TMI Blog2004 (5) TMI 418X X X X Extracts X X X X X X X X Extracts X X X X ..... the Central Excise Rules, they have been, instead of reversing the credit, paying an amount equal to 8% of the price of the exempted Tractor; that the tractors are manufactured on the assembly line; that by progressive assembly, various components and sub-assemblies go on getting meshed up; that for instance, the gear box assembly gets meshed up with differential assembly and these assemblies get meshed up with hydraulic assembly and so on till identifiable and marketable tractors emerges; that apart from Tractor Division, they have a subsidiary company M/s. Escorts Construction Equipment Ltd. where material handling machines like cranes are manufactured; that one of the components namely transmission assembly required for manufacture of such material handling machine, is manufactured and supplied from the tractor division on payment of appropriate duty; that the transmission assembly required for manufacture of material handling machines is different from that of tractor and such assembly does not require other sub-assemblies like differential cover, PTO/System, operative lever and hydraulic assembly. 2.2 He mentioned that a show cause notice dated 31-1-2002 was issued for dema ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpeting manufacturers of EMR. Each is having a different plastic body to suit its design and requirement. If one goes to the market to purchase plastic body of EMR of the Respondents either for replacement or otherwise, one can not get it in the market because at present it is not a commercially known Product. He mentioned that this decision squarely applies to the present matters inasmuch as the transmission assembly coming into existence is unique to the tractors of the Appellants and is not a commercially known product. 4. The learned Counsel also contended that the entire exercise is Revenue neutral; that the duty payable on the transmission assembly is available as Modvat Credit since they are clearing the exempted tractors manufactured out of the impugned transmission assembly on payment of an amount of 8% of the sale price of the exempt tractor as provided under Rule 57CC(1) of the Central Excise Rules; that thus the levy and collection of duty on the impugned transmission assembly is Revenue neutral; that, therefore, the question of evasion of duty by them does not arise as has been held by the Larger Bench of the Tribunal in Jay Yushin Ltd. v. C.C.E., New Delhi, 2000 (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey do not, they can not blame the assessee. 5. Countering the arguments, Shri V. Valte, learned Senior Departmental Representative, submitted that the scrutiny of the classification declaration revealed that they had classified the transmission assembly under Heading No. 87.08 of the Schedule to the Central Excise Tariff Act and were paying duty only for transmission assemblies supplied to M/s. ECEL and had not claimed exemption from payment of duty in respect of transmission assemblies used within the factory in the manufacture of tractors; that they had also not shown the production and captive use of the impugned goods in the statutory records and returns; that Shri K.K. Kachroo, Manager Excise and Authorised signatory of the appellants, in his statement dated 2-11-2000 and 3-11-2000 had deposed that they were assembling transmission assembly from different parts and one transmission assembly is used in one tractor; that the process of manufacture of the impugned goods is same for tractor as well as material handling; that M/s. Escorts Ltd. (Farmtrac Division) also manufacture tractors and have imported transmission assembly from abroad; that this has been admitted by the Sanj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter or use. The Supreme Court, after referring to various judgments on the concept of the manufacture, has laid down a two fold test for deciding whether the process is that of manufacture in Union of India v. J.G. Glass, 1998 (97) E.L.T. 5 (S.C.) as follows, First, whether by the said process a different commercial commodity comes into existence or whether the identity of the original commodity ceases to exist; secondly, whether the commodity which was already in existence will serve no purpose but for the said purpose. We find that this two fold tests laid down by the Supreme Court is satisfied in respect of the transmission assembly coming into existence during the course of manufacture of tractors by the Appellants. After assembly of various parts and components a new and different article known as transmission assembly emerges having a distinctive name, character and use and but for the manipulation undertaken by the Appellants, the parts and components would not have served the purpose which a transmission assembly performs. The impugned product is also marketable as the learned Senior Departmental Representative has mentioned the fact of its being imported by the Appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... better than the description battery grade acid. The observation of the Tribunal, relied upon by the learned Advocate was in this context. 8. The learned Counsel has also submitted that the entire exercise is Revenue neutral as the duty payable on transmission assembly is available as Modvat credit since they were clearing the tractors after introduction of Rule 57 CC in September 1996 on payment of an amount equal to 8% of the sale price of the exempted tractor and before that date they had reversed the inputs credit. The Commissioner has not considered this plea by observing in the impugned order that the Modvat Scheme offers credit of duty paid on inputs, etc. when used in production of final dutiable goods only which is not the case here and the facility of availing credit in such case is barred as credit cannot be taken after six months of the date of issue of notice. We observe that once the impugned product is held to be leviable to Central Excise duty, the Appellants would be eligible to avail the Modvat credit of the duty paid on inputs which had been used in or in relation to the manufacture of these products and the credit which they had reversed shall be available ..... X X X X Extracts X X X X X X X X Extracts X X X X
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