| SooperKanoon Citation | sooperkanoon.com/28990 |
| Court | Customs Excise and Service Tax Appellate Tribunal CESTAT Delhi |
| Decided On | Sep-27-2002 |
| Judge | A T V.K., K Kumar |
| Reported in | (2003)(152)ELT328TriDel |
| Appellant | indcon Projects and Equipments Ltd. |
| Respondent | Commissioner of C. Ex. |
2. Shri Naveen Mullick, learned Advocate, submitted that BMDS is an equipment to mix more than two chemical ingredients which on mixture becomes explosive; that chasis mounted BMDS is then driven to the coal field site near the blasting hole and the prepared mixture is transferred into the blasting hole and BMDS is driven away; that it is thus apparent that the main function of the impugned equipment is to prepare a hazardous and highly explosive mixture and transferring the same into a blasting hole; that a BMDS can very well function without having mounted on a chasis; that it is clear from show cause notice that the Department has treated BMDS as a machinery; that in terms of Note 2(e) to Section XVII of the Central Excise Tariff, expression parts and accessories do not apply to the machines and apparatus of Heading Nos. 84.01 to 84.79; that therefore, the very basis of the notice takes out the system from Heading 87.05; that the vehicle as a whole even if classifiable under Heading 87.05 it does not mean that the system created on the chasis which is in the nature of the machine of Heading 84.79 shall find its classification as parts of Heading 87.05. He referred to the Explanatory Notes of H.S.N. according to which Heading 84.79 applies to mechanical devices which cannot perform their function unless they are mounted on another machine or appliance provided this function (i) is distinct from that which is performed by the machine and, (ii) does not play an integral and inseparable part in the operation of such machine. He relied upon the decision in G & P Engineering Co. v. CCE, Surat - 2001 (130) E.L.T. 197 (T) wherein Drilling rig mounted on motor vehicle chasis was classified under Heading 84.30 of the Tariff.
3. The learned Advocate, further, contended that the demand is hit by time-limit specified in Section HA of the Central Excise Act as the show clause notice is dated 24-12-99 and the duty has been demanded for the period from 11-6-1996 to 22-8-1997; that the Appellants, under their letter dated 21-8-95, had informed the Department about clearance of Site Mixed Slurry System (BMDS) under Heading 84.79; that they had also filed a classification declaration on 3-8-95 in which one of the item declared was BMDS under Sub-heading 8479.10; that as they were availing of Modvat credit of the duty paid on inputs under Rule 57A of the Central Excise Rules, 1944, they had filed a Modvat declaration under Rule 57G on 9-5-96 which clearly declared motor vehicle chasis of Sub-heading 8706.40 as an input for manufacture of BMDS of Sub-heading 8479.10; that the Classification declaration read with Modvat declaration clearly reveals that the BMDS is manufactured using motor vehicle chasis and as such there was no suppression of facts on their part. He, further, mentioned that they were filing R.T. 12 Returns along with the invoices issued by them under Rule 52A which clearly showed clearance of BMDS with accessories classifying under Heading 8479.10; that the Department had also defaced the invoice relating to chasis in respect of which Modvat credit was taken by them; that as such all the facts were known to the Department; that the Tribunal had consistently taken the view that where RT 12 returns had been assessed, classification declaration filed, the assessee could not be fastened with the charge of suppression or mis-declaration. The learned Advocate also referred to Board's Circular No. 124/35/95-CX, dated 10-5-95 in which Board had directed the Range Superintendent to acknowledge the receipt of the classification declaration and return the 4th copy back to the assessee in lieu of acknowledgement. The Circular further directs the Suptd. to check the declaration, to study the manufacturing process and submit the original and duplicate copies to the Assistant Commissioner along with his verification report within 6 weeks; that Asstt. Commissioner shall carefully scrutinize the declaration and if information contained therein is found to be incomplete or incorrect the Assistant Commissioner may cause necessary enquiry and after being satisfied with the correctness and completeness of the declaration shall forward the duplicate copy of declaration to the Commissionerate Headquarter. The learned Advocate also mentioned that the Adjudicating Authority has admitted in the Adjudication Order (Para 12) that the Classification Declaration had been accepted. He, therefore, contended that as such there was no suppression of facts. He relied upon the following decisions:-Padmini Products v. CCE 4. Finally the learned Advocate submitted that Notification No.162/86-C.E., dated 1-3-86 exempted Special Purpose Motor Vehicles from payment of duty, if manufactured from chasis and equipments on which the duty of excise leviable had already been paid; that the Appellants had received the chasis on payment of duty and Modvat credit had been availed; that they cleared the BMDS on payment of duty under Heading 84.79 towards the Modvat Credit availed on Motor Vehicle chasis they reversed the same under Rule 57F(1); that in the case of Chanderpur Magnetic Wires P. Ltd. v. CCE, Nagpur - 1996 (81) E.L.T. 3 (S.C.) it has been held that the exemption is available to the final product where the Modvat credit availed on the inputs has been reversed at the end of the month; that they are in the better position as they have reversed the Credit before removal of the impugned product; that there is no revenue implication; that no penalty is payable as the issue involved is one of interpretation involving classification as held by the Appellate Tribunal in the case of White Machine v. CCE, New Delhi, [2002 (149) E.L.T. 210 (T) = 2002 (79) ECC 793 (Tribunal)].
