AI Drafter 
TaxTMI 
TaxTMI 
2024 (1) TMI 134
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....product becomes classifiable as "Special Purpose Vehicles" under chapter sub-heading No.87059000 and 87054000 respectively. 3. Notification No.12/2012-CE dated 17.03.2012 vide SI No. 283 exempts "Special Purpose Vehicles" [SPV] falling under chapter 8705 of the Central Excise Tariff, on the condition that the same is manufactured out of duty paid chassis and equipment. In the instant case, the appellant pays duty on the Concrete Pumps / Mixers, and mount the same on chassis supplied by their customers, which have also suffered duty. As the conditions in the said exemption notification are satisfied, the appellant clears SPVs without payment of duty by raising invoices showing 'nil' value for these clearances. However, the details of manufacture and clearance of these SPVs were not furnished / shown in the mandatory ER 1 returns filed by the Taxpayer. 4. Further it was noticed by Audit that the appellant was importing spares for the special purpose vehicles in bulk, packed in wooden cartons. These imported spares are bought by the appellant on payment of appropriate duty. The spares are received in wooden cartons in bulk as the unit packing is n....
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....nished. The appellant vide letter dated 17.6.2014 stated that they do not maintain MRP and they only indicate the list price to their sales personnel for making quotations and that they are not in a position to furnish MRP. 10. Statement of Shri K. Sethuraman, General Manager, Finance and Accounts of the appellant company was recorded. He stated interalia, that they normally remove concrete mixers in open trucks and only when customers want them to be mounted on the chassis supplied by them, they mount them on the duty paid chassis and issue invoices availing exemption (8705) under Notification 12/2012-CE. They import components for production as well as for spares. They maintain separate accounts for both. The trading location has separate premises and has a separate accounting system compared to manufacturing location. The re-labelling and packing of spares was done for the purpose of identification and transportation. They have list price and do not affix MRP on the spares sold by them. It was stated that they do not pay excise duty on the spares as these are meant for trading. The appellant does not avail any input credit....
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....No: 8474 31 10 of the Central Excise Tariff. 14.2. The concrete handling equipment manufactured by the Appellant are purchased by industrial customers such as construction companies and entities engaged in the infrastructure and construction sector. 14.3. The products impugned in the present appeal are concrete mixers, concrete pumps (Line/Stationary Pumps & Boom Pumps). These are used in the construction sector for taking and pumping liquid concrete at desired spots at construction sites. 14.4. The equipments are manufactured by the Appellant and removed as such after manufacture, by covering it with plastic sheets. The equipment is placed on a trailer platform tied with ropes and hauled outside the factory. 14.5. In rare instances (Less than 5%) where the buyer drives-in his chassis to the Appellant's premises, the concrete mixer alone is kept on the chassis with temporary 'U'-Bolt. In case of concrete pumps such as Line pumps and Boom pumps temporary U-Bolt is not required at all. It is to be noted that what is manufactured and cleared are only the equipment. 14.6. The Appellant purchases parts and components separately for manufacture of equipment....
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....nt additional findings in Impugned Order. Tabulated for each of the Appeal(s) as under: Appeal and Period Involved Finding in Impugned Order E/41384/2016 27.02.2010 to 31.12.2014 • Concrete pumps and concrete mixers have to be necessarily mounted on any vehicle for transportation and accordingly the spares are used in the vehicle they fall under the Third Schedule and are liable for payment of duty. [Para 23 & Para 25] • No finding on 'Unit Container' • Extended period invoked. E/41283/2017; 01.01.2015 to 30.11.2015 • Admits that the appellant is only packing quantities (one/two/a set in each pack) in each polythene bag according to specific requirements and then affixed label. [Para 21(iii)] • The spares cleared by the taxpayer are used in the special purpose vehicle and fall under the Third Schedule of the CEA, 1944 and are liable to duty. [Para 23(iv)] • Parts of stationary pump will not fall under parts, components and assemblies of automobiles under Sl. No. 100 of the Third Schedule of Central Act, 1944. [....
