IN THE CUSTOMS, EXCISE AND SERVECE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI 					       COURT NO. II

IN APPEAL NO. E/173/11
(Arising out of Order-in-Original No. 14/CEX/2010 Dated 28.09.2010 passed by the Commissioner of Central Excise, Pune I.) 		
For approval and signature:							     Shri S.S. Kang, Honble Vice President            		
Honble Mr. P.K. Jain, Member (Technical)
1. 	Whether Press Reporters may be allowed to see 		: No	the Order for publication as per Rule 27 of the 				CESTAT (Procedure) Rules, 1982?
2. 	Whether it should be released under Rule 27 of the 	:		CESTAT (Procedure) Rules, 1982 for Publication				in any authoritative report or not? 						
3.	Whether Their Lordships wish to see the fair copy 	:       yes of the order?
4.	Whether Order is to be circulated to the Departmental 	:       yes	authorities? 
		
Commissioner of Central Excise, Pune I 
:  Appellant
                   Versus

M/s JCB India Ltd. 
: Respondent

Appearance Shri K.M. Mondal, Consultant : For Appellant Shri V. Sridharan, Advocate Shri Nikhil Aggarwal, Advocate Shri Rajesh Oswal, C.A.

: For Respondent CORAM:

Shri S.S. Kang, Honble Vice President Honble Mr. P.K. Jain, Member (Technical) Date of Hearing :

24.07.2013 Date of Decision:

.11.2013 ORDER NO.......................................................

Per: P.K. Jain, Member (Technical) M/s JCB India Ltd., Parts-Centre, Plot No. A & B, Talegaon Floriculture and Industrial Park, Village Ambi, Navlakh Umbhre, Taluka Maval, Talegaon Dabhade, Pune - 411507 is the appellant. The Appellants are engaged in activities involving purchase of various parts of Loaders, Backhoe Loaders, Road Rollers from different suppliers in India and abroad, repacking these parts with new packing material and affixing their Logo, fixing of MRP and selling under their own brand name.

2. Section 2 (f) (iii) of the Central Excise Act, 1944 reads as under:-

(f) manufacture includes any process, -

i) incidental or ancillary to the completion of a manufactured product;

(ii) which is specified in relation to any goods in the Section or Chapter notes of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as amounting to manufacture; or

(iii) which, in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer, and the word manufacturer shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account.

3. Vide Section 66 of the Finance Act, 2006 the Third Schedule to the Central Excise Act, 1944 was amended so as to include Parts, components and assemblies of automobiles falling under any heading of the Schedule to the Central Excise Tariff Act, 1975.

4. Section 4A of the Central Excise Act, 1944 empowers the Central Government to specify any goods, in relation to which it is required, under the provisions of Standards of Weight & Measures Act, 1976 or the Rules made thereunder or under any other law for the time being in force, to declare on the package thereof the retail sale price of such goods. In respect of such goods, value for purpose of charging duty is deemed to be the retail sale price declared on such goods less such amount of abatement as notified. The said section is as under:-

Section 4A - Valuation of excisable goods with reference to retail sale price. -

(1) The Central Government may, by notification in the Official Gazette, specify any goods, in relation to which it is required, under the provisions of the Legal Metrology Act, 2009 (1 of 2010) or the rules made thereunder or under any other law for the time being in force, to declare on the package thereof the retail sale price of such goods, to which the provisions of sub-section (2) shall apply.

(2) Where the goods specified under sub-section (1) are excisable goods and are chargeable to duty of excise with reference to value, then, notwithstanding anything contained in section 4, such value shall be deemed to be the retail sale price declared on such goods less such amount of abatement, if any, from such retail sale price as the Central Government may allow by notification in the Official Gazette.

(3) The Central Government may, for the purpose of allowing any abatement under sub-section (2), take into account the amount of duty of excise, sales tax and other taxes, if any, payable on such goods.

(4) ..

5. Exercising powers under Section 4A of the Central Excise Act, Central Government issued Notification No. 11/2006C.E. (N.T.) dated 29th May, 2006. The said Notification reads as:-

In exercise of the powers conferred by sub-section (1) and sub-section (2) of section 4A of the Central Excise Act, 1944 (1 of 1944), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby makes the following amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 2/2006-Central Excise (N.T.), dated the 1st March, 2006, G.S.R. 113(E), dated the 1stMarch, 2006, namely:-

In the said notification, in the TABLE, after S.No.96 and the entries relating thereto, the following shall be added, namely:-

97.

Any heading Parts, components and assemblies of automobiles 33.5%

98. 3808 30 40 Plant-growth regulator 30%

99. 9603 21 00 Toothbrush 28.5%.

2. This notification shall come into force on the 1st day of June, 2006.

[Notification No. 11/2006-C.E. (N.T.) dated 29.05.2006]

6. On 24th December, 2008, above Notification was replaced by Notification No. 49/2008C.E. (N.T.). However, there was no change in the description of entry with which we are concerned except that abatement percentage was reduced from 33.5% to 30%, and was listed as entry no. 108. The Notification No. 49/2008C.E. (N.T.) was amended vide Notification No. 9/2010C.E. (N.T.) dated 27.02.2010 and the said entry was replaced as:-

S. No. Chapter Heading, sub-heading or tariff item Description of goods (1) (2) (3) 108 Any Chapter Parts, components and assemblies of vehicles (including chassis fitted with engines) falling under Chapter 87 exculding vehicles falling under heading 8712, 8713, 8715 and 8716.

The said Notification was again amended vide Notification No. 19/2010C.E. (N.T.) dated 29.04.2010 and a new entry 109 was inserted which read as:-

Any Chapter Parts, components and assemblies of goods falling under tariff item 8426 41 00, headings 8427, 8429 and sub-heading 8430 10.

7. However no amendment was carried out in the corresponding entry in the Third Schedule to the Central Excise Act. In the Finance Bill, 2011, Third Schedule was amended as under:-

(a) for S. No. 100 and the entries relating thereto, the following shall be substituted and shall be deemed to have been substituted with effect form the 27th day of February, 2010 namely:-

S. No. Chapter Heading, sub-heading or tariff item Description of goods (1) (2) (3) 100 Any Chapter Parts, components and assemblies of vehicles (including chassis fitted with engines) falling under Chapter 87 exculding vehicles falling under heading 8712, 8713, 8715 and 8716.

