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TMI Blog2024 (5) TMI 1048X X X X Extracts X X X X X X X X Extracts X X X X ..... ured chassis and captively consumed them in the manufacture of dumpers. The second issue was whether NCCD is exempted for captively consumed goods under the Notification No.67/1995 dated 16.03.1995. The Commissioner held that the chassis fitted with engines are classifiable under Chapter Heading 8706 0043 of the CETA and these emerge during the course of manufacture of dumpers by the appellant. He also held that the appellant is not eligible for the benefit of the exemption under the Notification No.67/1995 dated 16.03.1995 and therefore, the duty was confirmed along with interest. Assailing the above order, the appellant is in appeal before us. 2. The learned counsel submits that based on DGCEI investigation; a notice dated 25.4.2006 was issued to the Appellants alleging that "Chassis" classifiable under Chapter Sub-Heading 8706.49 emerges during the course of manufacture of dumpers which is liable to NCCD. The Learned Commissioner vide Order dated 31.1.2007 held that the chassis does not come into existence as a separate identifiable commodity and what comes out of the continuous process of manufacture is dumper; that NCCD is also not payable since chassis is exempt under Notifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is the hydraulic part essential for coupling the steering assembly is also fixed. This would complete assembly Stage-II. At this stage also, the subassembly is incapable of being moved around. The other aggregates like center deck, emergency steering system, gang lubrication and exhaust system are installed on the frame along with four roll-out tyres. The emergency steering system is nothing but a high-capacity motor which will generate an increased power to enable the dumper to move out of the slush. This emergency motor is designed to get burnt after 45-seconds of use and it is meant as a purely emergency measure and has got nothing to do with the main steering system. This would complete assembly Stage III & IV. At this stage also, the assembly of parts would not be in a stage of mobility. In the final stage of manufacturing, the Appellants install the body on the Frame and fit the belly guards which protect the engine and transmission from damage. An important aspect of completion takes place when the bare cabin which was fixed earlier is furnished with the necessary fitments required to move the dumper. These important fitments are gadgets which control the hydraulic sys ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e item that is classifiable under Chapter Heading 87.06 may have bonnets, windscreens, mudguards, running-boards and dashboards (whether or not equipped with instruments). Chassis also remain classified here whether or not fitted with tyres, carburettors or batteries or other electrical equipment. The relevant Note 3 to Chapter 87 of the CETA, Chapter Heading and HSN Explanatory Notes are reproduced herein under: Note -3 to Chapter 87 read as under: "3. Heading No. 87.06 shall include chassis, whether or not filled with a cab" Chapter Heading 87.06 read as under:- "Chassis fitted with engines, for the motor vehicles of heading Nos.87.01 to 87.05" HSN Explanatory Notes to Chapter 87.06 reads as under: "This heading covers the chassis-frames or the combined chassis-body frame work for the motor vehicles of headings 87.01 to 87.05 fitted with their engines and with their transmission and steering gear and axles (with or without wheels). That is to say, goods of this heading are motor vehicles without bodies. The chassis classified in this heading may, however, be filled with bonnets, windscreens, mudguards, running-boards and dashboards (whether or not equipped with inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the manufacture of dumpers. It is submitted that in the present case, there is no material evidence whatsoever led by the Revenue to demonstrate that the installation of the body take place only after installation of the steering column and steering wheel. On the contrary, the Ld. Commissioner has gone back on the statements recorded in 2006 by the DGCEI which has already been considered by the erstwhile Commissioner in the OIO No. 2/2007. There is absolutely no new evidence whatsoever including fresh statements which has been recorded to come to this conclusion. This being the case, the issue is settled by the findings in Order-in-Original No. 2/2007 which has further upheld by this Hon'ble Tribunal and has attained finality and thus, the impugned order is liable to be set aside. 2.4 The learned Counsel further places reliance on the affidavit of Shri. M.V. Rajashekar explaining the sequential operation undertaken at the factory, which clearly shows that the steering column and the steering wheel are fitted only after the body is installed. He also places reliance on the decision of the Hon'ble Tribunal in the case of Mahindra & Mahindra Ltd Vs CCE, Bombay reported in 1999 (109) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use. In view of the size of the dumpers due to the heavy loads to be carried, the design and manufacture of dumpers manufactured by the Appellants are entirely different from other commercial vehicles like trucks, buses, which require chassis to be manufactured by one manufacturer and the completion of the body to be undertaken by another manufacturer, according to the customer's need; wherein in this case, the dumpers are manufactured by the Appellants according to