TMI Blog1995 (11) TMI 242X X X X Extracts X X X X X X X X Extracts X X X X ..... see is said to be manufacturer of Motor Vehicles and Chassis for Motor Vehicles falling under Item No. 34 of the erstwhile Central Excise Tariff and Chapter 87 of CET Act, 1985. They were clearing Chassis to M/s. Sutlej Coach Builders, Jalandhar on payment of duty, under the cover of gate passes issued in the name of self/Body Builder. After fabrication of Body on Chassis, a complete motor vehicles has come into existence. These Motor Vehicles were sent to their various Depots of the assessee or directly to the customers on receipt of proper directions and after payment of Central Excise Duty and completion of other CE formalities in the name of the assessee. They raised invoices on the customers for the full value of the Body Built Motor Vehicles. Hence, they were called upon to make payment of duty short paid on these invoice values of the complete motor vehicles, as per their invoices raised on the customers. The Asstt. Collector held that prior to 1-3-1986, the respondents were required to pay the Central Excise duty on the full value of the motor vehicles at the rate of duty applicable at the time of clearance minus the duty already paid. He had further held that the period pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under excise documents, the ownership of the chassis remains with the assessee. He noted about the internal arrangement between the assessee and the independent body builder, that the chassis are first cleared to independent body builders and after the bodies are fabricated, the Motor Vehicles are either sent to their depots or given to the ultimate buyer on their instructions. He noticed the admission of the assessee about their issue of invoice of the sale of the complete Motor Vehicle. Therefore, he concluded that the contention of the assessee about their issue of invoice of the sale of the complete Motor Vehicle. Therefore, he concluded that the contention of the assessee that the independent body builder have their own identity does not really affect the merits of the case. He held that TELCO s decision (supra) is distinguishable. He also disregarded the decision of Makers Development Services (P) Ltd. v. CCE - 1988 (33) E.L.T. 126, relied by the noticee and that of the Hon ble Supreme Court ruling rendered in the case of Ujagar Prints v. Union of India - 1989 (39) E.L.T. 493, 1988 (38) E.L.T. 535. He also rejected the pleas that the confirmation of demand would ultimately m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fered duty incidence at two points i.e. at the stage of clearing chassis and that at the stage of body building and separately and cleared the buses without paying duty levied on complete buses. Hence, they were called upon to pay the excise duty on the complete manufactured 146 buses, cleared during the period April, 1987 to April, 1988 amounting to Rs. 41,46,336.50 under the proviso to Section 11A of the Central Excises Salt Act, 1944. 7. The appellants denied any suppression of facts in this matter and pointed out that the Classification List No. 17/87 was filed with a view to avail of the facility of Rule 56B of the Central Excise Rules. The jurisdictional Asstt. Commissioner refused permission under Rule 56B vide his letter dated 16-4-1987 and also by Dy. Collector (T) Central Excise, Meerut vide his letter dated 9-7-1987, persuant to their request made to the Collector. Therefore, they could not avail the facility under Rule 57B of the Central Excise Rules and as the CL.17/87 effective from 14-4-1987 became infructuous and, hence they could not show in the statutory records i.e. in RG-1, R.T. 12 Returns etc. about the clearances of the buses. They pointed out that the dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed infra. 9. E/45/91-B1 : In this appeal, the appellants have challenged the order dated 10-10-1990 passed by Collector of Central Excise, Indore confirming excise duty of Rs. 23,17,959.24 under Rule 9(2) of Central Excise Rules, 1944 read with Section 11A of Central Excises Salt Act, 1944 and has also imposed a penalty of Rs. 7 lakhs under Rules 9(2), 52A(5) and 173Q of Central Excise Rules, 1944. The appellants were issued with show cause notice dated 28-12-1989, alleging that they were clearing cowl and chassis by paying duty under subheading 8706.20 of Central Excise Tariff to the body builders for mounting the bus body under their brand name `Canter , under gate pass G. P. 1. The body builder after manufacturing the same, cleared the buses on payment of duty by paying fixed rate of duty under the notification. These buses were sent to the customers alongwith date of invoice, after necessary inspection. Hence it was alleged that appellants were the manufacturers of the public transport type passenger, motor vehicles (buses) and they were required to discharge duty under sub-heading 87.02, which they had failed to discharge the same. The appellants denied the