TaxTMI 
TaxTMI 
2024 (5) TMI 1048
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....t alleging that the appellant had manufactured chassis and captively consumed them in the manufacture of dumpers. The second issue was whether NCCD is exempted for captively consumed goods under the Notification No.67/1995 dated 16.03.1995. The Commissioner held that the chassis fitted with engines are classifiable under Chapter Heading 8706 0043 of the CETA and these emerge during the course of manufacture of dumpers by the appellant. He also held that the appellant is not eligible for the benefit of the exemption under the Notification No.67/1995 dated 16.03.1995 and therefore, the duty was confirmed along with interest. Assailing the above order, the appellant is in appeal before us. 2. The learned counsel submits that based on DGCEI investigation; a notice dated 25.4.2006 was issued to the Appellants alleging that "Chassis" classifiable under Chapter Sub-Heading 8706.49 emerges during the course of manufacture of dumpers which is liable to NCCD. The Learned Commissioner vide Order dated 31.1.2007 held that the chassis does not come into existence as a separate identifiable commodity and what comes out of the continuous process of manufacture is dumper; that NCCD is also not ....
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...., the front rear brake lines, orbitrol system which is the hydraulic part essential for coupling the steering assembly is also fixed. This would complete assembly Stage-II. At this stage also, the subassembly is incapable of being moved around. The other aggregates like center deck, emergency steering system, gang lubrication and exhaust system are installed on the frame along with four roll-out tyres. The emergency steering system is nothing but a high-capacity motor which will generate an increased power to enable the dumper to move out of the slush. This emergency motor is designed to get burnt after 45-seconds of use and it is meant as a purely emergency measure and has got nothing to do with the main steering system. This would complete assembly Stage III & IV. At this stage also, the assembly of parts would not be in a stage of mobility. In the final stage of manufacturing, the Appellants install the body on the Frame and fit the belly guards which protect the engine and transmission from damage. An important aspect of completion takes place when the bare cabin which was fixed earlier is furnished with the necessary fitments required to move the dumper. These important fitmen....
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....es. The HSN Explanatory Notes also state that the item that is classifiable under Chapter Heading 87.06 may have bonnets, windscreens, mudguards, running-boards and dashboards (whether or not equipped with instruments). Chassis also remain classified here whether or not fitted with tyres, carburettors or batteries or other electrical equipment. The relevant Note 3 to Chapter 87 of the CETA, Chapter Heading and HSN Explanatory Notes are reproduced herein under: Note -3 to Chapter 87 read as under: "3. Heading No. 87.06 shall include chassis, whether or not filled with a cab" Chapter Heading 87.06 read as under:- "Chassis fitted with engines, for the motor vehicles of heading Nos.87.01 to 87.05" HSN Explanatory Notes to Chapter 87.06 reads as under: "This heading covers the chassis-frames or the combined chassis-body frame work for the motor vehicles of headings 87.01 to 87.05 fitted with their engines and with their transmission and steering gear and axles (with or without wheels). That is to say, goods of this heading are motor vehicles without bodies. The chassis classified in this heading may, however, be filled with ....
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....ith transmission and steering column and steering wheel. This burden has to be discharged by the Revenue for each and every 'Chassis' that is captively consumed in the manufacture of dumpers. It is submitted that in the present case, there is no material evidence whatsoever led by the Revenue to demonstrate that the installation of the body take place only after installation of the steering column and steering wheel. On the contrary, the Ld. Commissioner has gone back on the statements recorded in 2006 by the DGCEI which has already been considered by the erstwhile Commissioner in the OIO No. 2/2007. There is absolutely no new evidence whatsoever including fresh statements which has been recorded to come to this conclusion. This being the case, the issue is settled by the findings in Order-in-Original No. 2/2007 which has further upheld by this Hon'ble Tribunal and has attained finality and thus, the impugned order is liable to be set aside. 2.4 The learned Counsel further places reliance on the affidavit of Shri. M.V. Rajashekar explaining the sequential operation undertaken at the factory, which clearly shows that the steering column and the steering wheel are fitted only afte....
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.... in India, who manufactures and offer for sale chassis for dumpers. This is because of the fact that unlike ordinary commercial trucks, buses, etc.,; the dumpers manufactured by the Appellant is manufactured for off-highway use. In view of the size of the dumpers due to the heavy loads to be carried, the design and manufacture of dumpers manufactured by the Appellants are entirely different from other commercial vehicles like trucks, buses, which require chassis to be manufactured by one manufacturer and the completion of the body to be undertaken by another manufacturer, according to the customer's need; wherein in this case, the dumpers are manufactured by the Appellants according to their specifications in varying capacities so as to offer a choice of models to the customer and consequently the manufacturing process is continuous and integrated which does not bring into existence chassis at any intermediary stage, which is marketable. It is submitted that the burden to prove the marketability is always on the department. It is further submitted that the reliance placed on Tender Notification issued by the Steel Authority of India clearly states that the dumper is being offered f....
