CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH, CHANDIGARH



Excise Appeal Nos. E/791793 of 2012 



			 

(Arising out of order-in-original No. 29/DM/ADJN/CE/2011-12 dated 09.01.2012 passed by the Commissioner of Central Excise & Customs (Delhi-IV), Faridabad)


DATE OF HEARING : 01.08.2016
DATE OF DECISION :     .08.2016


FOR APPROVAL AND SIGNATURE :

HONBLE MR. ASHOK JINDAL, MEMBER (JUDICIAL)
HONBLE MR. B. RAVICHANDRAN, MEMBER (TECHNICAL)



1.
Whether Press Reporters may be allowed to see the order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982 ?


No
2.
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not ?

Yes
3.
Whether their Lordships wish to see the fair copy of the Order ?

Seen
4.
Whether Order is to be circulated to the Departmental Authorities?

Yes

M/s Action Construction Equipment Ltd.   .               Appellants
Shri Vijay Agarwal	                                         (Rep by Sh. B.L. Narshimhan, Adv)
Shri P.K. Bansal
VERSUS

CCE, Delhi-IV			                 .                      Respondent

(Rep. by Sh. G.M. Sharma, AR) CORAM : HONBLE MR. ASHOK JINDAL, MEMBER (JUDICIAL) HONBLE MR. B. RAVICHANDRAN, MEMBER (TECHNICAL) ORDER NO. 61057-61059/2016 PER ASHOK JINDAL :

The appellants are in appeal against the impugned order wherein demand of Central Excise Duty on main appellant has been confirmed along with interest and penalties on all the appellants have been imposed. The brief facts of the case are as under :

1.1 The appellants are manufacturers of construction equipment viz. Wheeled Tractor Loader Backhoe (WTLB), Hydra Cranes, Forklifts, tractors, etc. chargeable to central excise duty. The WTLB and Hydra Crane are self propelled type. Besides this, they also trade in spare parts of WTLB, Hydra Cranes, and tractors from separate warehouses outside the factory where the duty paid parts of these machines are stored and are sold after re-packing. There is one Spare Parts Division for Tractor parts which has central excise registration and spare parts of tractors after repacking for retail sale are cleared on payment of duty. The other spare parts division is for spare parts of WTLB and Hydra Crane for which the Appellant had not taken any central excise registration. The dispute is in respect of excisability of spare parts of WTLB and Hydra Crane, which have been repacked for retail sale. There is no dispute that the parts of WTLB and Hydra Cranes are covered by heading no.8431, which covers parts suitable for use solely or principally with the machinery of heading no.8425 to 8430. The period of dispute in this case is from June, 2006 to June, 2010. Section 2 (f)(iii) of the Central Excise Act, 1944, states that in respect of the goods listed in Schedule III to the Central Excise Act, 1944, packing or re-packing of goods in a unit container, or labelling or relabelling of containers including declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the same marketable to the consumer, amounts to manufacture. During the period till 28.4.2010, Sl.No.100 of the third Schedule to the Central Excise Act, 1944 covered  parts, components and assemblies of automobiles falling under any chapter heading. There is no definition of the term Automobile in that schedule or in the Central Excise Act, 1944. With effect from 29.4.2010, Sl. No. 100 of the third schedule was substituted by Sl.No.100 and 100 A. While the Sl. No.100 covers parts, components and assemblies of vehicles (including chassis fitted with engine) falling under Chapter 87 excluding the vehicles falling under Heading no. 8712, 8713, 8715 and 8716, the Sl.No.100 A covers parts, components and assemblies of goods falling under heading Tariff Item No. 84264100, 8427, 8429 and the sub-heading 843010. The dispute in this case is as to whether during the period of dispute, the repacking of the goods  parts of WTLB and Hydracrane for their retail sale would amount to manufacture. According to the department during the period prior to 29.04.2010, the word Automobile in the entry no.100 of the 3rd schedule would cover even the WTLB and Hydra Crane in terms of definition of this terms, as given in Section 2(28) of the Motor Vehicle Act, 1988 and Section 2 (e) of the Air (Prevention & Control of Pollution) Act, 1981 and, therefore, even during the period prior to 29.4.2010, spare parts of WTLB, and Hydra Crane would have to be treated as parts, components and assemblies of automobiles and their packing or repacking for their retail sale would amount to manufacture. On this basis, a show cause notice dated 4.1.2011 was issued to the appellant company for demand of allegedly non-paid duty amounting to Rs.6,07,44,253/- along with interest thereon and also for imposition of penalty on the Appellant Company under Section 11 AC and penalty on Shri Vijay Agarwal, CMD and Shri P.K. Bansal, CFO under Rule 26 of the Central Excise Rules, 2002.

