M/S Punjab Tractors Ltd. Vs. Cce, New Delhi - Court Judgment

Excerpt:
1. this is an application filed by m/s punjab tractors ltd. for waiver of pre-deposit of central excise duty amounting to rs. 27,98,535/- and penalty rs. 5,06,00/- imposed by the commissioner of central excise (adjudication), new delhi.2. sh. m.p. devnath, ld. advocate, submitted that the applicants manufacture harvester combine and parts thereof; that they have been classifying the parts under sub-heading 84.33.00 applicable to the harvester combine since these parts were suitable for use solely or principally with the harvester combine; that the commissioner under the impugned order has classified the parts/components under sub-heading 8483.90 of the schedule to the central excise tariff act, relying upon note 2(a) to section xvi. the ld. advocate further submitted that a conjoint reading of the various notes to section xvi would indicate that if an item is suitable for use solely or principally with a particular kind of machine, then the parts are to be classified with machines of that kind or in the headings appropriate to that machine in terms of note 2(b) to section xvi. he relied upon the decision in the case of diesel component works vs. cce, 2000 (40) rlt 641 and cce vs.g.s. auto international 1999 (111) elt 389 (t). finally, the ld.advocate mentioned that if would be eligible for modvat credit amounting of rs. 5 lakhs approximately; that the valuation adopted in the impugned order is incorrect as the value has been determined on the basis of price at which the impugned items were sold in the spare market, reliance was placed on the decision in the case of cce vs, ashok leyland ltd. 2000 (116) elt 630. he mentioned that on account of incorrect valuation duty involved is rs. 3.67 lakhs.3. opposing the prayer, sh. m.p. singh, ld. dr, submitted that the goods manufactured by them are specifically covered under the heading of the chapter 84 and in terms of note 2(a) parts which are goods included in any of the heading are in all cases to be classified in their respective headings.4. we have considered the submissions of both the sides prima facie the submissions made by the ld. dr are correct as the classification has to be made in accordance with note 2(a) to section xvi. however, taking into consideration the submissions of the ld. advocate regarding availability of modvat credit and question of valuation, we direct the applicants to deposit rs. 20 lakhs within eight weeks from today. on complying with this direction there will be waiver of pre-deposit of remaining amount of duty and the entire amount of penalty and recovery of the same will remain stayed during the pendency of the appeal. at this stage the ld. advocate requested for early hearing in view of the recurring liability on the applicants. the ld. dr has no objection if the matter is heard early. we, therefore, post the appeal for regular hearing on 27.8.2001 subject to the condition that the applicants comply with the direction of depositing rs. 20 lakhs within eight weeks from today.

Judgment:
1. This is an application filed by M/s Punjab Tractors Ltd. for waiver of pre-deposit of Central Excise duty amounting to Rs. 27,98,535/- and penalty Rs. 5,06,00/- imposed by the Commissioner of Central Excise (Adjudication), New Delhi.

2. Sh. M.P. Devnath, ld. advocate, submitted that the applicants manufacture Harvester Combine and parts thereof; that they have been classifying the parts under Sub-heading 84.33.00 applicable to the Harvester Combine since these parts were suitable for use solely or principally with the Harvester Combine; that the Commissioner under the impugned order has classified the parts/components under Sub-heading 8483.90 of the Schedule to the Central Excise Tariff Act, relying upon Note 2(a) to Section XVI. The ld. advocate further submitted that a conjoint reading of the various notes to Section XVI would indicate that if an item is suitable for use solely or principally with a particular kind of machine, then the parts are to be classified with machines of that kind or in the headings appropriate to that machine in terms of Note 2(b) to Section XVI. He relied upon the decision in the case of Diesel Component Works Vs. CCE, 2000 (40) RLT 641 and CCE Vs.

G.S. Auto International 1999 (111) ELT 389 (T). Finally, the ld.advocate mentioned that if would be eligible for modvat credit amounting of Rs. 5 lakhs approximately; that the valuation adopted in the impugned order is incorrect as the value has been determined on the basis of price at which the impugned items were sold in the spare market, Reliance was placed on the decision in the case of CCE vs, Ashok Leyland Ltd. 2000 (116) ELT 630. He mentioned that on account of incorrect valuation duty involved is Rs. 3.67 lakhs.

3. Opposing the prayer, Sh. M.P. Singh, ld. DR, submitted that the goods manufactured by them are specifically covered under the heading of the Chapter 84 and in terms of Note 2(a) parts which are goods included in any of the heading are in all cases to be classified in their respective headings.

4. We have considered the submissions of both the sides Prima facie the submissions made by the ld. DR are correct as the classification has to be made in accordance with Note 2(a) to Section XVI. However, taking into consideration the submissions of the ld. advocate regarding availability of modvat credit and question of valuation, we direct the applicants to deposit Rs. 20 lakhs within eight weeks from today. On complying with this direction there will be waiver of pre-deposit of remaining amount of duty and the entire amount of penalty and recovery of the same will remain stayed during the pendency of the appeal. At this stage the ld. advocate requested for early hearing in view of the recurring liability on the applicants. The ld. DR has no objection if the matter is heard early. We, therefore, post the appeal for regular hearing on 27.8.2001 subject to the condition that the applicants comply with the direction of depositing Rs. 20 lakhs within eight weeks from today.