9911796707
TMI Blog2024 (5) TMI 1048X X X X Extracts X X X X X X X X Extracts X X X X ..... apter 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 8701 to 8705 fitted with their engines and with their transmission and steering gear and axis (with or without wheels). That is to say goods of this heading are motor vehicles without bodies. The above explanation to emphasise the necessity of steering mechanism for qualifying to be called Chassis. 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 discussed above in the appellant s own case has attained finality. Accordingly, the Chassis does not come into existence at the intermediary stage and therefore, the question of dutiability does not arise. Whether NCCD is leviable on these captively consumed chassis or are they exempted vide N/N. 67/95? - HELD THAT:- Since it is held that the Chassis does not come into existence at the intermediary stage and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. The said order was further upheld by the Hon ble Tribunal vide Final order No.1466/2009 dated 8.12.2009. Revenue challenged the order before the Hon ble High Court and the Hon ble High Court vide Order dated 15.9.2010 dismissed the appeal as not maintainable under Section 35G of the CETA, 1944 and granted liberty to approach the Hon ble Supreme Court under Section 35L of the Act. The Revenue preferred appeal to the Supreme Court, which was dismissed vide Order dated 29.7.2013 on the ground of delay and the question of law was kept open. Hence, the present 13 show cause notices for the period 01.04.2006 to 31.03.2013 issued by the respondents were decided vide the impugned order. The learned counsel submits that the issue involved in the present appeal relates to demand of NCCD on the chassis emerging during the manufacture of dumpers by denying the exemption from payment of NCCD under Notification No.67/1995-CE dated 16.3.95. This issue is settled by the 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 has upheld the earlier order of the Commissioner which held that chassis did ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ystems of the dumpers. The gadgets so installed at this stage also include the pedals, a steering column and the steering wheel. The diesel tanks and the hydraulic tanks are filled with the oil and gas which are charged to a particular level and only thereafter the brakes which are always in locked position because of the weight and size of the dumper get released enabling the dumper to move. This is because a dumper having a capacity of 35 Tons would normally weigh 30 Tons and as a measure of safety, the design of the dumper ensures that the dumper can be moved only after it is fully finished and no movement is technically possible before this stage. The Appellants submit that the entire manufacture of dumpers is a continuous process beginning with the Frame and ending with the fully finished dumper. It is submitted that the entire operations which result in the emergence of the fully finished dumper is an integral and continuous process and there is no intermediate stage at which an item called chassis which is capable of movement comes into existence. In this regard, the Appellants place reliance on the documents viz Master Process control sheets, affidavit, photographs, technic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot fitted with tyres, carburettors or batteries or other electrical equipment. However, if the article is a complete or substantially complete tractor or other vehicle it is not covered by this heading. The heading also excludes: 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). It is evident from the process of manufacture of Dumper as enumerated in paragraphs supra that the entity that emerges at Assembly Stage IV does not have the steering column and steering wheel fixed in it. Thus, up to this stage, the entity that emerges does not satisfy the conditions set-out in the HSN Explanatory Notes to Chapter Heading 87.06. At Assembly stage V, the following operations are undertaken. a) Fixing of battery box b) Installation of body with the help of pins and hoist cylinders c) Installation of rock ejector box and belly guards d) Installation of steering column and steering wheel e) Furnishing of cabin including fitment of gadgets etc. f) Filling up of diesel and hydraulic fluid an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also analyzed the scope and application of tariff entry, as also what has to be considered as chassis in trade parlance. The Tribunal has held, by relying on several technical and affidavit produced by Mahindra Mahindra Ltd, that for an item to be considered as Chassis, it should necessarily comprise of the following : (i) Front Suspension (ii) Steering mechanism (iii) Radiator (iv) Engine clutch and gear box (v) Propeller shaft (vi) Rear springs to which is attached the rear axle (vii) Road wheels (viii) Shock absorbers, fuel tank, petrol and hydraulic pipes, brake shafts and cables, and, of course, some means of mounting these components. 2.5 In view of the above, the Appellants, therefore, submit that the entity emerging at Assembly stage IV cannot be considered as a Chassis classifiable under Chapter Heading 87.06 of the Central Excise Tariff. It is submitted that on completion of assembly stage IV, the product emerging can at best be termed as un-finished Dumper which does not have the required characteristics of a chassis as is known to the trade. As already noted supra, both the HSN Explanatory Notes and the decision in case of Mahindra Mahindra Ltd. (supra) of the Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at assembly stage is not marketable, no duty can be levied at that stage. 