1.2 This show cause notice was adjudicated by the Commissioner, Central Excise, Indore. In course of adjudication proceedings, the appellant citing the Boards circulars No.22/90-CX-4 dated 11.7.1990 and No.1/667/30/CX dated 16.12.2008 pleaded that the components of WTLB and Hydra Crane cannot be treated as automobile parts. In the circular dated 16.12.08 with regard to entry no.97 of table to Notification No. 2/06-CE (NT) issued under section 4A of the Central Excise Act, 1944, for the purpose of MRP based assessment, which is identical to entry no. 100 of the 3rd Schedule to Central Excise Act, 1944, as it stood during period prior to 29.04.10, the Board had clarified that to interpret the term automobile, the definition of this term as given in Automobile Cess Rules, may be adopted. In circular dated 11.07.90, the Board had clarified that Hydraulic excavators are not automobile. However, this plea of the appellant was not accepted by the Commissioner, who vide order-in-original dated 9.1.2012 held that re-packing of parts of WTLB and Hydra Crane for their sale as spares parts would amount to manufacture under Section 2(f)(iii) of the Central Excise Act, 1994 and would accordingly attract duty. He accordingly confirmed the total duty demand of Rs. 6,07,44,253/- along with interest. Besides this, Commissioner also imposed penalty of Rs.6,07,44,253/- on the appellant company under Section 11 AC of the Central Excise Act, 1944. He also imposed penalty of Rs.One Crore and Rs.50 Lakhs on Shri Vijay Agarwal and Shri P.K. Bansal respectively under Rule 6(1) of the Central Excise Rules, 2002.

2. Shri B.L. Narshimhan, learned Counsel for the appellants, pleaded that there is no dispute about the fact that WTLB, and Hydra Crane are construction machinery classifiable under heading 8429 and 8426 respectively and their parts are classifiable under heading 84.31, that in terms of the Boards Circular dated 16.12.2008 for the purpose of entry no. 97 in notification No.2/06-CE (NT) issued under Section 4 A of Central Excise Act, 1944, which is identical to the entry no.100 of the third schedule to the Central Excise Act, 1944. The term Automobile should be construed in the light of its definition in Automobiles Cess Rules and on that basis, the WTLB and Hydra Cranes being construction machinery would fall outside the purview of the term Automobile and hence the parts of Hydra Crane and WTLB would not be covered by the expression parts, components and assemblies of Automobiles, that the clarification issued by the Board is binding on the department, that the term Automobile appearing in Sl.No.100 of the third Schedule to the Central Excise Tariff Act, 1944 should be interpreted in the context of the Central Excise Tariff and not on the basis of definition of this term in Motor Vehicle Act, 1988 or Air (Prevention and Pollution)Act 1981, that when components of Hydra Crane and WTLB are classifiable under heading 84.31 as construction machinery parts and this classification is not disputed, for the purpose of Section 2(f)(iii) read with 3rd Schedule of the Central Excise Act, 1944, the same cannot be treated as automobile parts, that the Apex Court in the case of MSCO Pvt. Ltd., reported in 1985 (190) ELT 15 (SC), has held that while constructing a word in a statute or statutory instrument, in absence of any definition of that term in that very statute, it must be given the same meaning which it receives in ordinary parlance or understood in the sense in which the people conversation with the subject matter of the statute understand it and it is hazardous to interpret such word in accordance with its definition in another statute or statutory instrument, more so, where the statute or statutory instrument is not dealing with the cognate subject, that in view of this judgement of the Apex Court, the definition of Automobile in Motor Vehicle Act, 1988 or in Air (Prevention & Control of Pollution) Act, 198, which do not deal with cognate subject, cannot be adopted for construing the entry no. 100 of the 3rd Schedule of Central Excise Act, 1944, that w.e.f. 29.4.2010, the entry no.100 of the third schedule was substituted by two entries in Entry No.100 and 100 A and while Entry No.100 covers parts, components and assemblies of the vehicles (including chassis fitted with engines) falling under chapter 87 excluding the vehicles falling under Heading No. 8712, 8713, 8715 and 8716, the S.No.100A covers parts, components and assemblies of the goods falling under Tariff Item No.84264100, 8427, 8429 and 843010, that this amendment, in absence of any specific provision regarding its retrospective applicability, is inapplicable for the period prior to 29.04.2010, that from this amendment also, it is clear that during the period prior to 29.4.2010, the term parts, components and assemblies of Automobiles would not cover the parts, components and assemblies of earth moving/construction machinery falling under Heading No. 84.31, that the Commissioner has not given any finding as to how the Boards Circular mentioned the above would not be applicable, that even if the departments plea that the re-packing of the goods, in question, for retail sale amounts to manufacture and would attract central excise duty, is accepted, the appellant would be eligible for Cenvat Credit of the duty paid on the components, as the components packed for sale as spares were duty paid, that the Commissioner has not given any finding as to why Cenvat Credit would not be available, that in any case, the appellants duty liability in respect of clearance of parts of WTLB and Hydra Crane during the period prior to 29.04.2010 after permitting the Cenvat Credit would be substantially less than the amount confirmed, that the bulk of the duty demand pertains to the period prior to 29.04.2010 while the appellant have already paid an amount of Rs.50,68,909/-, pertaining to the period from 29.04.2010 to June, 2010, that no penalty is imposable or the Appellant company under Section 11 AC and on its CMD & CFO under Rule 26.

