment of the Hon ble High Court of Karnataka, we find that in that case the entire Central Excise Act and Rules were applicable to sugar cess but in the case of CEC, only some provisions of Central Excise Act have been made applicable. Section 37 of the Central Excise Act under which the CCR, 2004 as well as other Rules are framed are not made applicable to the CEC. Therefore, the Finance Act itself does not conceive of applying CENVAT Credit Rules to the CEC. In the absence of any explicit provision, they cannot be made applicable to the CEC. In other words, neither does Rule 3 of CCR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise and therefore is also exempted. 14. The very same issue was decided by the Tribunal in the case of Paras Petrofils Ltd. Vs. CCE, Surat- 2009 (237) ELT 367 (Tribunal) Ahmedabad and Superfine Syntex Pvt. Ltd. Vs CCE, Surat- 2009 (237) ELT 292 (Tribunal)Ahmedabad. In both the above cases the Tribunal has held that in the absence of inclusion of exemption of NCCD in the notification no.67/95 and in view of the similarity between Section 136 and Section 3 (3) of both the enactments, the assessee is liable to pay NCCD on captively consumed goods. The decision in the case of Union of India Vs. Modi Rubber Ltd. 1986 (25) ELT 849 (SC) was relied by the Ld. AR to argue that in the said case the Hon ble Apex Court held that exemption of duty of excise did not mean exemption from Special excise duty, Additional excise duty or Ancillary duty also. In a later decision the Hon ble Apex Court in the case of Unicorn Industries Vs. Union of India (supra) has relied on the earlier decision in the case of Modi Rubber Ltd. to hold that when particular kind of duty is exempted, other types of duty or cess imposed by different legislation for different purpose cannot be said to be exempted. The Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the Tribunal in the case of CCE, Mysore Vs Bharat Earth Movers Ltd. 2010 (261) ELT 596 (Tri.-Bang). In the said case, after analyzing the entire process of manufacture of dumpers, the Tribunal upheld the findings of the adjudicating authority that at no stage, an intermediate product of Drive-away chassis emerges. The issue in the case is the very same issue as to the leviability of NCCD on the alleged chassis in the course of manufacture of dumpers. The relevant paras read as under: 8.2 It can be seen from the above reproduced findings, after the verification and considering the process of manufacture and flow chart, the Adjudicating Authority came to the conclusion that the items which come into existence at a particular stage, i.e. stage 4, cannot be called as Drive away Chassis. He also placed reliance on the clarification given by the Mysore Chamber of Commerce Industry i.e. on the basis of findings available at the time of adjudication, the Adjudicating Authority has held that the Drive away Chassis does not come into existence at the factory premises of the respondents. As against these findings, we find that Revenue has not refuted the same in their entire groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue is challenging the grant of exemption under Notification No. 67/95-C.E. to the assessee in respect of NCCD. 2. After hearing both sides and considering the case law cited by them, we find that the question whether NCCD is a duty of excise for purposes of Exemption Notifications issued under Section 5A of the Central Excise Act has been considered and answered in the affirmative in Toyota Kirloskar Motor Pvt. Ltd. v. CCE, Bangalore [2007 (217) E.L.T. 403 (Tribunal) = 2001 (82) RLT 828 (CESTAT - Ban.)], wherein the benefit of Notification No. 108/95-C.E. dated 28-8-1995 was held to be admissible to NCCD leviable under Section 136 of the Finance Act, 2001. We agree with that decision, which was rendered after examining the relevant provisions of the Finance Act and considering a Circular of the CBEC. The contention raised by the Revenue that NCCD is only a surcharge and not a duty of excise cannot be accepted. The Revenue, in their appeal, has also claimed support from the Supreme Court s judgment in Union of India Ors. v. Modi Rubber Limited Ors. [1986 (25) E.L.T. 849 (S.C.)], wherein it was held that exemption from duty of excise did not mean exemption also from Speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Earth Movers is different as contented by them in their reply to SCN. 16.6. The reason in the impugned order to hold that an intermediate marketable product emerges is not based on the process/ stages of manufacture. The reason is that the appellant while making some exports had described the product as chassis with cabin assembly in the export documents. The exigibility to duty of a product cannot merely be based on how the assessee described the product in a document. In case of dispute, the department has to clearly state in the SHOW CAUSE NOTICE the nature, classification and dutiability of the product. The Tribunal in the case of Bharat Earth Movers Ltd. (supra) has categorically held that the demand of NCCD cannot sustain as there is no intermediate, identifiable and marketable product viz. Dumper chassis emerging in the process of manufacture of dumpers. The issue as to whether NCCD is payable on dumper chassis was also held in favour of assessee by the Tribunal. 16.7. The levy of NCCD has been introduced vide Section 136 of Finance Act, 2001 for the goods mentioned in Seventh Schedule of the said Act. Section 136 has already been noticed in para 1.1 of this order. