TaxTMI 
TaxTMI 
2017 (10) TMI 554
X X X X Extracts X X X X
X X X X Extracts X X X X
....PS) and Mahindra Bullet Proof Bus (BPS) respectively. The dispute is in respect of bullet proofing process in respect of the M & M Scorpio, M & M Bolero Jeep and M & M Bus. The process of bullet proofing involves the removal of the body shell of the vehicle and reinforcing the same with bulletproof sheets, strengthening the platform by welding iron studs on the weak joints of the platform and replacement of coils and shock absorbers so as to enable the platform to bear the increased weight of the base vehicle after bullet proofing. The body shell is then reinstalled on the platform and the floor is covered with a ballistic carpet. The glass is also changed to thicker bullet proof glass. These vehicles are also sold to defence establishments, paramilitary forces, State Police and to individual in India and abroad. There is no change whatsoever to the external or internal appearance of these vehicles and their use to which the vehicles are used for. The Scorpio remains a Scorpio; the Bolero Jeep remains a Bolero Jeep and the Bus remains a Bus. All three vehicles are used for transportation of passengers both before and after bullet proofing. The bullet proofing is merely an additiona....
X X X X Extracts X X X X
X X X X Extracts X X X X
....acture as such process converted the base vehicle into a specialized vehicle having a distinct name, character and use. Therefore, the duty was demanded. Further, two show cause notices in respect of bullet proofing carried on the Scorpio and the Bus for the period January, 2013 to December, 2013 and January, 2014 to December, 2014 were issued. The show cause notices were adjudicated and confirmed the demand holding that the activity undertaken by the appellant amounts to manufacture. Consequently, they are liable to pay duty. Aggrieved from the said orders, the appellant is before us. 6. Learned Counsel for the appellant submits that the show cause notice dated 29.1.2013 is barred by limitation as the adjudicating authority ignored the fact that as far back as in 2003, the department after making the requisite inquiries alleged that the appellants predecessor-in-title (MDS) was, by bulleting proofing the M & M vehicles, manufacturing new product. Further, a mere perusal of the Order dated 17.06.2004, it is clear that the very same process of bullet proofing that has been set out by the department in the present show cause notice have been taken from the appellants letters dated....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s that the bullet proofing process only involves the removal of the body shell of the vehicle and reinforcing the same with bullet proofing sheets from the inside, strengthening the platform by welding iron studs on the weak joints of the platform and replacement of coils and shock absorbers so as to enable the platform to bear the increased weight of the base vehicle after bullet proofing. The body shell is then reinstalled on the platform and the floor is covered with a ballistic carpet. The glass is also changed to thicker bullet proof glass. These vehicles are sold to defence establishments, paramilitary forces, State Police and to individuals in India and abroad. The said activities does not amount to manufacture, to support this, he relied on the following decisions: (1) Union of India Vs. Delhi Cloth & General Mills Co. Limited -1977 (1) ELT J199 (SC) (2) Servo-Med Industries Pvt. Limited Vs. CCE-2015 (319) ELT 598 (SC) (3) Deputy Commissioner of Sales Tax Vs. Pio - Food Packers-1980 (6) ELT 343 (SC) (4) Crane Betel Nut Powder Works Vs. CCE-2007 (210) ELT 177 (SC) (5) VeeKalyan Industries Vs. CCE-1996 (83) ELT 262 (SC) (6....