(b) after S. No. 100 and the entries relating thereto, the following S. No. and entries shall be added and shall be deemed to have been added with effect form the 29th day of April, 2010 namely:-

100A Any Chapter Parts, components and assemblies of goods falling under tariff item 8426 41 00, headings 8427, 8429 and sub-heading 8430 10.

Thus Finance Act, 2011 amended/inserted above mentioned entries with retrospective effect i.e. the day where Notification No. 9/2010C.E. (N.T.) and 19/2010C.E. (N.T.) were issued.

8. According to Appellant Revenue, w.e.f. 01.06.2006 goods dealt by the appellant are covered under the Third Schedule to the Central Excise Act, 1944 and in view of Section 2(f)(iii), activities of the appellant would amount to manufacture and therefore appellant is liable to pay Central Excise duty. The duty, liability is to be computed as per Section 4A read with Notification No. 2/2006C.E. (N.T.) dated 01.03.2006 as amended by Notification No. 11/2006C.E. (N.T.) dated 29th May, 2006, or as per Notification No. 49/2008C.E. (N.T.) dated 24.12.2008.

9. Respondent on the other hand is of the view that goods being dealt by them are not covered under the Third Schedule to the Central Excise Act, 1944 or Notification No. 11/2006C.E. (N.T.) dated 29th May, 2006, or Notification No. 49/2008C.E. (N.T.) dated 24.12.2008 till May, 2010 and hence activity carried out by them does not amount to manufacture; and therefore they are not liable to pay any excise duty.

10. There is no dispute after May, 2010 as both Revenue and appellant agree for dutiability and assessment under Section 4A. In view of above, dispute in brief is whether or not goods dealt by the appellant are covered by the description Parts, components and assemblies of automobiles as appearing in Third Schedule or above mentioned Notification. The term Automobile is not defined under the Central Excise Act, 1944 or the Central Excise Tariff Act. There is no dispute that goods are Parts, components and assemblies of Loaders, Backhoe Loaders, Road Rollers. It is also a fact that numbers of such parts may be useable in other vehicles. However, since appellants assigns their own code number/name to such parts, according to them all Parts are meant for Loaders, Backhoe Loaders, Road Rollers.

11. Two show-cause notices were issued to the appellant dated 22.12.2009 and 23.08.2010 demanding duly of Rs.9,03,39,053/- and Rs.10,09,33,274/- for the period June, 2006 to July, 2009 and August, 2009 to May, 2010 respectively. The notices inter alia stated that Loaders, Backhoe Loaders, Road Rollers,-

(i) require registration with Road Transport authorities under Rule 2(ca) of the Central Motor Vehicles Rules, 1989 as construction equipment vehicle. Further construction equipment vehicle is defined as:-

construction equipment vehicle means rubber tyred, (including pneumatic tyred), rubber padded or steel drum wheel mounted, self-propelled, excavator, loader, backhoe, compactor roller, dumper, motor-grader, mobile crane, dozer, fork lift truck, self-loading concrete mixer or any other construction equipment vehicle or combination thereof designed for off-highway operation in mining, industrial undertaking, irrigation and general construction but modified and manufactured with on or off or on and off highway capabilities.

Explanation-A construction equipment vehicle shall be a non-transport vehicle the driving on the road of which is incidental to the main off-highway function and for a short duration at a speed not exceeding 50KMs per hour, but such vehicle does not include other purely off-highway construction equipment vehicle designed and adopted for use in any enclosed premises, factory or mine other than road network, not equipped to travel on public roads on their own power.

(ii) as per Rule 126B of the Central Motor Vehicle Rules, 1989 (CMVR, 1989), prototype of every construction equipment vehicle is to be subjected to test by any of the agencies referred to in Rule 126 of CMVR, 1989 for granting certificate. Appellant have taken such certificates from Automotive Research Association of India, Pune for Loaders & Backhoe Loaders.

(iii) Section 2 of the Air (Prevention and Control of Pollution) Act, 1981 defines the term Automobile as follows:

2(e) automobile means any vehicle powered either by internal combustion engine or by any method of generating power to drive such vehicle by burning fuel;

(iv) Section 2(28) of the Motor Vehicle Act, 1988 defines a motor vehicle or vehicle to mean any mechanically propelled vehicle adapted for use upon roads whether the power of propulsion is transmitted thereto from an external or internal source and includes a chassis to which a body has not been attached and a trailer; but does not include a vehicle running upon fixed rails or a vehicle of a special type adapted for use only in factory or in any other enclosed premises or a vehicle having less than four wheels fitted with engine capacity of not exceeding twenty-five cubic centimetres;

(v) from the details available on the website of the appellants, it is clear that different types of attachments are fitted with the chassis e.g. buckets to carry loads, road sweeper/sweeper collector, grabs & grapples, backhoe, loader, muck fork & grab, patch planer, quickhitch, trencher, shovel, earthdrill, hammer, kergmaster stump grinder, concrete skip, snow blade etc. Such type of attachments appear to indicate that these goods are motor vehicles which have the capabilities to perform versatile and multiple functions on road as well as off the road.

(vi) Manufacturing process of Hydraulic Loader is as under:-

(a) Stage-1 covers following activities like front axle oil filling, drop front axle on front chassis trolley, GA front axle, grease hose fitment from rear axle to rear chassis, engine dropping & fitment, hose fitment, transmission hose one side fitment, rear propeller shaft transmission side fitment;

(b) Stage-II covers the activities like engine main harness fitment, front axle fitment with front chassis, centre pivoting fitment, front propeller shaft fitment, PVB & pump hoses fitment, intermediate shaft fitment, steps sub-assembly & fitment to the side of rear chassis

(c) Stage-III covers the activities like steering ram other ends fitment, combicooler fitment including previous transmission cooler 2 hoses tightening, corner casting fitment, engine covers dropping on line, hoses fitment from engine covers to radiator, hoses fitment from fan motor to engine gear pump, hoses fitment from accumulator to engine gear pump, tyres subassembly- 4nos.;

(d) Stage-IV covers the activities of fitment of attachments and cover the activities like loader arm fitment & lift ram fitment one side, showel ram fitment, hoses of showel ram & clamp fitment, tyre fitment, hoses fitment (fuel hoses and others);

(d) Stage-V covers fitments of other detachable parts and covers and activities like fitment of front & rear fenders, cab dropping, cab hoses fitment with cahssis hoses, cab harness fitment with chassis harness, counter weight subassembly, counter weight assembly.