allegation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 24-4-1986 and No. 41/92-C.E., dated 1-3-1992, without taking credit of duty paid on the chassis and by paying specific rate of Rs. 8400/- per Motor Vehicle. [Item (1) of S. No. 17 reads as (1) Public Transport Type Passenger Motor Vehicle]. He submitted that these `buses , though manufactured as per specifications are manufactured at the hands of the independent manufacturer, which the department does not dispute. The grievance of the department is that the extra invoice price added on these Motor Vehicles and sold to the customers, is being objected to. It was submitted that the Motor Vehicle which had come into existence, is a complete commodity and it was removed to the depots. They were only adding their Trader s profit and incidental charges, which cannot form the part of the manufacturing cost of the Motor Vehicle at the hands of the Body Builder. He submitted that the department would not have objected, had the body builder sent the same to the customer directly. The duty charged under Section 3 of the Central Excises Salt Act, 1944 is at the time of manufacture and not on the basis of the ownership of the goods in question. The ownership and invoice had nothing to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined with Tata s and they had also sold the goods at their invoice value, yet the High Court of Patna held that the Motor Vehicle had discharged the duty at the hands of the body builder and that no duty is again leviable and payable by the manufacture of the chassis. He submitted that the Hon ble Supreme Court in the case of Ujagar Prints etc. v. Union of India [1988 (38) E.L.T. 535 @ 554, 552 and in 1989 (39) E.L.T. 493] has clearly laid down that no duty can be again charged on the invoices issued by the Traders, as the job-workers had discharged the duty on the coming into existence of goods. He submitted that in an identical situation, the Tribunal held that holding ownership on the goods or its sale is not the criteria for charging duty under Section 3 of the Act but it is the coming into existence of goods by manufacture and its clearance, which is the point of charging duty [BPL Electronics Ltd. v. CCE 1994 (71) E.L.T. page 801 para 8]. 14. Ld. DR submitted that the clearance of bus by the body builder is not the criteria. The Motor Vehicle had come back to the appellants, who had sold to the customer on the basis of invoice value and hence, the duty was required to be di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upheld the charges of the suppression, despite bringing to his notice the entire correspondence, records and also about the previous proceedings the show-cause notice issued in 1990. He also pointed out to the fact that the ld. Collector had proceeded to go beyond the scope of the allegations in the show-cause notice to hold that the body builder have manufactured on behalf of the assessee, when in fact both the manufacturers are independent and that there is no nexus between them, besides the fact that the body builders, have been in existence since decades, while the appellants have come into independent existence only in 1987. He also pointed out to the non-grant of permission by the department to clear the chassis under Rule 56B. 16. Ld. DR. Shri Jha defending the action of the department, reiterated his earlier submission made in the case of M/s. Swaraj Mazda and Eicher Motors case. He submitted that H. Guru Instrument s case has been distinguished and it has not been followed in several judgments of the Tribunal. In this context, he relied on the ratio of Fusion Polymers v. Collector of Central Excise - 1991 (56) E.L.T. 665. 17. We have carefully considered the submissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for each known goods mentioned in the tariff, and emerging at the hands of the manufacturer. Therefore, the concept of Excise Duty is to levy duty at all time of emergence of goods and the collection is postponed till the clearance from the factory gate. The duty is collected on the clearance of goods at the factory gate, at the rate fixed by the tariff and on the valuation arrived at, as per Section 4 of the Act. Therefore, the ownership of the goods is not the criteria for levy of Excise Duty. The manufacturer may be a job worker, who has no ownership in the goods or a loan licence manufacturing the goods as an independent manufacturer on the inputs being supplied by the supplier of raw material (principal manufacturer) to manufacture the goods on the specifications and drawings supplied by them. The principal manufacturer will be liable to discharge the duty only when it is found that the so called job worker is a bogus name lender or a benami or a dummy manufacturer, without having any independent identity of its own. For this, the burden is heavy on the Revenue to discharge and to show that the Principal manufacturer has set up these facades and dummy units for evading payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hose