2023 (12) TMI 521 - AT - Central Excise

E-bikes imported in CKD condition not liable for additional automobile cess after assembly process

The CESTAT Chandigarh allowed the appeal, setting aside the demand for automobile cess on E-bikes imported in CKD condition. The tribunal held that since ... Time Limitation - Levy of Automobile Cess - impugned order passed without appreciating the facts of the case and the law - impugned order is beyond the allegation in the SCN - principles of natural justice - Suppression of facts or not - time limitation - HELD THAT:- The appellant imported E-bike in CKD condition and E-Bike parts falling under heading 8711 & 8714 respectively. The appellant assembled E-Bike imported in CKD condition and cleared the same without payment of duty as E-bike were exempt vide notification No. 25/2008-CE dated 29.04.2008. Further, E-bike imported in CKD condition after assembling were cleared without payment of duty as the goods were imported and cleared fall under the same sub-heading and processes undertaken does not amount to manufacture as per section 2(f) of the Central Excise Act being no new/distinct product came into existence. Further, it is found that the classification at the time of importation and at the time of clearance for home consumption are the same - the appellant is not required to pay automobile cess because he has already paid the same at the time of import which has been shown in the Bill of entry 531 dated 11.07.2008. Time Limitation - HELD THAT:- It is found that the entire information regarding the clearance of E-bike were reflected in ER-1 return submitted to the department periodically and the department never raised any objection regarding non deposit of automobile cess which clearly shows that automobile cess were paid as per concurrence of the department - the entire demand in this case is time barred because for the period September, 2006 to September, 2008 show cause notice was issued on 19.11.2010 which is beyond the normal period of limitation. The department has invoked the extended period of limitation without showing that the ingredients for invoking the extended period of limitation is present in the case. The demand is barred by limitation - the impugned order set aside on merit as well as on limitation - appeal allowed. Issues involved:The judgment involves the demand of Automobile Cess on the ground of value addition, computation of Automobile Cess, imposition of penalty, and demand of interest on the appellant.Comprehensive Details:Demand of Automobile Cess on Value Addition:The appellant, engaged in the manufacture of E-bikes and parts, imported E-bikes and parts in CKD condition. The show cause notice alleged that the appellant did not file mandatory returns under the Automobile Cess Rules, 1984 and suppressed production, clearance, and value of E-bikes to evade payment of automobile cess. The appellant contended that they imported E-bikes in CKD condition and parts falling under specific headings, and the processes undertaken did not amount to manufacture as per the Central Excise Act. The Commissioner (Appeals) held that there is a need to work out the automobile cess on the value addition, requiring fresh computation without imposing penalty and interest.Computation of Automobile Cess:The appellant argued that the impugned order was unsustainable as it did not appreciate the facts and law, and the automobile cess was already paid at the time of import. The appellant maintained that the processes undertaken did not amount to manufacture, and the duty was not payable on the cleared E-bikes. The appellant contended that the demand was time-barred, as all relevant information was reflected in the ER-1 returns submitted to the department periodically, with no objection raised regarding non-payment of automobile cess.Imposition of Penalty and Demand of Interest:The appellant argued that the entire demand was time-barred, as the show cause notice was issued beyond the normal period of limitation. The appellant emphasized that the department confirmed the demand by invoking the extended period of limitation without demonstrating the presence of the necessary conditions for such invocation. The Tribunal found that the demand was barred by limitation, setting aside the impugned order on both merit and limitation, thereby allowing the appeal of the appellant.Separate Judgment by Judge:The judgment was pronounced by MR. S. S. GARG, MEMBER (JUDICIAL) on 11.12.2023.