X X X X Extracts X X X X
X X X X Extracts X X X X
....T 653 ((T) (c) CCE Vs. Roplas (India) Ltd.-1991 (52) ELT 240 (T) (d) CCE Vs. Roplas (India) Ltd.-1998 (98) ELT 441 (T) (e) CCE Vs. Concept Engineering (P) Ltd.-2001 (134) ELT (T) 136 (T) 13. He further submits that assuming that bullet proofing activity does not amount to manufacture. What should be the correct classification of the Bullet Proof Scorpio: i. Heading 8703 3299 or 8707 as proposed by the appellant or ii. Heading 8703 3392 as proposed in the show cause notice or iii. Heading 8703 3292 as held by the Commissioner. 14. It is his submission that the show cause notice proposed classification of the BP Scorpio under sub heading 8703 3392. This sub-heading is not applicable for two reasons: (i) the sub-heading is applicable to vehicles of a cylinder capacity exceeding 2500 cc, whereas the Scorpio has a cylinder capacity of only 2179 cc; and (ii) the said sub-heading covered "Specialized transport vehicles like ambulances, prison vans, and the like". The BP Scorpio is not a specialized vehicle where the exterior and the interiors are altered for a specialized use. An ambulance is fitted with life-sa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he classification would then be under heading 8707 and there is no allegation to that regard. 19. He further submits that the adjudicating has erred in recalculating the demand by working backwards from the cum-duty price. He also submitted that the penalty is not imposable on the appellant in the light of the following decisions: (a) CCE Vs. Pioneer Scientific Glass Works-2006 (197) ELT 308 (SC) (b) CCE, Belgaum Vs. S.R.V. Automobiles-2014 (299) ELT 301 (Kar.) (c) CCE, Mumbai Vs. Danmet Chemicals Pvt. Limited - 2007 (216) ELT 3 (SC) 20. He therefore submits that the impugned orders are to be set aside. 21. On the other hand, learned AR submits that the sole issue before the adjudicating authority is whether the bullet proofing of Scorpio Jeep and Bus amounts to manufacture or not, and whether the extended period of limitation is invokable or not. 22. The appellant is doing manufacturing activity on behalf of the principal manufacturer M/s. Mahindra& Mahindra who is the actual person receiving the orders from the ultimate user and also receiving the final price from the ultimate users. As per judicial pronouncements of the Hon'ble Apex Court, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ucted. This fact was also not disclosed during filing ER-1 returns, therefore the impugned orders are to be upheld. 25. Heard both sides and considered the submissions. 26. On careful consideration of the submissions made by both sides, the following issues emerge for consideration: (a) Whether the activity of bullet proofing amounts to manufacture or not (b) Whether the vehicle has been classified correctly by the adjudicating authority in the facts and circumstances of the case or not (c) Whether the issue of classification considered by the adjudicating authority is beyond the scope of the show cause notice or not: (d) Whether the extended period of limitation is invokable or not (e) Whether the penalty on the appellant are imposable or not 27. Whether the activities comes under manufacturing or not, we find that the said issue came up before this Tribunal in the case of Mahindra & Mahindra Limited (supra) wherein the this Tribunal held as under:- "4. The Revenue heavily relied upon the Hon'ble Supreme Courts decision in the case of Siddhartha Tubes Ltd. v. Commissioner of Central Excise, Indore - 2006 (193) E.L.T. 6....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Rule 174 of erstwhile Central Excise Rules, 1944 and Rule 9 of Central Excise Rules, 2002 required every manufacturer to be registered and C.B.E. & C. is empowered to specify conditions and limitations. The Board vide Notification No.35/2001-C.E. (N.T.), dated 26-6-2001 as amended has prescribed conditions. According to the notification, if a registered person has more than one premises, he shall obtain separate registration certificate for each premises. The fact that each premises should have a registration emerges from the provisions of Sec. 4 of the Act which requires determination of value at the place of removal. Naturally, place of removal has to be one place. What follows from the provisions relating to registration is that each factory or premises of a manufacturer is required to be registered except those who are covered by exemption. 6. In terms of the legal provisions discussed above, it is quite clear that goods have to be assessed at the place of removal and if the value cannot be determined under main provisions of Section 4(1)(a) of the Act, rules for valuation have to be resorted.' 7. A hypothetical example makes the position clear. Le....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng to manufacture of manufactured goods in a separate/other unit of the same group or by any independent job worker. The advise of the Ministry of Law has been accepted by the Board. 16. Now as per the above clarification, the duty cannot be charged on the value addition carried out outside the factory of clearances on account of certain processes not amounting to manufacture of manufactured goods by an independent job worker. I am inclined to agree with the appellants contention that the above clarification squarely applies in their case where the bare vehicles were cleared from their factory on payment of duty and the value addition on account of bullet proofing was carried out by the independent job worker viz. M/s. Metaltech Motor Bodies, in the premises of the job worker. (6). Almost an identical issue relating to the place of removal after the amendment came up before the two member Bench headed by the President of the Tribunal, in Castrol India Ltd. v. C.C.E, New Delhi - 2000 (118) E.L.T. 35 (Tribunal) = 2000 (41) RLT 652 (CEGAT). In that case blended lubricating oil was removed from the place of manufacture in bulk in tankers to the depots/packing....
