TaxTMI 
TaxTMI 
2005 (5) TMI 537
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....tion 11AB has been demanded. Penalties have been imposed on the Sri V.P. Mahendra, Managing Director of M/s. VST Tillers and Tractors Ltd. and Sri S. Mahesh, Sr. Manager under Rule 209A of the Central Excise Act. The details of duties and penalties are detailed in the tabular column below. S. No. Appellants OIO No. Duty Penalty 1. M/s. VST Tillers & Tractors Ltd. OIO No. 19/2003, dated 31-10-2003 Rs. 26,90,85,555/- 1. Rs. 26,90,85,555/-2. Rs. 2,90,00,000/-Under Rule 173Q and Rule 210 of CE Rules 2. Sri V.P. Mahendra, Managing Director OIO No. 19/2003, dated 31-10-2003 -nil- Rs. 30,00,000/- 3. Sri S. Mahesh, Sr. Manager -do- -nil- Rs. 20,00,000/- 4. M/s. VST Tillers & Tractors Ltd. OIO No. 6/2004, dated 30-4-2004 Rs. 2,12,22,640/-along with interest 1. Rs. 2,12,22,640/- 2. Rs. 20,00,000/- 3. Sri K.S. Ravi Shankar, learned Advocate appeared for the appellants and Sri M. Chandrasekharan Sr. Advocate along with Sri Manish Pushkama, learned Advocate appeared for the Revenue. 4. The short point to be decided is whether the "Power Tillers" manufactured by the appellants is classifiable under 8432....
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....Section 2(28) defines, " '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 is not exceeding [twenty-five cubic centimeters];" (x) When all the above definitions are carefully examined, it is very clear that 'Tractor' is different from 'Power Tiller'. (xi) The learned Advocate submitted that the appellant has been classifying the Power Tiller under CH 84.32 only and the classification lists filed by the appellants were being approved by the department. Our attention was drawn to classification list No. 1/95, dated 20-12-1995. In the above-mentioned classification list the Power Tiller was classified under CH 84.32 and exempted vide Notification No. 56/95 dated 16-3-95 (Sl. No. 21). This list has been appr....
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....ereby making legislative intent manifest. (xxi) In the case of O.K. Play (India) Ltd. v. CCE - 2005 (180) E.L.T. 300 (S.C.) it has been held that "HSN Explanatory Notes provide a safe guide for interpretation of an entry, but equal importance to be given to Rules of Interpretation of Excise Tariff, functional utility, design, shape and predominant usage have also got to be taken into account while determining classification of an item." (xxii) In the case of CCE v. Alcobex Metals - 2003 (153) E.L.T. 241 (S.C.) it has been held that "Once the notice is issued under the proviso for larger period, it cannot be treated as a notice under main Section 11A for shorter period of six months." 6. Sri M. Chandrasekaran learned Senior Counsel along with Sri Manish Pushkarna, Advocate adduced the following arguments : (i) The adjudicating authority has relied on the Chapter Note 2 of Chapter 87 and the definition of Pedestrian Controlled Tractor in the HSN to arrive at a conclusion that the impugned goods are Pedestrian Controlled Tractor classifiable under CH. 87.01. (ii) Adjudicating authority has care....
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.... following are the functions of a Power Tiller, as given in the Trade literature of the appellant. 1. Dry Tilling 2. Wet Puddling 3. Cultivating 4. Ploughing 5. Deweeding 6. Ridging 7. Water pumping 8. Transportation. 9. The definition of 'Tractor' as per Chapter Note 2 of Chapter 87 is as follows. "For the purposes of the Chapter, 'Tractors' means vehicles constructed essentially for hauling or pushing another vehicle, appliance or load, whether or not they contain subsidiary provision for the transport, in connection with the main use of the tractor, of tools, seeds, fertilizers or other goods." 10. From the above definition it is clear that the essential function of the Tractor is pulling or hauling. In this particular case the essential function of Power Tiller is not pulling or hauling. Even the function of transport is also subsidiary. In the commerci....
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....;Thus it is seen that the established practice in our country is to classify Power Tiller under 84.32 and not under 87.01, in spite of the requirement under HSN that it should be classified under 87.01 as Pedestrian Controlled Tractor. In a statement given before the Excise Authorities, Shri Sivaramakrishnan, Senior Manager of M/s. VST Tillers and Tractors Limited has given the comparison between Tractors and Power Tillers and also Rotary Tillers and Power Tillers. In order to appreciate the issue at hand we are extracting the same. COMPARISON BETWEEN TRACTORS AND POWER TILLERS Similarities :- (1) All the agricultural operations for soil preparation, like tilling ploughing, cultivating, furrowing step be equally done by both Tractors and Power Tillers. (2) Other operations like Transportation, pumping water, spraying etc., also can be carried out both by Power Tillers and Tractors. However the Power Tiller, since it is small in size and powered by Diesel Engines of less than 12 to 13 HP's the output of work will be very much less than that of Tractor, For Eg. Tractor can transport over 10 Tons of material whereas Power Til....
