2024 (9) TMI 1072 - AT - Central Excise

Classification of goods - Drilling Rigs suitable for Drilling Wells and Blast Holes (Mining) which are generally mounted on the truck chassis/crawler during the period from 01.03.1986 to 29.02.1988 - to be classified under tariff heading No. 8430 or under chapter heading No. 8705? - eligibility for exemption N/N. 242/86-CE dated 03.04.1986 - HELD THAT - There was no occasion for the appellant to claim the exemption Notification 242/86-CE dated 03.04.1986 for the reason that there was a dispute about classification as the appellant had claimed the classification under 84.30 as against the Revenue s claim under 87.05. This dispute has been settled by the Hon ble Supreme Court in the appellant s own case reported at COLLECTOR OF CENTRAL EXCISE BARODA VERSUS L. MP PRECISION ENG. CO. LTD. 2003 (12) TMI 57 - SUPREME COURT . Only after the said judgment of the Hon ble Supreme Court it has been settled that the goods manufactured by the appellant i.e. Drilling Rigs mounted on truck chassis/crawler is classified under chapter 8705. Once the classification is settled the Notification No. 242/86-CE which is applicable to the goods falling under Chapter 8705 became eligible to the appellant. In the case of M/S. FIBROTEX (PROCESSORS) VERSUS COMMISSIONER OF CENTRAL EXCISE MUMBAI-IV 2015 (11) TMI 1587 - CESTAT MUMBAI Tribunal has considered the similar issue wherein the facts was that initially the assessee had not claimed the benefit of notification but at a later stage the exemption was claimed and the same was extended to the assessee. Thus even though the assessee did not claimed the exemption notification which otherwise eligible to the assessee in the classification list the benefit of the same claimed at a later stage cannot be denied. Condition of the notification that the appropriate duty of excise has been paid on the chassis of such vehicles and equipments used in manufacture of such vehicles - HELD THAT - There is no case of the department that the chassis of vehicle on which the Drilling equipment was mounted and also on such equipment no duty paid. In this regard it is a settled law that all the goods available in the market are deemed to be duty paid. Therefore the inference of the Revenue that at this stage the fact that whether the chassis and equipments used in the manufacture of special purpose motor vehicle is duty paid or otherwise has no relevancy - it is settled that chassis and equipments used for manufacture of special purpose vehicles are considered as deemed duty paid. Therefore the condition of N/N. 242/86-CE stand complied for and the appellant is eligible for the said exemption. The impugned order is set aside - appeal allowed.

Summary

Issues Involved:
1. Classification dispute of Drilling Rigs.
2. Eligibility for exemption under Notification No. 242/86-CE.
3. Rejection of alternative exemption benefit by lower authorities.
4. Appellant's compliance with conditions of Notification No. 242/86-CE.
5. Time-barred nature of demands.

Detailed Analysis:

1. Classification Dispute of Drilling Rigs:
The appellant classified their final product, Drilling Rigs suitable for Drilling Wells and Blast Holes (Mining), under tariff heading No. 8430 as "other Moving Machinery for Earth Extractors." The department issued a show cause notice disputing this classification, seeking to classify the product under chapter heading No. 8705 as special purpose motor vehicle, attracting a higher duty rate. The matter escalated to the Supreme Court, which settled the classification under chapter heading No. 8705 against the appellant.

2. Eligibility for Exemption under Notification No. 242/86-CE:
Post the Supreme Court's decision, the appellant sought exemption under Notification No. 242/86-CE, which provides a nil rate of duty for special purpose motor vehicles if the appropriate duty of excise has been paid on the chassis and equipment used in their manufacture. The lower authorities rejected this claim, stating that the appellant had not claimed this classification during the relevant period and that the exemption could not be applied retrospectively.

3. Rejection of Alternative Exemption Benefit by Lower Authorities:
The lower authorities rejected the alternative exemption benefit on the grounds that:
- The appellant had never claimed classification under CETH 8705 during the relevant period.
- The exemption Notification No. 242/86-CE is conditional and requires verification by the assessing authority.
- The benefit of the exemption could not be extended retrospectively.

4. Appellant's Compliance with Conditions of Notification No. 242/86-CE:
The appellant argued that the only condition for the exemption was that the chassis should be duty paid, which was fulfilled as confirmed by the original manufacturer and dealer. They cited various judicial precedents to support their claim that alternative exemption benefits can be claimed even if not initially mentioned in the classification list. Relevant cases included:
- Gujarat State Fertilizers Co. Ltd.
- Fibrotex Processors
- Shriram Bearings Ltd.
- Kopran Chemicals Co. Ltd.

5. Time-barred Nature of Demands:
The appellant contended that the demands were time-barred, as previously held by the Hon'ble CEGAT, and there was no evidence of any malafide intent or fraud on their part. The Supreme Court's decision did not suggest any intention to evade duty, and no penalty was imposed on the appellant.

Tribunal's Findings:
The Tribunal found that the lower authorities denied the exemption Notification solely on the ground that the appellant had not claimed it in the classification list. It was noted that the classification dispute was settled by the Supreme Court, and once settled, the exemption Notification No. 242/86-CE became applicable to the appellant. The Tribunal referenced several judgments supporting the notion that exemption benefits can be claimed at a later stage if the conditions are met.

The Tribunal also found that there was no dispute regarding the duty-paid status of the chassis and equipment used, thereby fulfilling the condition of the Notification. It was concluded that the appellant was eligible for the exemption under Notification No. 242/86-CE.

Conclusion:
The Tribunal set aside the impugned order and allowed the appeal with consequential relief, affirming that the appellant was entitled to the exemption under Notification No. 242/86-CE.

(Pronounced in the open court on 13.09.2024)