their specifications in varying capacities so as to offer a choice of models to the customer and consequently the manufacturing process is continuous and integrated which does not bring into existence chassis at any intermediary stage, which is marketable. It is submitted that the burden to prove the marketability is always on the department. It is further submitted that the reliance placed on Tender Notification issued by the Steel Authority of India clearly states that the dumper is being offered for sale in a dismantled condition and the chassis referred to therein is only a skeletal frame as clarified by Steel Authority of India, vide their letter dated 12.9.06. It is submitted that for any commodity to be considere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. vs. CGST & CE, Chennai reported in 2023-VIL-1136-CESTAT-CHE-CE held that demand of NCCD is not sustainable as there is no intermediate, identifiable and marketable product viz., Dumper Chassis emerging in the process of manufacture of dumpers; and further held that NCCD is a duty of excise and the benefit of exemption Notification No.67/95 would be available for NCCD also. The relevant paragraph of the referred judgement is as below: "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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the argument that dumper without dump body should be considered as semi-finished dumper. In view of the said change in the statutory provisions, the decision of the Commissioner to consider and decide the present notices afresh is legal and correct. 3.1 He further submits that the adjudicating authority at para 22 of the impugned order has very clearly distinguished the findings of the Commissioner in the earlier Order-in-Original dated 31.01.2007. Previously the Commissioner had come to the conclusion that Chassis does not come into existence by holding that 'drive away chassis' does not emerge at Stage 4 and that for chassis to be called so, it should be able to move, stop and also run on uneven surfaces. However, the statutory provisions do not lay down any such criteria for chassis fitted with engine classifiable under CTH 87060043. The HSN notes very clearly states that chassis with or without wheels are classifiable under Chapter and therefore, the criterion of drive away chassis, considered in the earlier OIO is not a statutory requirement. Referring to the HSN notes it is submitted that CTH 8706 states "This heading covers the chassis-frames or the combines chassis-body f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lone cannot bring about dumping of materials. The box like body is also essential for this purpose. Hence, it cannot be said that the product in question, which does not have the box-like movable body, has the essential character of a fully built dumper. Hence the subject goods can only be classified under 8706.49 as dumper chassis and not under 870430 as dumper." Therefore, by applying the above ratio to the present case, the dumper without its body, at the end of 4th Stage, is to be classified as dumper chassis and not semi-finished dumper {as was held in the earlier Order-in-Original}. In view of the above, the appellant's contention that the adjudicating authority had already held that drive away chassis does not emerge in their earlier case in Order-in-Original No.02/2007 dated 31.01.2007 is distinguishable since the said 'drive away chassis' is not specified/ recognised by the statutory provisions. The appellant's claim that it is not their intention to manufacture chassis and they do not clear/sell the dumper chassis and that the entire process is an integrated process for manufacture of dumper only. The procedure involved being 'Integrated Process' does not mean there will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not chassis, but frame does not help them since the HSN at chapter 8706 categorically states that "This heading the chassis-frames or the combined chassis-body framework (unibody or monocoque construction, for the motor vehicles headings of headings 8701 to 8705, -----" Thereby, usage of word frame will not make a chassis not to be a chassis. 3.4 With regard to marketability of the chassis, the Revenue argues that there is no doubt that the dumper chassis is very much marketable and it is well known in the trade and it is seen that dumper chassis have been sold by M/s. Tata Motors. Though in the instant case there is no sale as held by the Hon'ble Supreme Court in the following cases the actual selling of the very same goods (marketability) was not a criteria for determining excisablity and that capability of being marketed was sufficient to hold that the goods are excisable/dutiable. * Delhi Cloth and General Mills - 1977(1) ELT J199[S.C.] * Union Carbide India Ltd - 1986(24) ELT 169[S.C.] * Bhor Industries - 1989(40) ELT 280[S.C.] * Hindustan Polymers - 1989(43) ELT 165[S.C.] * A.P. State Electricity Board - 1994(70) ELT 3[S.C.] * Indian Cable Company Ltd. - 1994(7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alled chassis in the manufacture of dumpers." The said argument is misleading in as much as the Hon'ble Tribunal dealt in detail with regard to the levy of NCCD in the said decision and has found at para 16.6 that "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." and has concluded at para 16.19 that "We make it clear that we do not render any decision on the classification of the impugned goods and confine our finding as to whether the demand of NCCD is sustainable or not." The appellants have submitted that the