5. Countering the arguments Mrs. Neetalal Butalia, learned SDR, submitted that Para 14 of the memorandum of appeal explains as to how the system is mounted on chasis; that no special chasis is manufactured for manufacture of BMDS and as such the exclusion of HSN would not apply to the facts of the present matter; that Heading 84.75 covers a wide range of motor vehicles specially constructed or adapted, equipped with various devices that enable them to perform certain non-transport functions; that BMDS cannot work without being mounted on the chasis; that the process of manufacture clearly shows that BMDS cannot function without being fitted/mounted on the motor vehicle chasis; that therefore, it is appropriately classifiable under Heading 87.05. The learned SDR, further, submitted that the extended period of limitation is invocable; that in their classification declaration or in their letter dated 21-8-95 the Appellants did not mention chasis as one of the inputs; that they had also not mentioned in the process of manufacture about the mounting process; that they had deliberately suppressed the fact regarding the nature and description of BMDS, and therefore, acceptance of classification declaration and assessment of RT-12 return do not advance the case of the appellants, as far as invocation of extended period of limitation is concerned; that filing of Modvat declaration subsequently is of no consequence as it does not amend the classification declaration on the basis of which the product is being classified for the purpose of levy of duty. The learned SDR also mentioned that the benefit of notification No. 162/86-C.E. is also not available to the Appellants inasmuch as the appropriate duty of excise has not been paid on the equipments used in the manufacture of BMDS; that whatever duty has been paid was paid on BMDS and not on the equipments; that penalty is also imposable on the Appellants as they had suppressed the fact from the department and cleared BMDS on payment of short duty. In reply learned Advocate emphasized that while filing the classification declaration and RT-12 return they have informed about the chasis and as such there was no intention to evade payment of duty.
6. We have considered the submissions of both the sides. Heading 84,79 applies to machine and mechanical appliances having individual function not specified or included elsewhere in Chapter 84 whereas Heading 87.05 applies to special purpose motor vehicles. The process of manufacture of Bulk Mix Delivery System involves fabrication of tank and hopper and related items to store various chemicals, interconnecting piping through pump, valves and fittings, drive arrangement for which power is supplied by engine, assembling of all mechanical equipments, hydraulic equipments, pumps, valves, instruments. It has also been mentioned in the process of manufacture that the complete assembly is made on base frame which is fixed up on a chasis in order to make it moveable for field application. It is, thus, apparent from the process of manufacture that the appellants are making special purpose vehicles for mixing of various chemicals and taking the mixture to the blasting site and feeding the mixture into the blasting hole. It is mentioned in the Explanatory Note of HSN below Heading 87.05 that "This Heading covers a range of motor vehicles specially constructed or adapted, equipped with various devices that enable them to perform certain non-transport functions, i.e. the primary purpose of the vehicles of this Heading is not to transport the persons or goods." Number of special purpose motor vehicles has been mentioned in the Explanatory Notes such as outside Broadcast vans, Mobile Clinic with operation theatre, anesthetic equipment and other surgical apparatus, concrete mixture lorry, etc., which clearly go to show that the impugned product namely Bulk Mix Delivery System is nothing but a special purpose motor vehicle classifiable under Heading 87.05. Our attention was also drawn to the Explanatory Note of HSN below Heading 87.05 which mentions that the Heading excludes self-propelled wheeled machines in which the chasis and the working machines are specially designed for each other and form an integral mechanical unit. We agree with the learned SDR that this exclusion clause does not apply to the impugned goods inasmuch as the chasis used by them is not a special chasis which cannot be used for other purposes.
7. The Appellants vehemently contended that they have not suppressed any fact from the department with an intent to evade payment of duty as they have filed classification declaration which had been accepted by the department, their RT-12 returns had been assessed and they had filed a Modvat declaration claiming Modvat credit of the duty paid on chasis to be used in the manufacture only of the impugned product. A perusal of classification declaration filed by them reveals that they have simply mentioned BMDS and classified it under Heading 8479.10 of the Tariff. From this description it is not apparent that it is a system which is mounted on motor vehicle chasis and not even sufficient to create a doubt in the minds of Central Excise Officers about classification. The Modvat declaration for availing Credit of duty-paid on motor vehicle chasis was filed by them on 9-5-96. It has been clearly mentioned in the Modvat declaration that the inputs are motor vehicle chasis and the final product is Bulk Mix Delivery System. From this declaration it is apparent that the Appellants had clearly declared to the department that motor vehicle chasis is used as an input in the manufacture of BMDS. With such a declaration it cannot be claimed by the department that the Appellants have suppressed any vital fact from the department with an intent to evade payment of duty.
Chasis as an input can be used only for the purpose of mounting certain equipments, apparatus, etc., on it. Moreover the Modvat credit is available to any manufacturer only, if the inputs are used in or in relation to the manufacture of the final product. Once the Appellants have declared motor vehicle chasis as their inputs, suppression cannot be alleged against them. It has also not been denied by the Revenue that the invoice under which chasis was received by the Appellants and on the strength of which Modvat credit was availed had been defaced by the Range Supdt. which shows that the Appellants had no intention to suppress any fact from the department. As the show cause notice was issued on 24-12-99 for demanding the duty for the period from 11-6-96 to 22-8-97 the entire period is beyond the normal period of 6 months specified in Section 11A(1) of the Central Excise Act at the relevant time. In view of our findings that there was no suppression extended period of limitation is not invokable. Accordingly the demand of duty as well as penalty is set aside. The appeal is allowed on time bar.