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....ncrete equipment and would not qualify as parts of the vehicle on which the equipment may or may not be mounted and the demand in the Impugned Order fails on this ground alone. A.7 The spare parts traded by the Appellant are not known as 'parts of vehicles' either in common parlance or in trade parlance. A.8 In this regard, Appellant places reliance on CBEC Circular No. 167/38/2008-CX 4, dated 16.12.2008 wherein the department clarified the scope of the phrase 'Parts, components and assemblies of automobiles' as was present under SI. No. 97 of Notification No. 2/2006-CE (NT). As per the Circular, only those parts which are commonly known and sold in the trade as parts of automobiles will be covered under the entry. A.9 Drawing an analogy, in the present case, the spare parts traded by the appellant are always referred to as parts of the equipment and are never known and sold in the trade as parts of automobiles. A.10 The Appellant also places reliance on the decision of the Larger Bench in M/s Action Construction Equipment Ltd (Spare Part Division) v. Commissioner, Central Excise & Customs, Delhi-IV 2023-VIL-514-CESTAT-MUM-CE, w....
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.... B. The appellant does not re-pack the spares in any pre-determined unit container or label the product and hence the provisions of Section 2(f)(iii) of CEA, 1944 are not attracted. B.1 The Appellant submits that the spare parts (i.e., goods) sold by the Appellant are not repacked or labelled in a 'unit container'. B.2 The Appellant submits that the spare parts which are kept in bins after procurement. The spare parts are packed after the same is sold to the customers, as per customer's requirement and put in plastic bags or containers for the purpose of transportation. B.3 In the present case, the package in which the goods are re-packed is not designed to hold pre-determined quantity of goods. The Appellant submits that the term 'designed to hold pre-determined quantity' means that the container must contain, exactly that much quantity of goods for which it is designed. In this regard reliance is placed on the following decisions, • Nestle (India) Ltd. V. Commr. of C. Ex., Chandigarh, 2003 (155) E.L.T. 107 (Tri. - Del.) • Commissioner Of C. Ex., Mumbai V. Shalimar Super Foods 2007 (210) E.L.T. 695 (Tri. -....
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....es Pvt. Ltd. v. Commissioner (2002) 139 ELT 366 (Tri-Mum)- SLP dismissed by Hon'ble SC - Commissioner v. Lupin Laboratories Pvt. Ltd. - 2004 (166) E.L.T A116 (S.C.)] • Adi Enterprises (2002) 144 ELT 379 (Tri-Mum) B.12 Hence, it is submitted that the Appellant is not repacking the spare parts/goods in unit containers and hence the sale of spare parts by the Appellant does not qualify as manufacture under Section 2(f)(iii) of CEA, 1944. B.13 Therefore, the finding in the impugned Order(s) that the appellant has performed the activities of packing and labelling and such activities amount to manufacture as per Section 2(f)(iii) is incorrect and the Impugned Order(s) are liable to be set aside. C. Without prejudice, the Department having accepted that the spare parts are traded cannot now allege that the activity of sale of spare parts is manufacture and not trading. C.1 The Appellant submits that the Appellant is liable to reverse proportional Cenvat credit in terms of Rule 6(3)(i) of CCR in terms of Order in Appeal No. 106/2014 dated 04.08.2014. C.2 The Appellant submits that the Appellant is liable to reverse propo....
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....submits that no penalty can be imposed as the Appellant is of the bona fide belief that the activity undertaken does not amount to manufacture and since it is an issue of interpretation, no penalty can be imposed. In this regard, reliance is placed on the decision in Hindustan Steel Ltd. v The State of Orissa reported AIR 1970 (SC) 253, wherein it was held that when there was no intention on the part of the Appellant to evade payment of duty the imposition of penalty cannot be justified. E.4 Hence, the Impugned order imposing interest and penalty is to be set aside. It is humbly prayed that the appeal be allowed. 17. The learned AR Shri. Rudra Pratap Singh appeared and argued for the department. The learned AR submitted that the argument of the appellant that they are clearing the concrete mixers, pumps as such and not fitted to chassis cannot be accepted. When fitted to chassis, these fall under the category of Special Purpose Vehicles (SPV). The appellant has admittedly cleared SPVs. The details of concrete pumps mounted on chassis and cleared by appellant for the period 27.2.2010 to 31.12.2014 is furnished in page 15 of the impugned order. ....