X X X X Extracts X X X X
X X X X Extracts X X X X
....de, strengthening the platform by welding iron studs on the weak joints of the platform and replacement of coils and shock absorbers so as to enable the platform to bear the increased weight of the base vehicle after bullet proofing. The body shell is then reinstalled on the platform and the floor is covered with a ballistic carpet. The glass is also changed to thicker bullet proof glass. We have seen that Mahindra Scorpio remains as Mahindra Scorpio and Mahindra Bus remains as Mahindra Bus before and after the bullet proofing and the use of the vehicles also remains same to carrying the passengers and the character of vehicle also do not change on accessories being added to these vehicles. It has been observed by this Tribunal in the case of CCE, Mumbai Vs. Dilip Chhabria Designs Pvt. Limited (supra) wherein the issue before this Tribunal was that, whether customisation of the motor vehicles as per requirement of customers amounts to manufacture and duty is required to pay. The said issue has been examined by this Tribunal and this Tribunal has held as under:- "6. In all the appeals the issues to be decided by us are as under : (a) Whether customisation of the mo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hapter 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 v. CCE (supra), and CCE v. 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 kits and parts and shortage found in the physical stock verification in Powai and Silvassa unit, we find that there are serious conflicts between the allegation made in the show cause notices and Commissioners findings in the impugned orders. The ld. Counsel also made submissions that due to claim of SSI Exemption demand is not sustainable and also it is time bar. We therefore find that as regard demand of excise duty on all....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ew of our above discussion, we upheld the setting aside the demand in respect of customization of motor vehicle as held by the Ld. Commissioner in order in OIO No. 25/2003, dated 10-12-2003. However the matter relates to OIO No. 26/2003 and 27/2003 both dated 10-12-2003 (Except the demand of Rs. 16,48,780/- which has been finally decided by Hon'ble Bombay High Court vide order dated 12-3-2015) needs to be reconsidered by passing a fresh order by the adjudicating authority. Needless to say that principles of natural justice shall be followed in de novo adjudication, which is expected from the Adjudicating Authority to be completed preferably within three months from receipt of this order. The appeals are disposed of by way of remand." Further we find that, in the case of Servo-Med Industries Pvt. Limited (supra), the Hon'ble Apex Court has laid down a test to determine whether the activity amounts to manufacture or not, as under:- "27. The case law discussed above falls into four neat categories. (1) Where the goods remain exactly the same even after a particular process, there is obviously no manufacture involved. Processes which remove foreign matter....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r, dated 1-7-1986." In that circumstances, we hold that activity undertaken by the appellant does not amount to manufacture. 32. Further, we find that in the show cause notice the vehicles in question were proposed to be classified under Chapter 8703 3392 and the ld. Commissioner has classified the vehicles under Chapter heading 8703 3292. For better appreciation, we reproduce the Chapter tariff heading as under:- Tariff Item Description of goods 8702 MOTOR VEHICLES FOR THE TRANSPORT OF TEN OR MORE PERSONS, INCLUDING THE DRIVER 8703 MOTOR CARS AND OTHER MOTOR VEHICLES PRINCIPALLY DESIGNED FOR THE TRANSPORT OF PERSONS (OTHER THAN THOSE OF HEADING 8702), INCLUDING STATION WAGONS AND RACING CARS 8703 32 -- Of a cylinder capacity exceeding 1,500 cc but not exceeding 2,500 cc 8703 32 92 ---- Specialized transport vehicles such ambulances, prison vans and the like 8703 33 -- Of a cylinder capacity exceeding 2,500 cc 8703 33 92 ---- Specialised transport vehicles such as ambulances, prison vans and the like We find that Chapter heading 8703 33 proposed in the show cause notice....