chapter 8706 covers the chassis of trucks which are used on roads only, which cannot be accepted in as much as the CSH 87060043 specified chassis - "For dumpers covered in the heading 8704". This matter has also been noticed in the case of Tata Motors. In the light of the above averments and facts of the present case, it is very clear that the chassis emerges at the IV stage of the manufacturing process of the Dumpers and the same is rightly classifiable under Chapter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erusal of the decision of the Hon'ble Supreme court in the case of Unicorn Industries, it becomes very clear that the said decision does not limit itself to any specific notification, but it is a general principle pronounced by the Hon'ble Supreme Court in the said matter. Para 40, 41 & 42 of the said decision clearly state that the order contained therein is a principle, that needs to be adopted by all in similar matters. It has been held therein that "The reason employed in SRD Nutrients Private Limited that there was nil excise duty, as such, additional duty cannot be charged, is also equally unacceptable as additional duty can always be determined and merely exemption granted in respect of a particular excise duty, cannot come in the way of determination of yet another duty based thereupon. The proposition urged that simply because one kind of duty is exempted, other kinds of duties automatically fall, cannot be accepted as there is no difficulty in making the computation of additional duties which are payable under NCCD, education cess, secondary and higher education cess. Moreover, statutory notification must cover specifically the duty exempted. When a particular kind of dut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e similarity between Section 136 and Section 3(3) of both the enactments, we find that the decision of Commissioner (Appeals) has to be upheld." and held that exemption from payment of NCCD for captive consumption under Notification 67/95 is not admissible. All the above cited decisions are squarely applicable in this case. In view of the above decisions of the Tribunal involving the same issue of exemption of NCCD under Notification No.67/95-CE read with the judgements of the Hon'ble Supreme court in the case of Unicorn Industries and Modi Rubber Limited, it becomes abundantly clear that the appellants are not eligible for the exemption of NCCD on chassis that are captively consumed under Notification No.67/95-CE. He has also relied on the following decisions of the Tribunal. * Baba Asia Ltd. - 2011(267) ELT 115 (Tri.-Del) * Hero Honda Motors Limited - 2011(273) ELT 89 (Tri.-Del.) 3.10 With regard to the arguments of the appellant that if for the purpose of collection, the provisions of the Central Excise Act are applicable, then it should logically be extended to exemption also, the revenue submits that the provisions given in the Section 136 (3) would mean merely borrowing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issed the department appeal with the observation that the department had liberty to file appeal before the Hon'ble Supreme Court. Accordingly, the Department filed a Civil Appeal No.5836/2012 along with an application for condonation of delay before the Hon'ble Supreme Court of India. The Civil Appeal was dismissed vide order dated 29.07.2013 on the ground of delay but however, held that the question of law was kept open. 5.2 The learned counsel submits that the issue involved in the present appeal which has culminated from 13 show-cause notices relates to the same issue settled by the above decision of this Hon'ble Tribunal in the appellant's own case reported in CCE, Mysore versus BEML: 2010 (261) ELT 596 (Tri-BANG), wherein the Tribunal had upheld the earlier order of the Commissioner which held that chassis did not come into existence and also held that they are eligible for the benefit of the notification on NCCD which has attained finality at the apex court. 5.3 Let's examine the earlier order to assess the claim of the appellant that the issue is one and the same. The Tribunal Vide Final Order No.1466/2009 dated 8.12.2009 observed as follows: "8.1 First and foremost we hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to the shipping department. The noticee has strongly disputed the emergence of chassis at stage IV of assembly. The investigation has failed to establish that the steering column was installed at stage IV of the manufacturing process, to qualify the items to be a chassis as defined in terms of the explanation under HSN. It cannot be held that the subject item was a drive away chassis at stage IV of assembly. There is no contrary material to dispute the shop manuals, parts catalogue, charts and processing flow chart as well as the classification declaration filed by the notice. The investigation has failed to establish that there was a steering mechanism and a functional breaking capability at stage IV which could direct its motion, stop it, and allow it to run smoothly over uneven surfaces for qualifying the disputed item to be a chassis. On the contrary, it is fairly established that the process of manufacture of Dumper is a continuous integral process. The assembly of aggregates on a main frame, attachment of other accessories and coupling of steering assembly, installing Body on the frame etc., are all integral and inseparable. Noticee has no intention to manufacture an inde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld in the market" In view of the above findings, and the explanation given in the HSN as detailed in Para 88, I hold that no separate excisable goods viz., "chassis" emerge in the process of manufacture of Dumpers by the noticee as alleged by the investigation." 