In stage VI and VII activities like filling of oil, coolant and engine starting etc. is undertaken. From the above processes, it is seen that the mainframe of chassis with engine is completed at stage III. Process of manufacturing undertaken evolves, at first go, the manufacture of chassis fitted with engine which stand on the wheels and thereafter, the attachments as per the requirements, are fitted thereon. Thus, the vehicle per se comes into existence at the stage-III itself which criteria for classification of the vehicle.

(vii) Consideration of these features/characteristics suggest that the Road Rollers, Loaders and Backhoe Loaders are principally designed as motor vehicles which are also capable of performing one or any of the functions like excavation, loading, cutting, sweeping on road, drilling, boring, lifting and predominantly transporting or material generated in that process from one place to another place with the help of their running wheels in faster manner. The chassis with wheel attached to it can be fitted with the accessories of such functions depending upon the requirements. The mobility of the chassis mounted on the wheels appears to be the predominant and determinative factor for these goods to be considered as motor vehicles. By putting four wheels in loader and backhoe loader by its own characteristics clearly spells out that the said vehicles are meant for movement and transport of the material form one place to another place either on the public road, private road or in a working site. Further, the types of attachments like bucket, lifter etc. which are fitted to the said motor vehicles enable them to dump the materials at the desired place. Similarly the Road Rollers also are capable of moving on road and same are vehicles powered by internal combustion engine to drive by burning fuel. Therefore, the Loaders and Backhoe Loaders appear to fall under the category of motor vehicle which transport and dump the materials. Further, Road Rollers are powered by the IC engine and are capable of moving on road. As such, they also appear to fall under the category of motor vehicle.

12. Revenue also relied upon the following case laws to support that goods in question are Parts, components and assemblies of automobile.

(i) M/s Central Coal Fields Ltd. Vs. State of Orissa & Ors. -1992 AIR SC 1366

(ii) Apex Courts judgement in the case of Bose Abraham Vs. state of Kerala & Anr. dated 01.02.2001.

(iii) Ashok Leyland Ltd. Vs. UOI  1991 (62) ELT 32 (Mad.)

(iv) Krishna Fabricators P. Ltd. Vs. CCE, Bangalore  1994 (69) ELT 729 (T)

(v) Hi-Tech Engineering Sales And Services Vs. CCE, Ranchi - 2008 (221) ELT 298 (T)

(vi) Sociedade De Fomento And Others Vs. CC, Bombay - 1987 (29) ELT 620 (T)

13. Both the show-cause notices were adjudicated by the Commissioner, in the impugned order, who dropped the demand and Revenue is in appeal before this Tribunal.

14. In the impugned order, it was held that in all the decisions, it is concluded that a vehicle which is adapted to use on road would have to be considered as motor-vehicles and in the case of M/s Krishna Fabricators Pvt. Ltd., it is held that the term motor vehicle and automobiles are synonymous. Commissioner further found that this conclusion was in the context of exemption and not the classification as is the case here. Commissioner also found that a new entry was introduced in the budget- 2010, it implies that items covered by new entry were not covered earlier. Commissioner also referred to Finance Ministers Budget speech on this aspect. Another reason advanced is that Hon'ble Apex Court in the case of Goodyear India Ltd. Vs. UO(I) --1997(92) ELT 14 (SC) held that tyres of the size 1800 and above meant for fitment to heavy moving vehicles such as dumpers and earth movers mainly used at construction site are not classifiable as tyres for motor vehicles. Commissioner also relied upon Hon'ble Rajasthan High Court Judgement in the case of Commissioner of Income Tax Vs. Gotan Line Stone Khangs Ltd.  2007 (113) GTX-0443-RAJ wherein the Hon'ble High Court allowed investment allowance to hydraulic excavators considering these to be nontransport vehicles. In view of above as also Boards clarifications, Commissioner dropped the demands.

15.1 Ld. Special Counsel for the Revenue took us though various Notifications, Third Schedule etc. as enumerated earlier. Ld. Counsel further took us though following Circulars of Board-

(i) Circular No. 262/15/86-CX.8 dated 14.07.1987

(ii) Circular No. 22/90-CX.4 dated 11.07.1990

(iii) Circular No. 167/38/2008-CX.4 dated 16.12.2008 The first Circular is regarding leviability of cess under Automobile Cess Rules, 1984 on Earthmoving machinery. The said Circular is as under:-

Automobiles - Cess not chargeable on earthmoving machinery F. No. 262/15/86-CX.8, dated 14.07.1987 Government of India Ministry of Finance (Department of Revenue) New Delhi Subject : Cess on automobiles  Clarification Regarding.

A doubt has arisen whether Earthmoving machinery is levialbe to cess under the Automobile Cess Rules, 1984.

2. The matter has been examined in consultation with the Ministry of law which has opined that since Earthmoving machinery including dumpers fall under item 11 of the 1st Schedule to the I (D & R) Act, 1951 and not under Heading 7(5) of the said schedule, no cess would be chargeable on the same under the Automobile Cess Rules, 1984. The opinion of the Law Ministry has been accepted by the Board. Ld. Special Counsel also took us through the definition of Automobile under the Automobile Cess Rules, 1984 which defines as:-

Automobile means motor cars, buses, trucks, jeep type vehicles, vans scooters, motorcycles, mopeds, and the like Ld. Special Counsel further stated that Automobile Cess is collected form vehicle used in transportation sector alone.

15.2 Ld. Special Counsel also took us through the Boards Circular No. 22/90-CX.4 dated 11.07.1990 which reads as:-

Drivers seats of Hydraulic Excavators not eligible for    benefit under Notification No. 61/86-C.E.
Circular No. 22/90-CX.4, dated 11-7-1990
[From F. No. 156/15/90-CX.4]
Government of India  
Ministry of Finance (Department of Revenue)
Central Board of Excise & Customs, New Delhi
Subject : Whether benefit of Notification No. 61/86-C.E., dated 10-2-1986, as amended would be extended to Drivers Seats of Hydraulic Excavators or not - Clarification regarding.

