TaxTMI 
TaxTMI 
2000 (9) TMI 548
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....is levied on motor cycles; that after assembling the motor cycle they started selling the same; that a show cause notice dated 29-11-96 was issued by the Asstt. Commissioner for demanding duty amounting to Rs. 29,47,738.69 in respect of 26 BMW motor cycles cleared by them; that another show cause notice dated 19-12-97 was issued by the Additional Commissioner for demanding duty amounting to Rs. 10,16,307/- in respect of 18 BMW motor cycles cleared during the period from July, 1996 to November, 1997; that the Additional Commissioner under the Adjudication order dated 27-3-98 confirmed the demand and imposed penalty under Section 11AC and separate penalty under Section 9(2) of the Central Excise [Act] on them holding that the activity of assembling the motor cycle from SKD kits amounts to manufacture in terms of Note 6 to Section XVII of the Tariff; that the Commissioner (Appeals) under the impugned order rejected their appeal. The learned Advocate further submitted that motor cycles imported in SKD condition were assessed to duty as complete motor cycles in accordance with Rule 2(a) of the Interpretative Rules which provides that incomplete goods having essential character of the co....
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....ved 50 BMW motor cycles in SKD condition under Bill of Entry dated 29-9-95 on payment of customs duty; that they would sell the aforesaid motor cycle after final assembly and as the goods had already assessed to duty/Cess as motor cycle they would not be paying again the excise duty on their sale; that this letter was duly received by the Assistant Commissioner's office which is apparant from the acknowledgement on the letter itself; that a copy of the said letter was also sent to the Range Suptd., who under letter dated 16-10-95 enquired from them as to why no permission had been taken under Rule 51A of the Central Excise Rules to bring duty paid goods into factory premises; that under their letter dated 19-10-95 they provided necessary information to the queries raised by the Supdt. and also furnished the documents desired by him; that again under letter dated 26-10-95 they mentioned that since assembly did not bring into existence any new commodity, no excise duty would be chargeable and they also referred to the decision in Walchand Nagar Industries case; that on query made from Supdt. under letter dated 4-12-95 about Bill of Entry not indicating import of 100% components, the ....
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....tor cycles. The learned SDR also referred to the terms of Cooperation Agreement entered into between the Appellants and BMW and submitted that the tenure of agreement support the view of the department that motor cycles were to be manufactured by the Appellants. He specifically referred to paragraphs 1.1, 2.2 and 9.8 which are extracted below :- 1.1 BMW shall supply and MAL shall purchase, import and assemble SKD/CKD-kits of F650 motorcycle in accordance with the provisions of this Agreement, the Importer Contract attached as Appendix 1 and the terms of the separate orders for the SKD/CKD-kits placed by MAL and accepted by BMW. 2.2 ...................................................... A minimum of 300 F650 motorcycles shall be delivered as SKD-kit to MAL in the period from September 1, 1995 to December 31, 1995. 100 of such SKD-kits shall be produced in July, 1995, 100 in September, 1995 and 100 in October, 1995, provided that the necessary letter of credit stipulated in Article 3.2 of this Agreement is confirmed to BMW not later than May 31, 1995 for the production in July, 1995, not late....
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.... extended time-limit is invokable as the appellants had wrongly claimed exemption by suppressing the fact of manufacture. He also referred to the decision in the case of Hindustan Playcards v. C.C.E., 1993 (68) E.L.T. 906 (T). Regarding competence of the Additional Commissioner the learned SDR submitted that he was competant to adjudicate the cases up to Rs. 20 lakhs and as in the show cause notice adjudicated by him the demand of duty is less than Rs. 20 lakhs. It cannot be said that if this show cause notice is clubbed with the earlier show cause notice the Additional Commissioner would not be competent to adjudicate the matter; that in the earlier show cause notice no extended period of limitation was invoked and as such issue involved in both the show cause notices were not the same. 6. In reply learned Advocate submitted that the word 'production' in the Agreement has been used in the commercial sense only; that assembly of parts does not amount to manufacture; that in Maruti Udyog case, adjudicating authority had treated the cars imported in CKD condition as motor car in terms of Rule 2(a) of the Interpretative Rules. He finally submitted that at least on 29-11-96 whe....
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....to the facts of the present case. The decision in the case of Indian Xerographic System was in respect of Item No. 33D of the erstwhile Central Excise Tariff which did not contain any Note like Note 6 to Section XVII. As per Section 2(f) of the Central Excise Act, manufacture includes any process which is specified in relation to any goods in the Section or Chapter Note of the Schedule to the Central Excise Tariff Act as amounting to manufacture. Such a definition was not in existence at the relevant time for deciding the matter in the case of Indian Xerographic System Ltd. Similar was the situation in the case of Walchand Nagar Industries as the goods were manufactured and cleared during the period August, 1984 to January, 1986 when the definition of manufacture under Section 2(f) of the Central Excise Act did not provide that the process mentioned in Section or Chapter Note would amount to manufacture. Further, our views are strengthened by the decision of the Appellate Tribunal in the case of C.C., Mumbai v. Maruti Udyog Ltd., 1996 (16) RLT 646 wherein it was held that for customs assessment purpose the goods have been deemed to be cars as a result of legal fiction. The imported....