2.6 The levy relating to National Calamity Contingent Duty (NCCD) was brought into effect by virtue of Section 136 of the Finance Act 2001. Sub-section 3 of Section 136 of the Finance Act, 2001 reproduced herein below: The provisions of the Central Excise Act, 1944 (1 of 1944) 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 . 2.7 With regard to the above, it is submitted that the provisions of the Central Excise Act relating to exemptions were specifically borrowed for the purpose of levy and collection of NCCD. That the Notification No.67/95-CE dated 16.3.1995 exempts chassis classifiable under Chapter Heading 87, when captively consumed within the factory of production, provided the finished product namely Dumper is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in favour of assessee by the Tribunal. 16.17. From the foregoing, we find that the issue as to whether the exemption under notification 67/95 is available to NCCD is to be answered in the affirmative and in favour of the assessee. The demand of NCCD therefore cannot sustain and requires to be set aside. Ordered accordingly. 2.8 Reliance is also placed on the following decisions, wherein the courts have held that NCCD is a duty of excise and NCCD is not leviable on captive consumption. ➢ Toyota Kirloskar Motor Pvt. Ltd. Vs. CCE Bangalore - 2007 (217) ELT 403 (Tri.-Bang) ➢ Indorama Synthetics India Ltd. Vs CCE, Nagpur -2016-VIL-1833-CESTAT-MUM-CE. 2.9 The show-cause notice has invoked the provisions of Section 11A of the Central Excise Act, 1944 which can be invoked only for collection of duty. Further, Rule 2(e) of the Central Excise Rules, 2002 defines duty as the duty payable under Section 3 of the Central Excise Act, 1944. Section 3 of the Central Excise Act, 1944 refers only to duty leviable under the First Schedule and the Second Schedule of the Act. It is submitted that if for the purpose of collection, the provisions of the Central Excise Act, 1944 are applicab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion and steering gear and axles [with or without wheels]. Hence the said criterion does not have any legal backing and also in the context of amended Chapter note 3 of chapter 87, the said finding appears to be not proper and legal and hence the issue is liable to be re-examined in proper perspective in terms of the prevailing provisions. 3.2 Learned AR further submits that the appellants themselves vide their letter dated 29.07.2006 have submitted the process of manufacture of Dumpers and as per the said process, the Dumper manufacture involves 5 stages which is spelt out at para 20 of the impugned order. On perusal of the said process, it can be seen that Engine, Cabin, Diesel Fuel Tank, Hydraulic Tank, Radiator, Steering system, Battery Box with batteries, Exhaust system and also Emergency Steering system among other parts/components gets assembled/fitted to the main frame by the end of 4th stage. In the 5th and last stage, Exhaust tube, Body, Cabin furnish and filling of Hydraulic fluid, diesel gas are undertaken to complete the process of the manufacture of Dumper. The Dumper body is not built on the chassis as an integral part and it is fitted in Assembly stage 5. On a glanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here cannot be the criterion to prove that the chassis emerges during the process of manufacture of dumper. It can be observed that there are many other goods, where though the process is integrated process, there are many intermediate products which emerges and which are classifiable, though it is not intended/programmed to manufacture said intermediate products. Similarly, in the case of dumper also, though the process adopted by them may be an integrated process and they do not intend to manufacture chassis, as per the process stages, the chassis, which is appropriately classifiable under chapter 8706 emerges and the same has to be liable to be held excisable at that stage of process. The appellant s argument that they do not manufacture any chassis for the above reason is devoid of any evidences since the process of manufacture submitted by themselves very evidently confirms the emergence of chassis after the completion of Stage 4. The appellants submitted photographs of their product and also of M/s Tata Motors to show the difference in the dumpers manufactured by the said two companies. The photographs display chassis without body fitted clearly in respect of M/s. Tata Motors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 181) ELT 170[S.C.] Dharampal Satyapal 2005(183) ELT 241[S.C.] Gujarat Narmada Valley Fertilizer Ltd 2005(184) ELT 128[S.C.] Moriroku UT India (P) Ltd 2008(224) ELT 365[S.C.] Medley Pharmaceuticals Ltd 2011(263) ELT 641[S.C.] Escorts Ltd. - 2015(319) E.L.T. 406[S.C.] The above decisions of the Hon ble Supreme Court have been followed acquiescently by various High Courts and Tribunals. Consequently, in consonance of the above decisions, the argument of the appellants that they are not into selling the said dumper chassis and hence not marketable, is liable to be rejected outright and it is aptly to be held that the dumper chassis emerges as intermediate product during the process of manufacture of dumpers and the same is excisable and appropriately classifiable under 87060043. 