Doubts have been expressed regarding extension of benefit of Notification No. 61/86-C.E., dated 10-2-1986 to drivers seats of hydraulic excavators in terms of Serial No. 2 to the table annexed to Notification No. 61/86-C.E. as amended.

2. The matter has been discussed in the North Zone Tariff-cum-General Conference held at Manali, on 7th and 8th June,1990. A view was expressed that hydraulic excavator was nothing but an automobile and therefore, seats were eligible for the benefit of exemption Notification No. 61/86-C.E., dated 10-2-1986. However, the Conference took note of the fact that, automobiles are conveyances for transportation of passengers, and goods on roads (Chapter 87), whereas hydraulic excavators were earth digging and earth loading machinery classifiable under Heading 84.20 of Central Excise Tariff Act, 1985. As such they cannot possibly be treated as automobiles.

3. The Conference recommended that as hydraulic excavators are not automobiles the benefit of exemption Notification No. 61/86-C.E., dated 10-2-1986 on drivers seats would not cover Drivers seats meant for hydraulic excavators.

4. The Board has accepted the above recommendation of the Conference and accordingly, it is clarified that benefit of Notification No. 61/86-C.E., dated 10-2-1986 would not be available to drivers seats meant for hydraulic excavators.

5. All pending assessments may be finalised accordingly.

6. Field formations and Trade may be informed suitably. 15.3 Ld. Special Counsel stated that the said Circular is based upon Tariff conference where a view was expressed that hydraulic excavators was nothing but automobile. However, the other view was that automobiles are conveyances for transportation of passengers, and goods on road and therefore decided not to extend the benefit of Notification No. 61/86-C.E. dated 10.12.1981 to driver seats of hydraulic excavators. Ld. Special Counsel further argued that this very circular was matter for decision before this Tribunal in the case of Krishna Fabricators P. Ltd. (supra) and after detailed discussion and based upon various judgements of the Hon'ble Supreme Court and Madras High Court, this Tribunal came to the conclusion that Automobile includes tractors and earth moving equipments. Thus Tribunal took a view contrary to the said Circular. Revenue has not challenged the said judgement and therefore the Circular dated 11.07.1990 is no more valid and this does not represent the correct legal position. Any reliance on the said circular would be contrary to judicial verdict.

15.4 Ld. Special Counsel thereafter submitted that Boards Circular No. 167/38/2008-CX.4 dated 16.12.2008 is as under:-

Automobile parts, components and assemblies  Scope, for MRP based valuation F. No. 167/38/2008-CX 4, dated 16-12-2008 Government of India Ministry of Finance (Department of Revenue) Central Board of Excise & Customs, New Delhi Subject : MRP based assessment - Clarification regarding the scope of entry No. 97 of the Notification No. 2/2006-C.E. (N.T.) inserted vide the amending Notification No. 11/2006-C.E. (N.T.) [Present entry no. 107 in the Notification No. 14/2008-C.E. (N.T.)] - Regarding.

References have been received from the field formations regarding the scope of above mentioned entry. The entry reads as under :

S. No. Chapter, heading, sub-heading or tariff item of the First Schedule Description of goods Abatement as a percentage of retail sale price 97.

Any heading Parts, components and assemblies of automobiles 33.5% 2.1 The first issue is regarding interpretation of term automobiles. The said term has not been defined in the Notification, hence its general meaning needs to be considered.

In this regard, reference may be made to the Circular No. 22/90-CX.4, dated 11-7-1990. In this circular at para 2, it has been stated that automobiles are conveyances for transportation of passengers and goods on roads (Chapter 87) and that hydraulic excavators cannot be treated as automobiles.

2.2 Further, as per the Automobile Cess Rules [under the industries (Development and Regulation) Act, 1951], automobile is defined as follows:

Automobile means motor cars, buses, trucks, jeep type vehicles, vans, scooters, motorcycles, mopeds, and all other automobiles covered under the sub-heading (5) of Heading 7 Transportation of the First Schedule to the Act;

The relevant sub-heading 7(5) reads as follows :

7. Transportation (5) Automobiles (motor cars, buses, trucks, motorcycles, scooters and the like) 2.3 It is also to clarify that the term automobiles does not include animal driven or manual driven vehicles.

The above clarification/definition may be considered to interpret the scope of term automobile.

3.1 Another issue that has arisen in the scope of the term parts as used in the aforementioned entry. Chapter 87 of the Central Excise Tariff covers parts of different vehicles. Further, Section Note 2 of the Section XVII also defines the scope of parts of goods falling in said section. Doubts have arisen as to whether parts classified in Chapter 87 shall only be covered under the said entry or all parts irrespective of their classification should be covered.

3.2 The issue has been examined. The said entry provides that parts, components and assemblies falling in any heading in the Tariff are covered. Therefore, it is logical that all parts, components and assemblies, irrespective of their classification shall be covered. It is also important to note that there is no specific entry for components or assemblies of automobiles in the Tariff, therefore, this also supports the view that all goods which are commonly known and sold in the trade as parts, components and assemblies are covered by said entry, irrespective of their clarification in the Tariff.

Hence, the term parts, components and assemblies of automobiles includes items like batteries, brake assembly, tyres, tubes and flaps, IC engines, ball bearing etc.

4. The contents of this clarification may be brought to the notice of trade and industry. 15.5 Ld. Special Counsel stated that Board in this Circular has reiterated circular dated 11.07.1990 which has already been negated by this Tribunal based upon detailed discussion and various case Laws of Hon'ble Supreme Court and therefore needs to be ignored. Ld. Special Counsel further submitted that is settled law that interpretation given by Supreme Court/High Court/Tribunal has to prevail over Boards interpretation. Ld. Special Counsel further argued that the said circular is specific to hydraulic excavators while the goods in question are Loader, Bockhoe Loader & Road Roller. In any case, hydraulic excavators are in various forms such as on its own track (which are not vehicles/automobiles) etc. 15.6 Ld. Special Counsel also submitted that the terms automobile is defined in the Air (Prevention and control of pollution) Act, 1981 to mean any vehicle powered either by internal combination engine or by any method of generating powers to drive such vehicle by burning fuel. This definition of automobile covers the goods in question. Ld. Counsel, further stated Section 2(28) of the Motor Vehicles Act, 1988 defines motor vehicles as:-

