TaxTMI 
TaxTMI 
2010 (4) TMI 736
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....the assessee challenging the findings of the Commissioner and appeal No. E/925/09 is filed by the Revenue for non-imposition of penalty. Appeal No. E/715/09 is filed by the assessee against Order-in-appeal No. 25/2009(H-IV) CE date 26-6-2009. 4. The relevant facts that arise for consideration are that appellants are manufacturers of Butyl rubber inner tubes falling under Chapter sub-heading 40.13 of the Central Excise Tariff and they clear finished products to OEM customers, for retail sale and for exports as well. Notification No. 11/2006-C.E. (N.T.) date 29-5-2006 amending Notification No. 2/2006-C.E. (N.T), dated 1-3-2006 prescribed valuation of certain goods on the basis of their retail sales price (MRP/RSP). Entry at Sl. No. 97 of the table in the said notification provides that 'parts, components and assemblies of automobiles' falling under 'any heading' attract provisions of sub-section (2) of Section 4A of the Central Excise Act, 1944 implying that the same are to be assessed on the basis of their RSP but not on the basis of their transaction value. The contention of the department is that butyl rubber tubes manufactured by the appellants fall under the category of ....
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....ated as parts of automobiles and are therefore covered under this notification. The department referred a case law M/s. Perfect Electric Concern Pvt. Ltd v. CCE, Patna [1997 (93) E.L.T. 622 (Tri.)] wherein the Hon'ble Bench mentioned a passing remark stating that the automobile tubes though not classifiable under chapter 87 are nevertheless parts of automobiles. It is pertinent to mention that this case is not with regards to discussion on classification or valuation of inner tubes. Nothing has been brought on record to show that the goods cleared by the appellant are for automobiles only. It is also not discussed how this goods do not fall under Chapter 87 or whether they are parts or accessories or component etc. The department contended that as the inner tubes are used in automobiles they are to be called as parts of automobiles. (b) It is a sealed legal position that mere end use is not determinative factor for classification of goods. In the case of CCE, Delhi v. Carrier Aircon Ltd. [2006 (199) E.L.T. 577 (S.C.)], the Hon'ble SC held that "end use to which the product is put to by itself cannot be determinative of the classification of the product. S....
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.... adjudicating authority. Appeal No. E/715/2009 (f) The Order-In-Original was passed without issue of notice and without being heard. When the same was appealed, the Commissioner though notice should have been issued in this case, as there are no merits in the case of appellants, the same is dismissed. Interpretation of the Notification Heading is wrong (g) The issue stated with the mentioning of term 'any heading' in Column No. 2 against Sl. No. 97 covering 'parts, components and assemblies of automobiles'. The column heading is mentioned as "Chapter or heading or sub-heading of the first schedule to the Tariff'. The notice was issued by the officers on the ground that as under this column 'any heading' is mentioned it implies that parts of automobiles falling under any heading of any chapter are covered under this notification. The appellant's contention is that the expression 'any heading' implies 'any heading of Chapter 87' as Chapter 87 only covers parts of automobiles. Further if the legislative intention is that any heading of any chapter is covered against entry No. 97, the expression 'any chapter' would have ....
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....cific sub-headings for some of the parts and accessories of vehicles and there is a residuary item 'others' where under all other parts and accessories will fall. Therefore it is incorrect to say that the parts and accessories can fall under any chapter of the Tariff and this is against the principle of Harmonized System of Nomenclature. Inconsistencies in Board Circular (m) CBEC Circular F. No. 167/38/2008-CX-4, dated 16-12-2008 has been issued giving instructions to follow uniform practice of assessment of parts of automobiles. This circular is against the settled legal position and against the stand taken by the Board itself. It has many contradictions in itself. (n) This Circular did not discuss about assessment of accessories of automobiles. The Circular also gives definition of the term 'automobile'. The word 'automobile' has not been defined in the Central Excise Act. The definition of automobile has been taken under Entry No. 7(5) of the First Schedule to the Industrial (Development & Regulation) Act, 1951. This has also been clarified by the Board in the cited Circular. The term 'automobile' does not cover tractors, tillers, harvester....
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...."parts or accessories" as per Note 2 of Chapter XVII. (r) Note 3 of the Section stipulates that references in Chapters 86 to 88 to "parts or accessories" do not apply to parts or accessories which are not suitable for use solely or principally with the articles of these chapters. Inner tubes are at best accessories of motor vehicles (s) "The term 'Accessory' has been defined in McGraw Hill Dictionary of Scientific and Technical Terms as follows : "Accessory (Mech Eng): A part, sub-assembly, or assembly that contributes to the effectiveness of a piece of equipment without changing its basic function; may be used for testing, adjusting, calibrating, recording or other purposes." A 'part' has been defined as follows : "Part (Eng): An element of a sub-assembly, not normally useful by itself and not amenable to further disassembly for maintenance purposes." (t) The inner tubes are not used on motor vehicles as they are as an independent part. It cannot be used so. It is attached to the tyre for effecting running of the tyre with the air filled in the tube. Therefore, it is only an adjunct ....
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....nvolved in this case is squarely covered by the entry in the Notification very clearly reads as 'parts, components and assemblies of automobiles'. It is his submission that the inner tyre tubes manufactured by the appellants are automobiles. These tubes are carefully assessed under the provisions of Section 4A of the Central Excise Act, 1944. He would submit that the Board's Circular dated 16-12-2008 has clearly clarified the situation and hence the demand of the duty as confirmed by the lower authorities is correct. As regards the appeal filed the Department, it is his submission that the Revenue has preferred the appeal for non-imposition of the penalty on the appellant despite there being a finding that the appellant has not discharged the duty liability as per the notification. He would submit that the appellant should be penalized for such an act. 7. We have considered the submissions made at length by both sides and perused the records. The issue involved in this case is regarding the applicability of provisions of Section 4A of the Central Excise Act, 1944 to the products manufactured and cleared by the appellant. The provisions of Section 4A are made applicable to t....