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....pellant. The case of the department is firstly, that these are spares of SPVs classifiable under Chapter 87 and these spares fall under Sl.100 of the Third Schedule to Central Excise Act, attracting the mischief of deemed manufacture as per Section 2 (f) (iii) of the definition of manufacture. Secondly, it is alleged that the concrete mixers and pumps cannot be sold as such and has to be fixed to chassis before being sold and therefore appellant is engaged in manufacture of SPVs. Thirdly, that the activity of repacking from bulk to small packets and labelling amounts to manufacture attracting central excise duty. 19.2 The appellant has countered the allegations in the Show Cause Notice by submitting that they engage in manufacture of concrete pumps and concrete mixtures and clear them as such. That only in limited cases, when customer supplies the chassis, they mount the concrete pumps / mixers on the chassis free of cost and clear them by availing the exemption as per notification no.12/2012 - Central Excise dated 17.03.2012. It is categorically asserted by the appellant that they do not manufacture any chassis. 19.3 The whole case o....
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.... mixers as it is and 10 numbers of concrete mixtures fitted to chassis. For the period from 1.4.2010 to 31.3.2011, the appellant has sold 2918 numbers of concrete mixers as it is, and 67 numbers of concrete mixers fitted to chassis. These details recorded in para 19 of the impugned order has been brushed aside by the adjudicating authority without recording any reasons. 19.8 The learned counsel for appellant has drawn our attention to invoices raised in regard to concrete mixers fitted to chassis as well as invoices raised when concrete mixers are sold as it is. The invoice no.81009872 dated 17.01.2014 is an invoice raised in the name of 'Piyush Infratech Pvt. Ltd'. The description of the goods is 'concrete mixer'. The appellant has paid excise duty on the value of the concrete mixer. This invoice establishes that appellant sells concrete mixer as it is. The invoice no.10403545 dated 31.3.2011 is an invoice raised to 'Man Force Trucks Ltd.' The description of the goods is 'Transit mixer on Trucks'. The quantity is mentioned as one and the amount collected by appellant is shown as 0.01 paise which would prove that appell....
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....1944. The Sl. No. 100 is reproduced as under: "A.3. Sl.No. 100 of the Third Schedule covers parts, components and assemblies of vehicles falling under Chapter 87. Sl. No. 100 reads as under: 100 Any Chapter Parts, components and assemblies of vehicles (including chassis fitted with engines) falling under Chapter 87 excluding vehicles falling under headings 8712, 8713, 8715 and 8716 20.1 On perusal of the Board Circular para 3.1 and 3.2 reads as under: "3.1 Another issue that has arisen is the scope of the term 'parts' as used in the aforementioned entry. Chapter 87 of the Central Excise Tant covers parts of different vehicles. Further, Section Note 2 of the Section XVI also defines the scope of parts of goods falling in said section. Doubts have arisen as to whether parts classified in Chapter 87 shall only be covered under the said entry or all parts irrespective of their classification should be covered 3.2 The issue has been examined. The said entry provides that parts, components and assemblies' falling in any heading in the Tant are covered. Therefore, it is logical that all parts, components and assemblies i....
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....r manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account;" 20.5 In the present case, even as per the allegation in the Show Cause Notice or the impugned order, the department does not allege that the appellant is repacking in 'unit containers'. The relevant para in SCN is as under: "5. As per Section 2 (f) (iii) of the Central Excise Act, 1944, manufacture includes "any process which in relation to the goods specified in the Third Schedule, involving packing or re-packing of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer." Further SI.No. 100 of the table annexed to the Third Schedule, which was inserted with effect from 27.02.2010, covers parts/components/ assemblies of vehicles falling under 87 (excluding vehicles TSHS 8712, 8713, 8715 and 8716). Hence, As per Section 2 (f) (iii) of the Central Excise Act, 1944, read with SI.No. 100 of the table annexed to the Third Schedule, it appears that the ....
