TaxTMI 
TaxTMI 
2015 (10) TMI 371
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....1/- on customization of vehicles (iiia) Rs. 1,71,131/denying SSI Exemption 25/2003 dated 10/12/2003 Proceedings of SCN dropped. 2. E/329/05 (Powai Unit) DGCEI/WZU/204/12(4) 13/2002-Pt. V dated 1/1/2003 for Rs. 11,66,802/-on removal of add on kits from Powai unit to Silvassa unit 26/2003 dated 10/12/2003 Demand dropped except Penalty of Rs. 5,000/- on Shri B.D. Bajaj 3. E/339/05 (Silvassa unit) DGCEI/WZU/204/12(4) 13/2002 Pt. II dated 1/1/2003 for (i) Rs. 16,48,780/- denying exemption Notn. No. 3/2001-CE dated 1/3/2001 on Buses/Tempo Traveller(demand and equal amount of penalty upheld by Hon'ble Bombay High Court) (ii) Rs. 7,65,888/- denying SSI exemption (iii) Rs. 4,93,276/- on shortage (iv) Rs. 1,01,644/- for non accountal in records (v) Rs. 21,917/- Clandestine removal (vi) Penalty of Rs. 5,000/- under Rule 173Q & Penalty of Rs. 5,000 on B.D. Bajaj. 27/2003 dated 10/12/2003 Confirmed duty of Rs. 16,48,780/- and equal amount of penalty. Penalty of Rs. 5,000/- under Rule 173Q. Penalty of Rs. 5,000/- on B.D. Bajaj. Dropped 2. The fact of the case is that M/s. Dilip Chabriya design Pvt. Ltd having three units i.e. Andheri, Powai and Silvasa. They are engaged ....
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....STAT should: (i) Hold that major/full customization activity carried out an existing motor vehicles by M/s. DCDPL., Andheri, amounts to manufacture of motor vehicles and consequently, Central Excise duty liability on such customized vehicles amounting to Rs. 86,62,940/- during the period from Dec, 1997 to March, 2002, be ordered to be recovered. (ii) Deny the exemption availed by M/s. DCDPL, Andheri under the provisions of Notifications No. 08/2001-CE dated 1/3/2001 in respect of clearances effected by it during the year 2001- 2002 and consequently, order recovery of Central Excise duty amounting to Rs. 1,71,131/- liable on such clearances. (iii) Impose penalty, as proposed under Show cause notice dated 1/1/2003 issued to M/s. DCDPL, Andheri, on all the notices and order recovery of interest on duty liable as above, under the relevant provisions of Central Excise Act, 1944 and the Rules made thereunder. (iv) Up-hold the proceedings initiated under the SCN's dated 19/5/1998 and 7/5/2003 issued to M/s. DCDPL, Andheri by the jurisdictional Central Excise Commissionerate, and order recovery of Central Excise duty of Rs. 5,91,487/- and Rs. 49,75,190/- demanded in the said SCN....
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....t to Rs. 21,917/- and consequently, order recovery of total Central Excise duty amounting to Rs. 6,16,837/- liable on aforesaid clearances. (iv) Deny the exemption availed by M/s. DCDPL, Silvassa under the provisions of Notifications No. 08/2001-CE dated 1/3/2001 in respect of clearances effected by it during the year 2001-2002 and consequently, order recovery of Central Excise duty amounting to Rs. 7,65,837/- liable on such clearances. (v) Impose penalty, as proposed under Show cause notice dated 1/1/2003 issued to M/s. DCDPL, Andheri, on all the notices and order recovery of interest on duty liable as above, under the relevant provisions of Central Excise Act, 1944 and the Rules made thereunder. (vi) Up-hold the proceedings initiated under the SCN's dated 1/1/2003 issued to M/s. DCDPL, Silvassa by all the notices and order recovery of interest on duty liable as above, under the relevant provisions of central Excise Act, 1944 and Rules made thereunder (vii) Impose penalty, as provided in Rule 173Q & 209A of the Central Excise Rules, 1944 and Rules 25 and 26 of Central Excise Rules, 2001, viz. a penalty not exceeding the duty on the excisable goods or Rupees ten thousand wh....