customers, who have given their choice of Motor Vehicles for body building, the chassis have been sent to the independent body builders, who have the necessary expertise to manufacture a Motor Vehicle. The body builder has independently filed classification list, PL and got the same approved from the department and cleared the fully manufactured Motor Vehicle on payment of full duty. The job worker, body builder has merely collected his job charges from the appellants. The appellants have invoiced the customer from the department by adding their margin of profit. The department having recognised each of the item as independent goods and the manufacturer as independent manufacturer, therefore, the Revenue cannot raise the plea of valuation or a plea that the body builder has manufactured on behalf of the appellants. Therefore, mere fact of the appellants invoicing the full vehicle from their depot, does not lead to the inference that the motor vehicle has been manufactured by them or it was manufactured on their behalf. It is not the case of the Revenue, that further processes are being carried out by the appellants, which are incidental or ancillary to the completion of the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y builder is not the manufacturer and their payment of duty has no consequence and if they so desire they can seek refund of the duty paid. We are not impressed with this plea. This proposition has absolutely no basis, in the facts and circumstances of these cases. The levy of Excise duty is at the time of manufacture of goods and payable at the time of its removal at factory gate (see Rules 9 and 49 of Central Excise Rules, 1944). This plea of ld. DR is also not the basis of the case made out by the Revenue. The plea of ld. DR that H. Guru Instrument s case should be applied is also without substance and the Tribunal has rightly distinguished this ruling in the case of Fusion Polymers (supra). 19. Having said so, we notice that this issue is also no longer resintegra. The ld. Collectors have held that the ruling of Tata Engg. Locomotive Co. Ltd. Others. v. Union of India Others of Hon ble Patna High Court [1988 (35) E.L.T. 617] is not applicable to these cases. We do not agree with this attempt on their part to distinguish the ruling. The ruling is applicable on all fours. The findings rendered in paras 4 to 10 are reproduced herein below : 4. The only question which requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r which they neither supplied machinery nor manpower but they certainly controlled the fabrication by supervision (Supervising) the fabrication process so that it may be rejected even at the intermediate stage if it is not according to their customer s specification . 8. It will thus appear that respondent No. 2 recorded the following finding of fact: TELCO get the bodies manufactured on the chassis by independent body builders, the body builders are required to manufacture body according to the specifications given by TELCO, TELCO has full control over the quality of materials and supervise fabrication, it has a right to reject the material at any stage of fabrication if it is not according to the specification of the customer, i.e. the customer of TELCO, such fabrication is done outside TELCO s premises and for such fabrication TELCO neither supply machinery nor manpower. It will thus be noticed that the finding recorded by respondent No. 2 is that the only control TELCO exercises over the body builders is that it has right to supervise and control the fabrication process to satisfy itself about the quality of material used and to guarantee that it is manufactured according t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able value being post manufacture profit. There is great force in this submission and we respectfully follow the ratio of Hon ble Supreme Court as noted herein below: In respect of the civil miscellaneous petition for clarification of this Court s judgment dated 4th November, 1988, it is made clear that the assessable value of the processed fabric would be the value of the grey cloth in the hands of the processor plus the value of the job work done plus manufacturing profit and manufacturing expenses whatever these may be, which will either be included in the price at the factory gate or deemed to be the price at the factory gate for the processed fabric. The factory gate here means the `deemed factory gate as if the processed fabric was sold by the processor. In order to explain the position it is made clear by the following illustration: if the value of the grey cloth in the hands of the processor is Rs. 20/- and the value of the Job work done is Rs. 5/- and the manufacturing profit and expenses for the processing be Rs. 5/-, then in such a case the value would be Rs. 30, being the value of the grey cloth plus the value of the job work done plus manufacturing profits and expe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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