(28) motor vehicle or vehicle means any mechanically propelled vehicle adapted for use upon roads whether the power of propulsion is transmitted thereto from an external or internal source and includes a chassis to which a body has not been attached and a trailer ; but does not include a vehicle running upon fixed rails or a vehicle of a special type adapted for use only in a factory or in any other enclosed premises or a vehicle having less than four wheels fitted with engine capacity of not exceeding [twenty-five cubic centimeters] 15.7 Ld. Counsel submitted that Loader, Backhoe Loader & Road Roller are required to take registration under Motor Vehicles Act. It is only if vehicle is running upon fix rails/ own track or vehicle of a special tyres adapted for use only in a factory or in any other enclosed premises that are not considered as vehicles. Thus there are hydraulic excavators which do not have four tyred wheels, ---- etc. which will not come in the definition of motor vehicle, automobile other than such tyres as to be considered as automobile.

15.8 Ld. Special Counsel took as through the Hon'ble Supreme Court judgement in the case of M/s Central Coal Fields Ltd. (supra), Bose Abraham (supra) and Hon'ble Madras High Court judgement in the case of Ashok Leyland Ltd. (Supra) and this Tribunals judgement in the case of Krishna Fabricators P. Ltd. (supra), Hi-Tech Engineering Sales And Services (supra), Sociedade De Fomento And Others (supra). These judgements leaves no scope not to consider the present goods as parts components and assemblies of automobile. Ld. Counsel also argued that as per manufacturing process, first a vehicle comes into existence and on that other construction equipment are fitted. In case of tractor various agriculture implants are fixed as per requirement and used in farms but are undoubtedly vehicles.

16.1 Ld. Senior Advocate for the respondents cited definition of Automobile from various dictionaries such as Chamber Dictionary, American Heritage Dictionary, Cambridge International Dictionary of English, The New Encyclopaedia Dictionary, Dictionary of Automobile Engineering, Encyclopaedia of Invention and Technology, and other dictionaries. The Chamber Dictionary explains automobile as self-moving, a motor car. The American Heritage Dictionary explains automobile as a self-propelled passenger vehicle that usually has four wheels and an internal combustion engine, used for land transport. The new Encyclopaedia Britannica explains automobile as a usually four-wheeled automotive vehicle designed primarily for passenger transportation and commonly propelled by internal-combustion engine using a volatile fuel. Dictionary of Automobile Engineering explains automobile - dated or formal word for motor car in British English, but still widely used in American English. Similarly, other dictionaries explains automobile in similar way. Ld. senior advocate submitted that from the dictionary meaning it is clear that items like loader, backhoe loader and road rollers are not automobiles.

16.2 Ld. Senior Advocates other contention was that departments understanding as is clear form Circular dated 14.07.1987, 11.07.1990 and particularly dated 16.12.2008 (which was issued in the context of present Notification/entry) that construction/earth moving machinery are not automobile and therefore department now cannot take a contrary stand.

16.3 Ld. Senior Advocate further argued that Tribunals judgement in the case of Krishna Fabricators P. Ltd. (supra), was in different context. In that case Notification used the words, designed for use in automobiles, railway carriages and aircrafts. It is in this context that Tribunal took a view that earth moving equipments are also automobile. Ld. senior advocate also explained how in other cases quoted by Revenue, context are different.

17.1 We have considered the rival submissions, and given considerable thought to these submissions. At the outset we note that all the items in question viz. Loader, Backhoe Loader and Road Roller are self propelled, work with internal combustion engine using fuel such as diesel, have four wheels and are rubber tyred (road roller may have two rubber tyres and one roller, or only rollers). These can move on roads like other motor vehicles. These move also on roads. Thus, these have all the characteristics of motor vehicles. In addition, these items have attachments which enables execute and move earth, mud etc. from one place to another. In case of road rollers, it helps in compacting and setting the road due to vibrating techniques in compaction jobs.

17.2 We also note that these items require registration under Motor Vehicle Act, 1988. We also note that before permitting any motor vehicle on the roads, Motor Vehicle Act requires the vehicles to be examined/tested by specified institutions regarding suitability to ply on road etc. and based upon the appropriate certification, motor vehicles are allowed on the road and registration under Motor Vehicle Act is granted thereafter only. In the present case, appellant had approached the Automotive Research Association of India, Pune who after examination has granted the requisite certificate. A perusal of the application and certificate indicates that the items in question have all ingredients of motor vehicle.

17.3 We also note that the items in question are considered as Automobiles and requires to meet Air pollution norms and under the Air (Prevention and Control of Pollution) Act, 1981.

17.4 We also note that Hon'ble Supreme Court in the case of Bose Abraham Vs. State of Kerala & Anr. (Supra), while considering the exigibility of excavators and road rollers to tax under the Entry Tax Act, has observed:-

The short question that arises for consideration in these appeals is whether motor vehicle as defined in Section 2 (28) of the Motor Vehicles Act would include excavators and road rollers so as to attract the levy under Kerala Tax on Entry of Motor Vehicles into Local Areas Act [hereinafter referred to as the Act]  We hold that the excavators and road rollers are motor vehicles for the purpose of the Motor Vehicle Act and they are registered under that Act. The High Court has noticed the admission of the appellants that the excavators and road rollers are suitable for use on roads. However, the contention put forth now is that they are intended for use in the enclosed premises. Merely because a motor vehicle is put to a specific use such as being confined to an enclosed premises, will not render the same to be a different kind of vehicle. Hence, in our view, the High Court has correctly decided the matter and the impugned order does not call for any interference by us. However, the question whether any motor vehicle has entered into a local area to attract tax under the Entry Tax Act or any concession given under the local Sales Tax Act will have to be dealt with in the course of assessment arising under the Entry Tax Act. Appeals are accordingly dismissed. 17.5 We note that Hon'ble Supreme Court in the case of M/s Central Coal Fields Ltd. (Supra), while considering the issue about taxation of Dumper and Rocker under Motor Vehicle Act, 1988 has observed as under:-

7. learned Counsel for the appellants in these appeals have not challenged the view of the High Court regarding vires of the impugned Act before us or to its retrospectively but have addressed us only on the fact situation to contend that the Dumpers (which includes Rockers) are vehicles not adapted for use upon roads and, therefore, they are outside the scope of Section 2(b) of the impugned Taxation Act, 1975 and hence not within the ambit of the charging Section. Section 3(1) provides that subject to the other provisions of the Act, on and from the date of commencement of the Act, there shall be levied on motor vehicles, used or kept for use within the State, a tax at the rate specified under the Schedule. It is evident that the tax is chargeable on using or keeping for use a motor vehicle; a motor vehicle adapted for use on roads. Now it has to be seen whether Dumpers and Rockers are motor vehicles adapted for use on roads.