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.... - 2008 (227) ELT 269. It is further submitted that relying on the aforesaid decision of Hon'ble Tribunal, Bangalore in the case BEML and Tata Trucks Ltd. Supra, the Hon'ble Tribunal, Chennai recently in the case of Komatsu India Pvt. Ltd. vs. CGST & CE, Chennai reported in 2023-VIL-1136-CESTAT-CHE-CE held that demand of NCCD is not sustainable as there is no intermediate, identifiable and marketable product viz., Dumper Chassis emerging in the process of manufacture of dumpers; and further held that NCCD is a duty of excise and the benefit of exemption Notification No.67/95 would be available for NCCD also. The relevant paragraph of the referred judgement is as below: "16.6. The reason in the impugned order to hold that an intermediate marketable product emerges is not based on the process/ stages of manufacture. The reason is that the appellant while making some exports had described the product as "chassis with cabin assembly" in the export documents. The exigibility to duty of a product cannot merely be based on how the assessee described the product in a document. In case of dispute, the department has to clearly state in the SHOW CAUSE NOTICE the nature, classificati....
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....as "Heading 8706 shall include chassis whether or not fitted with a cab". Thereby, there is a change in the position of law in the cases being decided now when compared to the case already decided by the CESTAT in favour of the appellant and the said amendment also nullifies the argument that dumper without dump body should be considered as semi-finished dumper. In view of the said change in the statutory provisions, the decision of the Commissioner to consider and decide the present notices afresh is legal and correct. 3.1 He further submits that the adjudicating authority at para 22 of the impugned order has very clearly distinguished the findings of the Commissioner in the earlier Order-in-Original dated 31.01.2007. Previously the Commissioner had come to the conclusion that Chassis does not come into existence by holding that 'drive away chassis' does not emerge at Stage 4 and that for chassis to be called so, it should be able to move, stop and also run on uneven surfaces. However, the statutory provisions do not lay down any such criteria for chassis fitted with engine classifiable under CTH 87060043. The HSN notes very clearly states that chassis with or without wheels ar....
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....ssis/frame. To substantiate his arguments relies on the decision of CESTAT in the case Tatra Trucks India Ltd: 2008 (227) ELT 269 [Tri.-Chennai] wherein the Tribunal observed that "It appears to us that the tipping cylinder along with the hydraulic pipelines present in the chassis, alone cannot bring about dumping of materials. The box like body is also essential for this purpose. Hence, it cannot be said that the product in question, which does not have the box-like movable body, has the essential character of a fully built dumper. Hence the subject goods can only be classified under 8706.49 as dumper chassis and not under 870430 as dumper." Therefore, by applying the above ratio to the present case, the dumper without its body, at the end of 4th Stage, is to be classified as dumper chassis and not semi-finished dumper {as was held in the earlier Order-in-Original}. In view of the above, the appellant's contention that the adjudicating authority had already held that drive away chassis does not emerge in their earlier case in Order-in-Original No.02/2007 dated 31.01.2007 is distinguishable since the said 'drive away chassis' is not specified/ recognised by the statutory provisions....
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.... while describing a structure for undertaking the said job by the contractors. The usage of the word 'chassis' in the said contracts only goes to prove that the appellants themselves as well as the contractors/market identify the said goods as 'Chassis'. Further, contending that it is not chassis, but frame does not help them since the HSN at chapter 8706 categorically states that "This heading the chassis-frames or the combined chassis-body framework (unibody or monocoque construction, for the motor vehicles headings of headings 8701 to 8705, -----" Thereby, usage of word frame will not make a chassis not to be a chassis. 3.4 With regard to marketability of the chassis, the Revenue argues that there is no doubt that the dumper chassis is very much marketable and it is well known in the trade and it is seen that dumper chassis have been sold by M/s. Tata Motors. Though in the instant case there is no sale as held by the Hon'ble Supreme Court in the following cases the actual selling of the very same goods (marketability) was not a criteria for determining excisablity and that capability of being marketed was sufficient to hold that the goods are excisable/dutiable. * De....
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....of cast on the department to prove the emergence of chassis classifiable under 87060043 has been discharged completely and lawfully. 3.6 The AR further submits that the appellants have referred to the decision of the Chennai, CESTAT dated 07.11.2023 in the case of Komatsu India Ltd (supra) and have stated that the "Hon'ble Tribunal held that there is no emergence of an intermediate product called chassis in the manufacture of dumpers." The said argument is misleading in as much as the Hon'ble Tribunal dealt in detail with regard to the levy of NCCD in the said decision and has found at para 16.6 that "The exigibility to duty of a product cannot merely be based on how the assessee described the product in a document. In case of dispute, the department has to clearly state in the show cause notice the nature, classification and dutiability of the product." and has concluded at para 16.19 that "We make it clear that we do not render any decision on the classification of the impugned goods and confine our finding as to whether the demand of NCCD is sustainable or not." The appellants have submitted that the chapter 8706 covers the chassis of trucks which are used on roads only, whic....