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....s essentially for hauling, pushing other vehicles like Trailors, Rotary Tillers, Cultivators etc. (11) The maximum engine horse Power fitted to Power Tiller is around 12-13 HP only. Whereas all Tractors are filled with much higher horse Power Engines generally more than 25 HP. (12) Power Tillers are fitted with Single Cylinder, horizontal engines, whereas Tractors are fitted with Multi-cylinder Vertical engines. Just because, both Power Tillers and Tractors are capable of similar agricultural operations, we cannot group them in the same category. It will be appreciated that we cannot group a "Powered-Cycle" and a Motor Vehicle though both are used for conveyance; we cannot similarly compare "Power Tiller" which is nothing but a "Powered Bullock" with 'Tractor'. COMPARISON BETWEEN ROTARY TILLER AND POWER TILLER Rotary Tiller is only an attachment, which can be attached to Tractor for tilling the field; it does not have self-priming power whereas Power Tillers are complete Agricultural machinery, which have its own power to do the tilling of land by itself. 13. The Hon'ble Supreme Court in the case of O.K. Play (India) Ltd. v. CCE - 2005....
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....lassification will be that any machinery, including Tractors used for agricultural activity should be classified under agricultural implements under 84.32 and those used for transport should be under 84.34." The essential function of Power Tiller is not transport as seen from the literature available. Another point to be noted is Power Tiller Manufacturers Association's representations to the Government of India with regard to the import policy of Pedestrian Controlled Tractor cannot be held against them, as they have not been relied on in the Show Cause Notice. The adjudicating authority has gone strictly by the HSN and classified the item under 87.01. In our view, in a situation like this the totality of facts and circumstances has to be applied. There is also no merit in invoking the longer period, as there is absolutely no suppression of facts. The appellants have been filing the classification list and declaration and the department was very well aware of the activities of the appellants. We hold that the impugned goods, namely, Power Tillers manufactured by the appellants are classifiable under 84.32 during the relevant period. The OlOs has no merit and hence we allow the app....
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....2004 confirmed the demand of Rs. 14,02,28,699/- covered in show cause notice dated 12-3-2003 and Rs. 3,41,15,872/- covered in SCN dated 24-1-2004 under proviso to Section 11A(1) of the Central Excise Act, 1944. He imposed equal penalty under Section 11AC of the Act on the appellants. Further he demanded interest under Section 11AB of the Central Excise Act, 1944. 18. Shri A.K.J. Nambiar, learned Advocate appeared for the appellants and Smt. Shobha L. Chary, learned JCDR for the Revenue. 19. The learned Advocate adduced the following points :- (1) A tractor is a vehicle which is constructed essentially for hauling or pushing another vehicle/appliance whereas a power tiller is an agricultural machine which ensures a power take off from the engine to the blade shaft so that the agricultural implement/appliance attached to the prime mover are power driven and not merely hauled or pushed. (2) The I.C. Engine is fitted onto a power tiller framework where the blade shaft and the rotary shaft are connected by means of a chain and sprocket arrangement, it cannot be said that on the engine being fitted what comes into exis....
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....ions beginning with Notification No. 64/86-C.E., dated 10-2-1986, which exempted power tillers falling under Heading 8432 from the duty leviable under the CETA. In these circumstances, there is no justification to suddenly demand differential duty on the ground that a pedestrian controlled tractor emerges during the course of manufacture of a power tiller, when no such demand was ever made in the past. There is also no justification for invoking the larger period of limitation against the appellants. In view of the above, there is no justification for imposition of penalty and demanding interest. 20. In the course of hearing before the Tribunal, the learned Advocate informed the Bench that on the same issue for a subsequent period for the unit of the appellants at Athani, Emakulam Dist, the Commissioner of Central Excise and Customs, Cochin Commissionerate, has passed an order dropping the proceedings against the appellants. After a detailed study of the manufacturing process, he held that the goods manufactured by M/s. KAMCO, Athani are Power Tillers falling under Heading 8432.00 except tillers cleared without rotary units. The findings recorded in Para 36 of the Order-in-....