Tribunal Upholds Duty on Motor Vehicle Parts, Rejects Classification Challenge

Mercedes Benz India Pvt. Ltd. Versus CCE, Pune-III

Mercedes Benz India Pvt. Ltd. Versus CCE, Pune-III - 2018 (364) E.L.T. 226 (Tri. - Mumbai) Issues:
Classification of imported goods under Central Excise Act and applicability of manufacturing provisions.

Analysis:
1. The case involved the appellant importing various motor vehicle parts, subjecting them to packing, labeling, and affixing brand names and MRP before selling. The department claimed this activity amounted to manufacturing under Section 2(f)(iii) of the Central Excise Act, demanding duty, interest, penalty, and proposing confiscation of goods.

2. The appellant argued that the imported parts were correctly classified under 87.08, not falling under the third schedule of the Central Excise Act, hence not subject to manufacturing provisions. They contested the extended period demand, citing no suppression of facts and payment of duty before the notice, invoking Section 11A(2B) for penalty waiver.

3. The Revenue maintained the classification based on the bill of entry, asserting that repacking did not change the nature of goods, and the classification of repacked goods aligned with the imported goods' classification. They referred to precedent to support their stance.

4. The Tribunal upheld the classification of goods under specific tariff entries, not as parts of motor vehicles, rejecting the appellant's arguments. The activity of repacking and labeling fell under Section 2(f)(iii) of the Act, constituting manufacturing and liable for duty payment.

5. The Tribunal found suppression of vital facts by the appellant regarding manufacturing activities, justifying the extended period demand under Section 11A(1) proviso. The payment of duty post-facto did not absolve the appellant, leading to upholding duty, interest, and penalty demands.

6. The confiscation of goods was deemed incorrect as the cleared goods were not available for seizure, aligning with the Larger Bench judgment. The Tribunal set aside the confiscation and Redemption Fine.

7. The Tribunal distinguished previous judgments cited by the appellant, emphasizing the specific manufacturing activity under Section 2(f)(iii) in this case, rendering those judgments inapplicable.

8. Ultimately, the impugned order was partly modified, with the appeal partly allowed based on the above analysis. The judgment was pronounced on 26/10/2017.