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....unal Decisions in the case of Paras Petro fills Ltd. - 2009 (237) ELT 367 [Tri.-Ahd.] and Superfine Syntex Pvt. Ltd. - 2009 (237) ELT 292 [Tri.-Ahd.], the same has been held per incuriam without any specific reasonings. In view of the above distinguishing factors, the said decision dated 07.11.2023 of the Hon'ble CESTAT, Chennai cannot be made applicable in this case. 3.8 On the other hand, on perusal of the decision of the Hon'ble Supreme court in the case of Unicorn Industries, it becomes very clear that the said decision does not limit itself to any specific notification, but it is a general principle pronounced by the Hon'ble Supreme Court in the said matter. Para 40, 41 & 42 of the said decision clearly state that the order contained therein is a principle, that needs to be adopted by all in similar matters. It has been held therein that "The reason employed in SRD Nutrients Private Limited that there was nil excise duty, as such, additional duty cannot be charged, is also equally unacceptable as additional duty can always be determined and merely exemption granted in respect of a particular excise duty, cannot come in the way of determination of yet another duty based ther....
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....nly in respect of excise duty then prevailing but also in respect of all future duties of excise which may be levied from time to time". 3.9 The Hon'ble Tribunal in the case of Superfine Syntex Pvt. Ltd. - 2009(237) ELT 292[Tri.-Ahmd.] and Paras Petrofils Ltd. - 2009(237) ELT 367[Tri.-Ahmd.] has categorically held that "In the absence of inclusion of NCCD under Notification 67/95 and in view of the similarity between Section 136 and Section 3(3) of both the enactments, we find that the decision of Commissioner (Appeals) has to be upheld." and held that exemption from payment of NCCD for captive consumption under Notification 67/95 is not admissible. All the above cited decisions are squarely applicable in this case. In view of the above decisions of the Tribunal involving the same issue of exemption of NCCD under Notification No.67/95-CE read with the judgements of the Hon'ble Supreme court in the case of Unicorn Industries and Modi Rubber Limited, it becomes abundantly clear that the appellants are not eligible for the exemption of NCCD on chassis that are captively consumed under Notification No.67/95-CE. He has also relied on the following decisions of the Tribunal. ....
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.... Section 136 of the Finance Act 2001 was eligible for exemption under Notification No.67/95-CE dated 16.03.1995 as amended. The Hon'ble High Court of Karnataka vide order dated 15.09.2011 held that the issue raised by the Department did not fall in its jurisdiction under Section 35G of the Central Excise Act, 1944 and the same falls within the jurisdiction of the Apex Court as per Section 35L of the CETA, 1944. The Hon'ble court dismissed the department appeal with the observation that the department had liberty to file appeal before the Hon'ble Supreme Court. Accordingly, the Department filed a Civil Appeal No.5836/2012 along with an application for condonation of delay before the Hon'ble Supreme Court of India. The Civil Appeal was dismissed vide order dated 29.07.2013 on the ground of delay but however, held that the question of law was kept open. 5.2 The learned counsel submits that the issue involved in the present appeal which has culminated from 13 show-cause notices relates to the same issue settled by the above decision of this Hon'ble Tribunal in the appellant's own case reported in CCE, Mysore versus BEML: 2010 (261) ELT 596 (Tri-BANG), wherein the Tribunal had upheld th....
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....ion for start, Rear dumper equipment, Assembly trials and quality trials, start and check, Cabin Furnish (Steering column assembly, steering wheel assembly, seat assembly, fan assembly & electrical, air systems, interlinking of controls to engine, transmission Hyd. Eng, suspension oil & gas charging, diesel filling activity is done. Then it goes for final test, where greasing, decols, intensive testing in two stages are done. Finally, after painting the dumper will be handed over to the shipping department. The noticee has strongly disputed the emergence of chassis at stage IV of assembly. The investigation has failed to establish that the steering column was installed at stage IV of the manufacturing process, to qualify the items to be a chassis as defined in terms of the explanation under HSN. It cannot be held that the subject item was a drive away chassis at stage IV of assembly. There is no contrary material to dispute the shop manuals, parts catalogue, charts and processing flow chart as well as the classification declaration filed by the notice. The investigation has failed to establish that there was a steering mechanism and a functional breaking capabilit....