3.5 Learned AR further claims that the Adjudicating Authority has observed that the notices involved in this Order-in-Original does not rely on any evidences but since the show cause notices have been issued as a sequel to the DGCEI investigations, the facts of the earlier notice are applicable in these notices also. Accordingly, the facts, evidences and also the process of manufacture as submitted by the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the earlier period in their own case which was upheld by the CESTAT reported in 2010(261) ELT 596 [Tri.-Bang.] besides the decision of CESTAT in Tatra Trucks India Ltd. 2008(227) ELT 269[Tri.-Chennai], in Toyota Kirloskar Motor Pvt Ltd. 2007(217) ELT 403[Tri.-Bang] and Final Order No.41003-41005/2023 dated 07.11.2023 in the case of Komatsu India Pvt. Ltd. among others. It is seen that the CESTAT Chennai Bench in the Komatsu India Ltd. s case has decided and allowed the appeals of the party vide Final Order No. 41003-41005/2023 dated 07.11.2023. While allowing the appeals, the Hon ble CESTAT has distinguished the decision of the Hon ble Supreme Court in the case of Unicorn Industries reported in 2019 (370) ELT 3[S.C.]. The Chennai Bench in the said Order had distinguished the Unicorn Industries decision by holding that the Notification involved in the said case was No.71/2003 and that the language in the Notification No.71/2003 is different and it grants only partial exemption to the extent of value addition; that the language used in the Notification No.67/95 is more specific. Further, in the said order, the CESTAT had relied upon the Modern Petrofils which involved Notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d have respectfully followed the same. In view of the above, it is incumbent on the lower authorities to also follow the same. The Hon ble Supreme Court in the case of Modi Rubber Limited has observed that The presumption is that when a notification granting exemption from payment of excise duty is issued by the Central Government under Rule 8(1), the Central Government would have applied its mind to the question whether exemption should be granted and if so, to what extent. And obviously, that can only be with reference to the duty of excise, which is then leviable. The Central Government could not be presumed to have projected its mind into the future and granted exemption in respect of excise duty which may be levied in the future, without considering the nature and extent of such duty and the object and purpose for which such levy may be made and without taking into account the situation which may be prevailing then. It is only when a new duty of excise is levied, whether special duty of excise or auxiliary duty of excise or any other kind of duty of excise, that a question could arise whether any particular article should be exempted from payment of such duty of excise and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able to levy and collection of NCCD but the same would not be applicable to all the Notifications issued under Rule 5A for exempting duties of excise. Hence, in view of the fact that Section 136(3) only allows borrowing of the machinery for exemption, the appellant s contention that the same would allow borrowing the notifications already issued cannot be accepted and is liable to be rejected. 4. Heard both sides and perused the available records and the various decisions relied upon by both sides. The issues to be decided are: a) Whether chassis emerges at the intermediary stage and is captively consumed in the manufacture of Dumpers. b) Whether NCCD is leviable on these captively consumed chassis or are they exempted vide notification 67/95. 5.1 To understand the present appeal, we need to discuss the background of the entire case from the beginning. In 2007, the Learned Commissioner vide Order dated 31.1.2007 held that the chassis did 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 Notification No. 67/95-CE dated 16.3.95. The said order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a detailed finding as regards his conclusion on the manufacture of Dumpers, which we would like to reproduce : The process of manufacture of dumpers and flow chart were studied and the photographs produced by the defence were examined. The parts assembled/mounted during the manufacture of Dumper are detailed below as explained in the Flow Chart for manufacture of Rear Dumper: Assembly Stage 1: On the main frame, Rear axle assembly, Rear suspension assembly, Hoist cylinder, Brake oil cooler S/A assembly, Engineering S/A Assembly, Basic Air System assembly, Frame wire harness assembly, Front suspension assembly are done. Assembly Stage - 2: Hydraulic tank S/A assembly, Hydraulic piping assembly, Break oil cooler piping, Air tank S/A assembly, Front axle assembly, RH LH Hand rails assembly, LH RH Render side plate assembly, Skeletal cabin S/U assembly, RH Floor S/A assembly are done. Assembly Stage - 3: Air cleaner, Orbirtrol assembly piping, steering tie rod assembly, radiator piping, Drive shaft, Air system, Radiator S/A assembly, Hoist cylinder assembly piping, pump piping, Front rear brake line are done. Assembly Stage - 4: Grill assembly, Centre Deck S/U assembly, Panel board a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igation that the stage at which the said purported item claimed to be chassis emerges does not stand qualified so in terms of the explanation under HSN or as explained in the various judicial decisions relied by the notice. Further, the said item has not been proved to be a chassis as can be understood in the trade. There is no separable stage at which chassis and Dumper independently exist nor a stage at which the chassis which are usable and marketable in trace emerge. The clarification given by the Mysore Chamber of Commerce Industry, Mysore, is also relevant in this context. In