8. Reverting back to Bolani Ores case, it would be found that the pre-amendment definition of Section 2(18) conveyed that though they were motor vehicles as such, within the meaning of the first part of the definition, but nonetheless were not so because of their specified user, i.e., if they were used solely upon the premises of the owner. It would also be found that under the post-amendment definition, though a motor vehicle may be adapted for use upon roads, nonetheless in order to be taken out of the category it had further to be adapted for use only in a factory or in any other premises. But here no new facts have been pleaded by the appellants before the High Court as to how the Dumper/Rocker was a vehicle of a special type, adapted for use only in a factory or in any other premises. When Dumpers and Rockers were held registrable by this Court under the Act, it commended to this Court to hold that Dumpers and Rockers were definedly motor vehicles adapted for use upon roads, as otherwise they would have been held not so within the meaning of 'motor vehicle'. Rather the case of Bolani Ores (one of the appellants before us) then pointedly pleaded was that Dumpers were used for transporting ore from the mining faces to the crushing and screening plant or from head mine stock pile to near railway siding. Dumpers were thus shown to be vehicle engaged in the transport of goods.

9. It would be appropriate now to mention that some documentary material was sent to us by the appellants by means of an affidavit after we had reserved judgment. That material is suggestive of the fact that Dumpers in some States are granted permission to run on public roads at a speed not exceeding 16 kms. per hour and on bridges and culverts at a speed not exceeding 8 kms. per hour. From this it is suggested that they have a minimum weight and safe laden weight fixed on some principles. Pictures of various types of Dumpers have also been sent to us which indicate prominently one factor that these Dumpers run on tyres, in marked contrast to chain plates like cater pillars or military tanks. By the use of rubber tyres it is evident that they have been adapted for use on roads, which means they are suitable for being used on public roads. The mere fact that they are required at places to run at a particular speed is not to detract from the position otherwise clear that they are adapted for use on roads. The very nature of these vehicles make it clear that they are not manufactured or adapted for use only in factories or enclosed premises. The mere fact that the Dumpers or Rockers as suggested are heavy and cannot move on the roads without damaging them is not to say that they are not suitable for use on roads. The word 'adapted' in the provision was read as 'suitable' in Bolani Ores case by interpretation on the strength of the language in Entry 57, List-II of the Constitution. Thus on that basis it was idle to contend on behalf of the appellants that Dumpers and Rockers were neither adaptable nor suitable for use on public roads. Thus on. the fact situation, we have no hesitation in holding that the High Court was right in concluding that Dumpers and Rockers are vehicles adapted or suitable for use on roads and being motor vehicle per se, as held in Bolani Ores case, were liable to taxation on the footing of their use or kept for use on public roads; the network of which, the State spreads, maintains it and keeps available for use of motor vehicles and hence entitled to a regulatory and compensatory tax. (Exemptions claimable apart). The appellants, therefore, in our view, have no case for grant of any relief in these appeals.

17.6 We also note that Hon'ble High Court of Madras in the case of Ashok Leyland Ltd. (Supra) has held that:-

Merely because the equipment in this case viz. Beaver Rear Dumper is capable of being put on the road and is also capable of carrying loads over long distances, it does not cease to be an equipment coming within the definition of a motor vehicle. Even though Beaver Rear Dumper would not come within the definition of a vehicle used for weight lifting or earth moving, it is not in dispute that it is a specialised material handling equipment. This specialised material handling equipment i.e. the tipping gear and the steel body, which forms the container for moving and handling the material, is mounted on the chassis. This mechanism is intended to move materials from one place to another and to dump them in a chosen site. Such a specialised material handling equipment is similar to earth moving machineries and, therefore, this vehicle as a whole would come within the definition of Motor Vehicle and would attract the benefit of the Explanation to Tariff Item 34. 17.7 We also note that three member bench of this Tribunal in the case of Sociedade De Fomento And Others (Supra) while considering question whether Dumpers, Loaders and Tractors are classifiable as conveyances under Item 75 of the Indian Tariff Act, 1934 or a mining machinery under item 72 (18) ibid has held that Dumpers, Loaders and Tractors are conveyances and not a mining machinery.

17.8 Ld. Senior Advocate for the appellant has relied upon Hon'ble Supreme Court judgement in the case of Goodyear India Ltd. Vs. U.O.I. reported in 1997 (92) ELT 14 (S.C.). We have gone through the said judgement. The issue before the Hon'ble Supreme Court was whether tyres of the size 1800 mn and above meant for fitment to heavy moving vehicles such as dumpers and earthmovers mainly used at construction site is to be classified as tyres for motor vehicle. At the relevant time tyres were classified under three categories viz. for motor vehicles, for cycles & all other tyres. Further, Item No. 34 defined motor vehicles. It is in this context that Hon'ble Supreme Court has held that such tyres cannot be considered tyres of motor vehicles. In present case issue is whether parts, components and assemblies of Loader, Backhoe Loader & Road Roller can be considered as Parts, components and assemblies of automobiles. In our view, Hon'ble Supreme Court judgement does not help the cause of Respondents.

17.9 Another judgment quoted is that of Hon'ble Rajasthan High Court, in the case of Commissioner of Income Tax Vs. Gotan Lime Stone Khanij Udyog reported in 2007 (173)-GJX-0443-RAJ. Here the issue was road transport vehicles were excluded form the Investment Allowance and Income Tax department was denying the Investment Allowance considering tipper and hydraulic excavator as road transport vehicle. Hon'ble High Court took the view that these are non-transport vehicle by virtue of explanation attached to the definition. We donot consider this helps the cause of respondents as issue is about Parts, Components & Assemblies of Automobiles and not of non-transport vehicles.