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....treatment. Repacking therefore either did not confer on them or attribute any marketability except possibly to one particular customer. The process undertaken by the appellant therefore did not render them marketable. Further, the activities undertaken by the appellant also did not involve any treatment of the goods, or of an individual retail pack. It merely consists of transferring them from one kind of retail pack to another." 21.2 The Tribunal in the case of Lupin Laboratories Ltd. Vs. CC, and CE, Aurangabad 2002 (139) E.L.T. 366 (Tri. - Mum) has taken similar view wherein the Tribunal held that since each product was marketable on its own, putting them all together did not confer them any attribute of marketability that the goods did not possess earlier. The relevant para reads as under: "6. It is also relevant to note that these four or three tablets were initially packed, after their manufacture into this combination packing. It is not as if they were first packed into separate packing and thereafter drawn from this packing and put into the packing presently under consideration. If the Commissioner (Appeals)'s logic is to be adopted, it would mean that ever....
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.... figuring in the relevant tariff item are concerned, we may turn to the instructions issued by the Ministry, dated 3-4-1969. These instructions are reproduced below : "Meaning of Unit Containers. The expression 'unit container' used in Tariff Item 1B means a container in which prepared or preserved food is intended to be sold by the manufacturer. It may be a small container like tin, can, box, jar, bottle or bag in which the product is sold by retail, or it may be a large container like drum, barrel or cannister in which the product is packed for sale to other manufacturers or dealers. In short 'unit container' means a container, whether large or small, designed to hold a predetermined quantity or number which the manufacturer wishes to sell whether to a wholesale or retail dealer or to another manufacturer." ... ... .... 42. The respondents have argued that the concentrate sold in the carboys was not "put up in unit containers". The reasons given are briefly that - (a) they did not contain a predetermined quantity; (b) they were not labelled as required under the Fruit Products Order; and (c) the containers were not sold alongw....
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....n. He does not have to wait while the product is laboriously (and perhaps incorrectly) weighed out and packed. Nor does he have to worry whether this is done in a hygenic manner; nor yet whether the contents will get damaged by moisture, ants etc., if he keeps in on his own shelf for a few days or for a few weeks. The method of retail packing and marketing adopted in respect of the vast majority of consumer products (not only food products but also toilets preparations, medicines etc.) carries the immense advantages of immediate identification, easy choice, convenience of transport and preservation. 45. At the basis of this entire system of marketing and consumer satisfaction is the method of packing in "unit containers". In most cases (if not all) the container is not returnable; in many cases it is not durable, particularly if it is of cardboard or aluminium foil. For obvious reasons the container has to be just large enough to hold the predetermined quantity of the contents. To pack half a litre of fruit syrup in a bottle which can hold one litre would not only be wasteful but would also subject the contents unnecessary movement, perhaps with a loss of quality. Further,....
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....ng that the appellant has to reverse the credit availed on common input services used for manufacture and trading (exempted service). The said notice covers the period involved in these appeals also (1.4.2011 to 24.5.2011). Subsequent Show Cause Notices have also been issued alleging wrong availment of credit on trading. Thus, the department itself has accepted that the activity of sale of spares is trading and not manufacture. The relevant part of Show Cause Notice dated 16.3.2012 is as under: "M/s Schwing Stetter India Pvt. Ltd. Unit-1, F71, SIPCOT Industrial Park, Irungattukottai, Sriperumbudur, Chennai-602105, (hereinafter referred to as the taxpayer) are holders of Central Excise Registration Certificate No AACS5069DXM001 and are engaged in the manufacture of Concrete mixer, Pumps and Concrete plant falling under sub tariff item No. 84743110 and 84138190 respectively of the First Schedule to the Central Excise Tariff Act, 1985. They are also availing CENVAT credit on inputs, capital goods and input services under the CENVAT Credit Rules, 2004 2 As the Trading activity has become an exempted service from 1.04.2011 as per Explanation to ....