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....oval and duty was correctly proposed. He further submits that the Ld. Commissioner has dropped the demand on the ground that Silvassa unit was entitle for Modvat credit therefore even if the duty not paid on the clearances made by Powai unit, it amounts to revenue neutral which is not as per statute. The Powai unit is independently registered and whatever goods manufactured and cleared are liable for duty irrespective whether duty is available as Modvat credit to the Silvassa unit. He further submits that Ld. Commissioner observed that goods transferred from Powai unit to Silvassa units were accounted for by the later, the excise duty would have been discharged at the time of their further clearance of Silvassa unit therefore demand of duty on goods transferred from Powai unit would amount to double demand of duty and that the department should have worked out total clearance from Silvassa unit including those seized from Powai unit. In this regard he submits that Ld. Commissioner made a serious error in as much as no goods were seized at Powai unit on 30/12/2002 therefore the entire findings based on such wrong fact are incorrect. He further submits that during the physical stock ....
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....correct. As regard the penalty on Shri B. D. Bajaj of Rs. 5,000/- each in impugned Order Nos. 26/2003 and 27/2003 both dated 10/12/2003 on Shri B. D. Bajaj, he submits that the minimum penalty under rule 209A of Central Excise Rules, 1944 and Rule 26 of Central Excise Rules, 2001 is Rs. 10,000/- therefore the Commissioner had no discretion to impose any lower penalty than the minimum penalty of Rs. 10,000/- prescribed under the law. 4. On the other hand, Shri Rajeev Wagle, Ld. Counsel alongwith Ms. Anagha Gawade, Advocate appears for the respondent. He submits that as regard the customization of the cars the respondent is carrying out only restyling of interior body of the duty paid cars. They are not fabricating completely new body and mounting on chassis. The Revenue in their appeal has mainly emphasized on the Chapter Note 3 of Chapter 87 that since the respondent had customized the vehicle as per requirement of the customer, the activity falls under the said Chapter Note 3 and accordingly it amounts to manufacture and liable for duty. He submits that as per the Chapter Note 3 only if the whole body of motor vehicle is fabricated and mounted on chasis, then only it amounts to m....
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....ed after one year i.e. on 1/1/2003. As regard shortage of stock in Silvassa unit, he submits that the shortage in statutory register as against physical verification of stock were on account of fact that kits received from Powai unit were lying in factory and not accounted in statutory record and only stock of finished kits were entered in the statutory register. It is his submission that had all the loose kits would have counted there would not have been any shortages. He further submits that if the duty is demanded at Powai unit same duty again cannot be charged at Silvassa since the same goods were there as can be seen from Annexure C-I and Annexure B-I. As regard duty demand of Rs. 1,01,644/-, he submits that there is contradiction in Paras 30 and 31 of SCN dated 1/1/2003 and Annexure B-II inasmuch as Paras 30 and 31 of SCN alleged clearance value Rs. 1,59,005/- while the value mentioned in Annexure B-II is Rs. 6,35,272/-, This has been considered by the Ld. Commissioner on page 8 of OIO number 27/2003 therefore duty at the most can be demanded only on Rs. 1,59,005/- and not on Rs. 6,35,270/-. As regard duty demand Rs. 21,917/- he submits that this demand was raised on the alle....
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....e resultant motor vehicles in terms of said chapter note. As per the fact of the present case it is undisputed that in the activity of customization of the car, the respondent has only made partial changes in the completely built up vehicle therefore they have neither fabricated any body/equipment nor mounted the same on chassis. Therefore the activity of customization carried out by the respondent does not fall under the four corners of chapter note 3. Considering this undisputed position Ld. Commissioner has correctly held that customization of the Completely built up vehicle does not amount to manufacture even in terms of Chapter Note 3. We do agree with the findings of the Commissioner. As regard the judgments cited by the revenue, we find that in all those judgments the activities were of fabrication of complete body and mounting thereof on the chassis. Therefore the said judgments particularly Kamal Auto Industries (supra), and Satguru Auto Builders (supra) are not applicable in the present case. In view of this, we upheld the setting aside the demand in respect of customization of the motor vehicle. As regard the dropping of the demand on account of alleged removal of add on....