17.10 To us the inevitable conclusion from the facts as also various judicial pronouncement is that Loader, Backhoe Loaders & Road Rollers are motor vehicle.

18.1 The next question that arises is having come to the conclusion that Loader, Backhoe Loaders & Road Rollers as motor vehicle, whether parts, components and assemblies of three items are Parts, components and assemblies of Automobile.

18.2 The word automobile is not defined in the Central Excise Act or Central Excise Tariff Act. Ld. Senior Advocate for respondent have quoted meaning of the said term from various dictionaries. From the said meaning, it appears that word is used for what is popularly understood as car. Some dictionaries extend it to vehicles carrying small quantity of goods. However, this understanding is very different then that given in various Acts/Rules for example, Automobile Cess Rules, 1984 defines to mean motor cars, buses, tracks, jeep type vehicle vans, scooters, motorcycle, moped and the like. If one go by dictionary meaning buses, tracks, vans, scooters, motorcycle, moped are not automobiles. The term automobile is defined in the Air (Prevention and Control Pollution) Act to mean any vehicle powered either by internal combustion engine or by any method of generating power to drive such vehicle by burning fuel. In our view this definition though in different Act with different purpose will be nearer to the normal understanding of the term as on day. It may be true that concept of automobile started with car, which was thereafter technologically advanced to buses, truck, scooters, motorcycle, moped and then various special purpose vehicles such fire tender, ambulance, as also agricultural tractors, construction equipment vehicle etc. The term automobile, therefore might have started with car to carry few person but as on day extends to whole range of motor vehicles.

18.3 In fact, almost similar issue arose before this Tribunal in relation to seats of tractors and earthmoving machinery, to be considered as seats of automobile or not in the case of Krishna Fabricators P. Ltd. (supra). In the said case, this Tribunal observed:-

38. The expression automobile has a wider? connotation - one which runs by its own motor - internal combustion engine.

39. Motor vehicle has been defined as a motor driven? vehicle for use on roads and highways.

40. In both the exemption Notifications No.? 91/68-C.E. and No. 61/86-C.E., the expression automobiles has been used along with the railway carriages and the air-crafts. Railway carriages move on fixed rails, and the aircrafts fly in the air and run on the runways. Taken all the three - automobiles, railway carriages and aircrafts - together, they cover a very wide area.

41. The word automobile was first used in France? in the late 1880s. It comes from the Greek word Auto meaning self, and the French word Mobile meaning moving. Literally, it means a self-propelled vehicle.

42. While its dictionary meaning is motor-car, the? way the expression automobile has been used in the Notification along with railway carriages and the aircrafts, any restricted meaning given to it does not appear to be consistent with the scheme discerned from the reading of the notifications as a whole.

43. As observed by the Honble Supreme Court in the? case of Jain Engineering Company v. Collector of Customs, Bombay, 1987 (32) E.L.T. 3 (S.C.), paragraph 7, when the intention is clear and manifest it will be unreasonable to take a narrow view of the Notification.

44. As explained by the Honble Supreme Court in? Collector of Central Excise v. Parle Exports Private Ltd. [1989 (38) E.L.T. 741 (S.C.)] and Tata Oil Mills Company Ltd. v. Collector of Central Excise [1989 (43) E.L.T. 183 (S.C.)], in interpreting the scope of any Notification, the Court has first to keep in mind the object and purpose of the Notification. All parts of it should be read harmoniously in aid of and not in derogation of that purpose.

45. According to the? Noscitur A Sociis principle, which means that the meaning of a word is to be judged by the company it keeps, it could be safely said that the exemption was intended to all variants of steel seats for carriage or conveyance used on land, on rails or space. Of course here in place of a restricted meaning, by the principle of Noscitur A Sociis, it appears natural that a larger meaning is imparted to the expression automobile.

46. Even in the Automobile Cess Rules, 1984, relied? upon by the Collector of Central Excise, Bangalore, a wider meaning has been given to the expression automobiles. 18.4 We find that in the impugned order, adjudicating authority has brushed aside the said case law on the grounds of that it is in the context of exemption and not classification. We are unable to appreciate this reasoning.

18.5 We also note that Parts, components and Assemblies of Automobiles is further qualified by falling under any heading of the tariff, both in the Third Schedule to the Central Excise Act as also Notification No. 11/2006. Thus the expressions used are very very wide and does not restrict to few parts or assemblies but to all parts and falling any hearing of the whole schedule to Tariff. We also note that a large number of such parts, components and assemblies are interchangeable in different type of vehicles (though manufacture assign their part numbers). Thus keeping in view the way the two expression Parts, components and Assemblies of Automobiles and Any heading is used, we consider that Parts, components and assemblies of Loader, Backhoe Loader and Road Roller are covered by the said entry/expression.

18.6 We also find that this conclusion of ours also get support from the changes made in February/April 2010. In order to avoid the terminology automobile, (being not defined in Act/Tariff) specific heading of the Central Excise Tariff were introduced in the Notification No. 49/2008-C.E. (NT) in February 2010 vide Notification No. 9/2010-C.E. (NT). Apparently either this was done in haste and Government had to further amend the amendment made in February, 2010 within two months to specifically include headings relating to earth moving machinery. Not only this, corresponding amendment in Third Schedule was forgotten and next year retrospective amendment had to be brought with effect from 27.02.2010/29.04.2010. Thus a holistic look of these amendments, only supports that Parts, components and assemblies of automobiles included that of Loader, Backhoe Loader & Road Roller and were covered from June, 2006 onwards.