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nale is that while there may be surcharges under different financial enactments to provide the Government with revenue for specified purposes, the same have been notified as leviable in the nature of a particular kind of duty. In the case of NCCD, it is in the nature of an excise duty. It has to bear the same character as those respective taxes to which the surcharge is appended. NCCD will not cease to be an excise duty, but is the same as an excise duty, even if it is levied on the product. Thus, when NCCD, at the time of collection, takes the character of a duty on the product, whatever may be the rationale behind it, it is also subject to the provisions relating to excise duty, applicable to it in the manner of collection as well as the obligation of the taxpayer to discharge the duty. Once the excise duty is exempted, NCCD, levied as an excise duty cannot partake a different character and, thus, would be entitled to the benefit of the exemption notification. The exemption notification also states that the exemption is from the whole of the duty of excise or additional duty of excise. We may also note that the exemption itself is for a period of ten years from the date of comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hero Motor Corporation Limited 2023 (383) ELT A 33 (S.C). 16.12 . Again, in the case of Unicorn Industries Vs UOI 2019 (370) ELT 3 (S.C) the issue under consideration was whether the exemption granted by notification no.71/2003-CE (which is an area-based exemption notification for North Eastern states) would also apply to Education Cess, Secondary and Higher Education Cess imposed by Finance Acts 2004 to 2007 in the nature of duty of excise and also to NCCD. The exemption granted vide the said notification is such that, the manufacturer has to first utilise the CENVAT Credit for discharging duty liability on final products and the remaining amount of duties had to be paid through Personal Ledger Account (PLA) or Current Account i.e., in Cash. Thus, the exemption scheme of this notification is in the nature, that the duty has to be first discharged on the final product, and then claim or avail re-credit of the duties or refund by cash. Thus, the notification 71/2003 is not a direct exemption from payment of excise duty. The scheme of exemption is to discharge the entire duty liability and then seek credit or refund. The main question considered was, when 100 percent exemption ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 3. The field formations may suitably be informed. 4. Receipt of this Circular may please be acknowledged. 16.14. The Tribunal in the case of Modern Petrofills Ltd. Vs Commissioner 2009-TIOL-515-CESTAT MUMBAI (date of decision 3.12.2008) had considered the issue whether the benefit of exemption under notification 108/95-CE dt. 28.8.95 is available to NCCD also. The Tribunal answered in the affirmative, and held that NCCD is not leviable in respect of clearances for captive consumption. The said decision was followed in J.B.F. Industries Ltd. Vs Commissioner, Vapi 2009 (246) ELT 286 (Tri.-Ahmd) as well as in the case of Nava Petrochemicals Ltd. Vs CCE, Ahmedabad - 2010 (254) ELT 165 (Tri.-Ahmd). From the above, it can be seen that the decision passed by the Tribunal in the case of Paras Petrofills Ltd. and Superfine Syntex relied by the adjudicating authority are per in curium and therefore not applicable. 16.15. The Tribunal in the case of Modern Petrofills Vs CCE 2012-TIOL-132 CESTAT AHMD. Considered the very same issue and held that the exemption under notification no.108/95 is available to NCCD also. The relevant para reads as under: 5. The facts ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether National Calamity Contingency Duty (NCCD) is leviable on Partially Oriented Yarn (POY) and FDY when used captively in the manufacture of the goods falling under CETH 54.02 exempted under Notification No.46/2003-CE, dt.17.05.2003. 2. Shri P.P. Jadeja, learned Consultant appearing on behalf of the Appellant argued that POY and FDY does not attract NCCD when captively consumed. That when POY is sold as such by the Appellant, NCCD is paid by the Appellant at the time of clearance from the factory. It was his case that the issue of leviability of NCCD during captive consumption is no more res integra and is covered by the following case laws decided by this Tribunal: a) M/s Modern Petrofils Vs CCE Vadodara-II Order No.A/2094/WZB/AHD/2011, dt. 10.06.201 1 (in Appeal No.E/2748/2006) = 2012-TIOL-132-CESTAT-AHM b) M/s Modern Petrofils Vs CCE Vadodara-II Order No.A/2689/WZB/AHD/2008, dt.03. 12.2008 (in Appeal No.E/1640/2005) = 2009-TIOL-515-CESTAT-AHM c) M/s Filatex India Ltd Vs CCE Vapi [2014 (302) ELT 446 (Tri-Ahmd)] 3. Shri L. Patra, learned Authorised Representative appearing for the Revenue defended the order passed by the first Appellate Authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellants submits that the issue is po more res integra and submits that in respect of captive consumption, the following decisions of the Tribunal in support of his stand that NCCD is not leviable in respect of clearance for captive consumption: (i) Tatra Trucks India Ltd Vs CCE, Chennai reported in 2008 (227) ELT 269 (Tri-Chennai) = 2008-TIOL-1209-CESTAT-MUM (ii) CCE Trichy Vs Kulavi Tobacco Industry reported in 2008 (227) ELT 416 (Tri-Chennai) 3. As regards clearances to 100% EOUs, he submits that in the case of Toyota Kirloskar Motor Pvt.Ltd. Vs CCE, Bangalore reported in 2007 (217) ELT 403 (Tri Bang) = 2007-TIOL-1422-CESTAT-BANG, it was held that NCCD is not leviable in respect of goods cleared availing the benefit of Notification No. 108/95-CE, dt. 28.08.95. He submits that ratio of this judgment can be applied for the purpose of clearance to 100% EOU also. 4. We find that as pointed by the learned Advocate, the issue is no more res integra and we also agree with the Contention of the learned Advocate that the judgment of the Tribunal in relation to clearance under Notification No. 108/95 can be applied and therefore, NCCD is not leviable in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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