the light of the objectives and comprehensive corporate information, the Trade could recognize the drive away chassis where the rear portion left open for fabrication of body according to the wishes of the buyer. In the manufacture of dumper by BEML, the body is mounted on a frame fitted with certain components and thereafter, Steering wheel, Gadgets, Pedals, Belly Guard etc. are fitted making fit for movement as vehicle. Therefore, the frame on which body is mounted is not having characteristics for self-propelling as vehicle on the road. In the liable Parlance, frame off-highway Dumper of capacity of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under:- Whether the Hon ble CESTAT is right in holding that National Calamity Contingent Duty (NCCD) levied and collected as per the provisions of Section 136 of the Finance Act, 2001 was eligible for exemption under Notification No. 67/95 Central Excise dated 16-3-1995? 2. Therefore, it is clear that the resolution of the dispute between the parties involves the Notification dated 16-3-1995. As held by this Court in the case of Commissioner of Central Excise v. M/s. Mangalore Refineries and Petro Chemicals Limited in CEA No. 6/2007 disposed of on 1-9-2010, the said issue falls within the jurisdiction of the Apex Court under Section 35L of the Act and this Court has no jurisdiction under Section 35G to go into the said question. Hence, the appeal is dismissed reserving liberty to the appellant to prefer an appeal before the Supreme Court. Registry is directed to return the certified copies of the order of the Tribunal and other documents, if any, to the appellant. 5.5 The Hon ble Supreme Court Bench on 29-7-2013 dismissed the Civil Appeal No. 5836 of 2012 filed by Commissioner of Central Excise, Mysore against the CESTAT Final Order No. 1466/2009, dated 26-10-2009 as reported in 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble commodity. Therefore, the question whether Chassis emerged as an intermediary product or not being a question of fact stands settled and the Revenue cannot reopen the issue unless any new facts or change in laws/facts have emerged. 5.8 The Revenue in the earlier show-cause notices after detailed investigation by the DGCEI alleged emergence of the chassis at the intermediate stage on the basis of 2 documents; one is the tender document, where a tender was awarded for painting a chassis and the other document was the sample auction sale notice of Steel Authority of India Limited wherein in the Auction Notice under description column Dumper No. 62 Model 1150 BEML make consisting of chassis was mentioned. As already explained by the Counsel, this was clarified by the Steel Authority of India vide their letter dated 12.9.2006 to BEML stating that these dumpers consist of various uses and unserviceable components like main frame (referred as chassis in the auction catalogue) body hoist (referred as dallah in auction catalogue), air tank etcetera and as such accordingly described in the action catalogue. 5.9 The Commissioner in the earlier Order-in-Original No.2/2007 referring to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. However, since the show cause notices have been issued as a sequel to the case investigated by the DGCEI it is to be construed that the facts of that case are applicable to the present notices also. These facts are also reiterated by the Authorised Representative on behalf of the Revenue while arguing the case before us goes to prove that there is nothing new brought on record when compared to the earlier notice which has already been set aside. 5.12 At para 24 of the impugned order, the Commissioner states it is relevant to consider the amendment made to Chapter Note 3 of Chapter 87 with effect from 07.03.2005 vide Notification No.14/2005 dated 07.03.2005 to replace the Note which reads as motor chassis fitted with cabs fall in headings 8702 to 8704, and not in heading 8706, with the note which reads as heading 8706 shall include chassis weather or not fitted with cab . The period covered by the show-cause notice, which has been decided vide Order-in-Original No. 2/2007 was from 01.03.2003 to 31.01.2006. Hence major period covered by the case already decided by the Commissioner and CESTAT was prior to the above amendment. In the case of assembly of dumpers by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to existence only at the final stage, at which stage the fully finished dumpers also come into existence. Their claim is packed with flowchart, technical opinions, affidavits, shop manual, part catalogue, photographs etc; These facts have not changed and even during the relevant period in the present case, the definition of Chassis remains the same and there is nothing new on record brought about to dispute the above facts. 8706 Chassis Fitted with Engines, for the Motor Vehicles of headings 8701 TO 8705 8706 00 11 ---- Of engine capacity not exceeding 1,800 cc 8706 00 19 ---- Other --- For the vehicles of heading 8702: 8706 00 21 ---- For transport of not more than thirteen persons, including the driver 8706 00 29 ---- Other --- For the motor vehicles of heading 8703: 8706 00 31 ---- For three-wheeled vehicles 8706 00 39 ---- Other --- For the motor vehicles of heading 8704: 8706 00 41 ---- For three-wheeled motor vehicles 8706 00 42 ---- For vehicles, other than petrol driven 8706 00 43 ---- For dumpers covered in the heading 8704 8706 00 49 ---- Other 8706 00 50 --- For the motor vehicles of heading 8705 87.06 87.06 - Chassis fitted with engines, for the motor vehicles of headin ..... 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