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 grounds of appeal. The findings indicated in the above reproduced paragraphs, are not controverted by any evidence, to dislodge the findings of the Adjudicating Authority." 5.4 The Hon'ble Karnataka High Court Bench on 15-9-2011 dismissed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he first issue is question of fact and the second issue is question of law. Question of fact as to whether chassis emerged as an intermediate product and was captively consumed in the manufacture of dumpers was decided by this Tribunal vide Final Order No.1466/2009 dated 26.10.2009 in favour of the appellant concluding that drive away Chassis did not come into existence at the intermediary stage. This order was appealed against which was not entertained by the Hon'ble High Court on the issue of jurisdiction and liberty was given to the revenue to file before the Supreme Court and the Supreme Court dismissed on delay keeping the question of law open. The Supreme Court of India in the case of Union of India Versus Kirloskar Oil Engines Ltd.2001 (127) E.L.T. 322 (S.C.) decided on 20-7-2000 observed that: "Two questions which arise for consideration in this appeal are whether aluminium strips which is an intermediate product during the course of the manufacture by the respondent is a marketable commodity or not and secondly whether the principle of unjust enrichment would apply to the present case. 2. The question as to whether the intermediate product is a marketable commodity or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , part catalogue, photographs etc; No attempt has been made by the investigation to drive home the point that chassis as defined in HSN undisputedly emerges. In the absence of any technical expert opinion of any other independent evidence to controvert the deposition of the technical personnel of the notices the latter has to be given the weightage." 5.10 The arguments of the Revenue today are on two grounds. First, the question of law has been kept open and second, the amendment brought by introducing Note 3 to Chapter 87. We have already held that whether Chassis comes into existence at the intermediary stage is only a question of fact. Now to examine the other issue with regard to the amendment, let's examine the present show-cause notices. The present notices read: "M/s. Bharat earth movers limited Mysore complex Belavadi post Mysore 570018 (BEML for short) are holders of Central Excise registration certificate No. AAACB8433DXM002 and are engaged in the manufacture and clearance of 'dumpers' under chapter heading number 87060043 IB ID. During the course of manufacturing of dumpers, "chassis fitted with engine" Classifiable under Chapter Heading No.87060043 comes into existen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 03.2005 which replaces "Motor Chassis fitted with cabs fall under Heading 8702 to 8704, and not under Heading 8706" with "8706 shall include Chassis whether or not fitted with a cab" will destroy the entire findings of the Hon'ble Tribunal. First of all, the above observations are beyond the scope of the notice as the notice remains factually same and relies on the same documents that were relied upon previously. There is no whisper of Chapter Note 3 in any of these notices and no new facts have been brought out to show that in view of these changes, the chassis comes into existence even though it is not culminated into a drive away chassis. Secondly, the change in the Chapter Note, whether or not fitted with a cab will not make any change in the decision rendered earlier because the criteria based on HSN was whether it is a drive away chassis. From the Chapter Heading and the HSN Notes reproduced below, it is clear Chassis fitted with engines and with their transmission and steering gear and axles fall under Chapter 8706. The Commissioner at para 88/88.1 states "this heading covers the Chassis frames or the combined to Chassis body frame work for the motor vehicles of headings 870 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever, if the article is a complete or substantially complete tractor or other vehicle it is not covered by this heading. (a) Chassis fitted with engines and cabs, whether or not the cab is complete (e.g., without seat) (headings 87.02 to 87.04) (see Note 3 to this Chapter). (b) Chassis not fitted with engines, whether or not equipped with various mechanical parts (heading 87.08). 5.14 In fact, at para 15 of the earlier order, one of the allegations of the Revenue was that "as per note 4 to chapter 87, heading 8706 shall include chassis whether or not fitted with a cab. The dumper consists of two parts viz (1) Chassis and (2) the dump body," and further explains as to how the chassis has come into existence at Stage IV of the manufacturing process. This allegation of the Revenue was set aside by the Commissioner and upheld by the Tribunal. In view of the above, there is nothing new in the present show-cause notices nor in the impugned order to be decided afresh since all these factors have been already considered and the decision has been rendered in favour of the appellant. As seen from the Chapter Headings and the HSN Notes, nothing has changed and therefore, the orders discu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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