3. On the other Shri G.M. Sharma, learned AR appearing on behalf of the Revenue, submits that in similar facts in the case of CCE, Pune-I vs JCB India Ltd., 2014 (312) ELT 593 (Tri.-Mum), an identical issue came up before this Tribunal and this Tribunal held that, the duty is payable by the assessee retrospectively i.e. prior to 29.04.2010. Therefore, the appeals filed by the appellants have no merit and accordingly the same are to be dismissed.

4. Heard the parties and considered the submissions. On careful consideration of the submissions made by both sides, we find that the issue arises from the arguments is that : Whether the parts of WTLB and Hydra Cranes are liable for duty prior to 29.04.2010 being covered under automobiles or not?

5. We have seen that as per 3rd Schedule of Central Excise Act, 1944 the activity of re-packing was deemed to be manufacture entered at Serial No. 100 for parts, components and assemblies of automobiles. The contention of the appellants is that, the items in question are not parts, components and assemblies of automobiles as the same do not qualify as automobiles. Therefore, we have to see the definition of automobiles under Central Excise Act or any Notification issued thereunder. Admittedly, no definition has been given to the word Automobiles in Central Excise Act or any Notification thereunder. The said definition has been dealt by this Tribunal in the case of JCB India Ltd. (supra) wherein this Tribunal observed as under :

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 to 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 Vehicles Act, 1988. We also note that before permitting any motor vehicle on the roads, Motor Vehicles 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 Vehicles 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.

17.10? To us the inevitable conclusion from the facts as also various judicial pronouncements 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, trucks, jeep type vehicle vans, scooters, motorcycle, moped and the like. If one goes by dictionary meaning buses, trucks, vans, scooters, motorcycle, moped are not automobiles. The term automobile is defined in the Air (Prevention and Control of 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 as 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.

6. We have gone through the analysis of the definition of automobiles by this Tribunal in the above cited case, but we do not agree with the said proposition in the light of the decision of the Honble Supreme Court in the case of MSCO Pvt. Ltd. vs Union of India & Ors., 1985 (19) ELT 15 (SC), wherein the Honble Apex Court has observed as under :

4. The expression industry has many meanings. It? means skill, ingenuity, dexterity, diligence, systematic work or labour, habitual employment in the productive arts, manufacturing establishment etc. But while construing a word which occurs in a statute or a statutory instrument in the absence of any definition in that very document it must be given the same meaning which it receives in ordinary parlance or understood in the sense in which people conversant with the subject matter of the statute or statutory instrument understand it. It is hazardous to interpret a word in accordance with its definition in another statute or statutory instrument and more so when such statute or statutory instrument is not dealing with any cognate subject. Craies on Statute Law (6th Edn.) says thus at page 164 :

In construing a word in an Act caution is necessary in adopting the meaning ascribed to the word in other Acts. It would be a new terror in the construction of Acts of Parliament if we were required to limit a word to an unnatural sense because in some Act which is not incorporated or referred to such an interpretation is given to it for the purposes of that Act alone Macbeth v. Chislett - (1910) A.C. 220, 223.  Admittedly, the expression automobiles has not defined in the Central Excise Act. Therefore, it is not permissible to adopt the definition of very same expression appearing in another different enactment. We also take note of the fact that it is settled position when an expression is not defined in the Act to understand the expression in common parlance, dictionary meaning of the expression can be usefully looked if dictionary meanings are uniform as held by the Honble Supreme Court in the case of CIT, Bangalore vs Venkateswara Hatcheries (P) Ltd., (1999) 3 SCC 632 (SC), wherein the Honble Apex Court has observed as under :