18.7 One of the contention of Ld. Senior Advocate is that Boards Circular dated 16.12.2008 stated that hydraulic excavators cannot be treated as automobiles and this Circular is binding on Revenue Officials and a stand contrary to that is not permissible. We have gone through this Circular. We note that this is not a Circular under Section 37B of the Central Excise Act so as to make it binding on the officials. We also note that this Circular does not clarify which type of hydraulic excavators is being discussed. Hydraulic excavators having their own track are not considered as motor vehicle or automobile. Further we note that this Circular is based upon Circular No. 22/90-CX.4 dated 11.07.1990. At that point of time Hon'ble Supreme Court judgement in the case of Bose Abraham (supra) holding that excavator and road rollers are motor vehicles was not available. We also note that this Tribunal has already held contrary to what is stated in the Circular dated 11.07.1990 in the case of Krishna Fabricators P. Ltd. (supra) which is turn relied upon Hon'ble Supreme Court and Hon'ble Madras High Court judgements. It appears to us that Circular dated 16.12.2008 has been issued without taking into consideration above mentioned judicial decisions. We also note that this Circular was not issued in 2006 when Parts, components and assemblies of Automobiles were brought into Third Schedule to the Central Excise Act or specified under Section 4A (which would have indicated the objects and purpose of amendments). It has been issued after almost three years. In any case, it is settled legal position, that Circular contrary to the judicial decision are not binding. A five member Bench of Hon'ble Supreme Court in the case of Collector of Central Excise, Vadodara Vs. Dhiren Chemical Industries reported in 2002 (139) ELT 3 (S.C.) observed:-

9. We need to make it clear that, regardless of the interpretation that we have placed on the said phrase, if there are circulars which have been issued by the Central Board of Excise and Customs which place a different interpretation upon the said phrase, that interpretation will be binding upon the Revenue. 18.8 Hon'ble Supreme Court further Clarified in the case of Kalyani Packaging Industry Vs. Union of India reported in 2004 (168) ELT 145 (S.C.) as under:-

6. We have noticed that Para 9 of Dhiren Chemicals case is being misunderstood. It therefore becomes necessary to clarify Para 9 of Dhiren Chemicals case. One of us (Variava, J.) was a party to the Judgment of the Dhiren Chemicals case and knows what was the intention in incorporating Para 9. It must be remembered that law laid down by this Court is law of the land. The law so laid down is binding on all Courts/Tribunals and Bodies. It is clear that circulars of the Board cannot prevail over the law laid down by this Court. However, it was pointed out that during hearing of Dhiren Chemicals case because of circulars of the Board in many cases the Department had granted benefits of exemption Notifications. It was submitted that on the interpretation now given by this Court in Dhiren Chemicals case, the Revenue was likely to reopen cases. Thus Para 9 was incorporated to ensure that cases where benefits of exemption Notification had already been granted, the Revenue would remain bound. The purpose was to see that such cases were not reopened. However, this did not mean that even in cases where Revenue/Department had already contended that the benefit of an exemption Notification was not available, and the matter was sub-judice before a Court or a Tribunal, the Court or Tribunal would also give effect to circulars of the Board in preference to a decision of the Constitution Bench of this Court. Where as a result of dispute the matter is sub-judice a Court/Tribunal is, after Dhiren Chemicals case, bound to interpret as set out in that judgment. To hold otherwise and to interpret in the manner suggested would mean that Courts/Tribunals have to ignore a judgment of this Court and follow circulars of the Board. That was not what was meant by Para 9 of Dhiren Chemicals case. 18.9 Hon'ble Supreme Court in the case of Commissioner of Customs, Calcutta Vs. Indian Oil Corporation Ltd. reported in 2004 (165) ELT 257 (S.C.) has observed as under:-

25. As is? evident from Section 151A the Board is empowered to issue orders or instructions in order to ensure uniformity in the classification of goods or with respect to levy of duty. The need to issue such instructions arises when there is a doubt or ambiguity in relation to those matters. The possibility of varying views being taken by the Customs officials while administering the Act may bring about uncertainty and confusion. In order to avoid this situation, Section 151A has been enacted on the same lines as Section 37A of the Central Excise Act. The apparent need to issue such circulars is felt when there is no authoritative pronouncement of the Court on the subject. Once the relevant issue is decided by the Court at the highest level, the very basis and substratum of the circular disappears. The law laid down by this Court will ensure uniformity in the decisions at all levels. By an express constitutional provision, the law declared by the Supreme Court is made binding on all the Courts within the territory of India (vide Article 141). Proprio vigore the law is binding on all the Tribunals and authorities. Can it be said that even after the law is declared by the Supreme Court the adjudicating authority should still give effect to the Circular issued by the Board ignoring the legal position laid down by this Court? Even after the legal position is settled by the highest Court of the land, should the customs authority continue to give primacy to the circular of the Board? Should Section 151A be taken to such extremities? Was it enacted for such purpose? Does it not amount to transgression of constitutional mandate while adhering to a statutory mandate? Even after the reason and rationale underlying the circular disappears, is it obligatory to continue to follow the circular? These are the questions which puzzle me and these are the conclusions which follow if the observations of this Court in the two cases of Dhiren Chemicals Industries are taken to their logical conclusion.

26. I am of the? view that in a situation like this, the Customs authority should obey the constitutional mandate emanating from Article 141 read with Article 144 rather than adhering to the letter of a statutory provision like Section 151A of the Customs Act. The Customs authority should act subservient to the decision of the highest constitutional Court and not to the circular of the Board which is denuded of its rationale and substratum under the impact of the authoritative pronouncement of the highest Court. Alternatively, Section 151A has to be suitably read down so that the circulars issued would not come into conflict with the decision of this Court which the Customs authorities are under a Constitutional obligation to follow. 18.10 In view of above case laws, we are of the view that even if the Circular dated 16.12.2008 is with reference to Hydraulic Excavators which are motor vehicle, the same is required to be ignored in view of decisions on the issue by Higher Judicial forums. We therefore donot find any merit in this contention.

18.11 Another contention of Ld. Senior Advocate was that in chapter 73, Heading 7326 910 the words used are For automobiles and earth moving equipment and therefore two are different. We donot find any substance in this contention, both the words are used together and therefore indicates that these are same category of goods. In any case, automobile is not defined. We therefore donot find merit in this contention.

18.12 In the result, appeal succeeds on merit i.e. Parts, components and assemblies of Loader, Backhoe Loader and Road Rollers are covered by Parts, components and assemblies of Automobiles.

18.13 Keeping in view the facts and circumstances and nature of dispute, we are of the view that this is not a fit case for invoking the extended period of limitation as ingredients to invoke the same are absent. Accordingly, demand within the normal period of limitation is only confirmed. We also donot consider the case fit for imposing penalty under Section 11AC or Rule 25 or confiscation of goods under Rule 25. Accordingly, penalties and confiscation are set aside.

19. Appeal is allowed in above terms.

(Pronounced in court on ..11.2013) (S.S. Kang) (P.K. Jain) Vice President Member (Technical) Sp 2