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....age by stage to meet operational requirement as Dumper only. One goes to the market to buy a frame of Dumper of the above capacity, one cannot get it in the market because it is not a commercially known product in the Trade. Therefore, the frame of the Dumper of the above capacity is not having commercial identity known to the market for being bought and sold. The Dumper without body is a semi-finished Dumper having all essential characteristics of Dumper since per se the Dumper without body is not capable of being bought and sold in the market" In view of the above findings, and the explanation given in the HSN as detailed in Para 88, I hold that no separate excisable goods viz., "chassis" emerge in the process of manufacture of Dumpers by the noticee as alleged by the investigation." 8.2 It can be seen from the above reproduced findings, after the verification and considering the process of manufacture and flow chart, the Adjudicating Authority came to the conclusion that the items which come into existence at a particular stage, i.e. stage 4, cannot be called as Drive away Chassis. He also placed reliance on the clarification given by the Mysore Chamber of Comm....
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....ned senior counsel for the appellant. Civil Appeal is dismissed on the ground of delay. Question of law is kept open." 5.6 In the above order the issues are twofold: a) Whether Chassis fitted with engine falling under Chapter Heading 8706 0043 emerged during the course of manufacture of the Dumpers and was consumed captively in further manufacture of dumpers. b) NCCD which is specified under seventh schedule to the Finance act 2001 does not find mention in notification number 67/1995 CE dated 16.03.1995 and is not eligible for the exemption under the said notification. 5.7 The first issue is question of fact and the second issue is question of law. Question of fact as to whether chassis emerged as an intermediate product and was captively consumed in the manufacture of dumpers was decided by this Tribunal vide Final Order No.1466/2009 dated 26.10.2009 in favour of the appellant concluding that drive away Chassis did not come into existence at the intermediary stage. This order was appealed against which was not entertained by the Hon'ble High Court on the issue of jurisdiction and liberty was given to the revenue to file before the Supreme Court and the Supr....
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....ading 8701 to 8705 fitted with their engines and with their transmission and steering gear and axles (with or without wheels) that is to say goods of this heading or motor vehicles without bodies. The explanation emphasises the necessity of a steering mechanism for qualifying to be called chassis. The noticee has brought out very elaborately in their reply to the notice and written submissions that such steering mechanism is coming into existence only at the final stage at which stage the fully finished dumpers also come into existence. Their claim is backed with flow chart, technical opinions, affidavits, shop manual, part catalogue, photographs etc; No attempt has been made by the investigation to drive home the point that chassis as defined in HSN undisputedly emerges. In the absence of any technical expert opinion of any other independent evidence to controvert the deposition of the technical personnel of the notices the latter has to be given the weightage." 5.10 The arguments of the Revenue today are on two grounds. First, the question of law has been kept open and second, the amendment brought by introducing Note 3 to Chapter 87. We have already held that whether Chassis ....
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....e could not have been classified as chassis, as per the said Chapter Note. However, during the subsequent period, which is the period covered by the present show-cause notices, chassis whether or not fitted with the cabin is classifiable as chassis. Thereby, there is a change in position of law in the cases being decided now when it is compared to the case already decided by Hon'ble CESTAT in favour of the assessee and the said amendment also nullifies the argument that the dumper without dump body should be considered as a semi-finished dumper ." 5.13 The only question remains is whether Note 3 to Chapter 87 with effect from 07.03.2005 which replaces "Motor Chassis fitted with cabs fall under Heading 8702 to 8704, and not under Heading 8706" with "8706 shall include Chassis whether or not fitted with a cab" will destroy the entire findings of the Hon'ble Tribunal. First of all, the above observations are beyond the scope of the notice as the notice remains factually same and relies on the same documents that were relied upon previously. There is no whisper of Chapter Note 3 in any of these notices and no new facts have been brought out to show that in view of these changes, the....
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.... 87.06 - Chassis fitted with engines, for the motor vehicles of heading 87.01 to 87.05 This heading covers the chassis-frames or the combined chassis-body framework (unibody or monocoque construction), for the motor vehicles of heading 87.01 to 87.05, fitted with their engines and with their transmission and steering gear and axles (with or without wheels). That is to say, goods of this heading are motor vehicles without bodies. The chassis classified in this heading may, however, be fitted with bonnets (hoods), windscreens (windshields), mudguards, running-boards and dashboards (whether or not equipped with instruments). Chassis also remain classified here whether or not fitted with tyres, carburettors or batteries or other electrical equipment. However, if the article is a complete or substantially complete tractor or other vehicle it is not covered by this heading. (a) Chassis fitted with engines and cabs, whether or not the cab is complete (e.g., without seat) (headings 87.02 to 87.04) (see Note 3 to this Chapter). (b) Chassis not fitted with engines, whether or not equipped with various mechanical parts (heading 87.08). 5.14 In fact, at....