9. A reading of aforesaid dictionary meanings of the word produce does indicate that if a living creature is brought forth it can be said that it is produced. However, dictionary gives more than one meaning of the word produce. Neither the word produce nor the word article has been defined in the Act. When the word is not so defined in the Act it may be permissible to refer to dictionary to find out the meaning of that word as it is understood in the common parlance. But where the dictionary gives divergent or more than one meaning of a word, in that case it is not safe to construe the said word according to the suggested dictionary meaning of that word. In such a situation the word has to be construed in the context of the provisions of the Act and regard must also be had to the legislative history of the provisions of the Act and the scheme of the Act. It is settled principle of interpretation that the meaning of the words, occurring in the provisions of the Act must take their colour from the context in which they are so used. In other words, for arriving at the true meaning of a word, the said word should not be detached from the context. Thus, when the word read in the context conveys a meaning, that meaning would be the appropriate meaning of that word and in that case we need not rely upon the dictionary meaning of that word.

7. We have seen the dictionary meaning in the various dictionaries, namely, The Chambers Dictionary gives the meaning of automobiles as a motor car; The American Heritage Dictionary gives the meaning of automobiles as a self propelled passenger vehicle. Further, the Cambridge International Dictionary of English defines automobiles as a car. So, in general expression, the automobiles means a car or goods carrier.

8. In the case of JCB India Ltd. (supra), this Tribunal has over looked the settled position of law by the Honble Supreme Court, as discussed hereinabove. This Tribunal has committed an error while adopting the meaning of automobiles as given in Air (Prevention and Control of Pollution) Act, 1981. Further, it has also committed an error in ignoring the dictionary meaning of automobiles when various dictionaries have given the uniform meaning of the expression automobiles as passenger car or goods carrier. In these circumstances, we are not in agreement with the said decision of this Tribunal on this issue.

9. Further, the contention of the appellants is that, there was an amendment in 3rd Schedule of the Central Excise Act, 1944 by Finance Act, 2011 through Notification No. 11/2011 dated 24.03.2011 giving the effect of demand of duty w.e.f. 29.04.2010 on the parts, components and assemblies of goods falling under Tariff Item No. 8426 41 00, headings 8417, 8429 and sub-heading 8430.10 the amendment given in 2011 retrospectively w.e.f. 29.04.2010. In that circumstances, it is also clear from the clarification issued by the Ministry of Finance, Department of Revenue through DFO No. 334/3/2011-TRU dated 28.02.2011 which reads as under :

6.11 Parts, components and assemblies of vehicles falling under Chapter 87 excluding vehicles of headings 8712, 8713, 8715 and 8716 were notified under section 4A of the Central Excise Act with effect from 27.02.2010. Subsequently, parts, components and assemblies of certain vehicles falling under chapter 84 were also notified under these provisions with effect from 29.04.2010. However, these goods were not simultaneously included in the Third Schedule to the CETA. These are now being included in the Third Schedule retrospectively w.e.f. 27.02.2010 and 29.04.2010 respectively. The duty is payable on the parts and components w.e.f. 29.04.2010. Without examining the said provisions of law, this Tribunal in paragraph 18.6 of the decision in JCB India Ltd. (supra) has observed as under :

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. (N.T.) in February, 2010 vide Notification No. 9/2010-C.E. (N.T.). Apparently 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 earthmoving machinery. Not only this, corresponding amendment in Third Schedule was forgotten and next year retrospective amendment had to be brought with effect from 27-2-2010/29-4-2010. 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. The said view is not a correct view and not interpreted correctly. Therefore, we are in disagreement with the decision of this Tribunal in the case of JCB India Ltd. (supra).

10. In view of the above observations, it would be in the interest of justice to refer the following issues to the Larger Bench of this Tribunal for consideration :

(i) How to define expression automobiles when it is not defined in Central Excise Act/Rules or any Notification issued thereunder. Can the expression given in the Acts, namely, Air (Prevention and Control of Pollution) Act, 1981 or Motor Vehicles Act, 1988 be adopted or the meaning of the expression automobiles can be assigned from the uniformally defined in the various dictionaries and known in common parlance? and

(ii) The Notification No.11/2011 dated 24.03.2011 giving the effect of demand of duty w.e.f.29.04.2010 on the parts, components and assemblies of goods falling under Tariff Item No.8426 41 00, headings 8417, 8429 and sub heading 8430.10 is clarificatory and applicable prior to 29.04.2010 or mandatory and applicable from 29.04.2010 onwards

11. The matter be placed before the Honble President with a request to constitute a Larger Bench to address the aforesaid issues in view of the discussions made above.

(Operative portion was pronounced in the open court on 01.08.2016) (ASHOK JINDAL) MEMBER (JUDICIAL) (B. RAVICHANDRAN) MEMBER (TECHNICAL) Golay 1