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TMI Blog2006 (8) TMI 413X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; The assessee had manufactured and cleared "Drilling Rigs mounted on Motor Vehicle Chassis" clandestinely without accounting in the statutory records, without payment of appropriate Central Excise duty and without following the procedures prescribed under the erstwhile Central Excise Rules, 1944. (c) The assessee had not determined the proper Central Excise duty payable by them and did not discharge the same at the time of removal of excisable goods. (d) The assessee had undervalued the goods by splitting the value of Drilling Rigs mounted on Motor Vehicle chassis into two invoices by falsely indicating the items as 'Bought Out Items-II Sale'. (e) The assessee had collected amounts as Central Excise duty and had not deposited the same to the Government accounts in violation of Section 11D of Central Excise Act, 1944; and (f) The assessee had deliberately suppressed the factual information from the Department with intent to evade payment of appropriate Central Excise duty. The Adjudicating Authority, in his OIO No. 24/2004 dated 29-10-2004 held the following : (i)&nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The front side of the chassis is altered to accommodate the hydraulic leveling jacks; and (d) The number of leaf springs on the rear axle are enhanced and the chassis channels are also strengthened since the full load of the drilling rig is put on the chassis. (e) The power required for driving the hydraulic pumps which in turn operate the hydraulic drilling rig is drawn from the engine mounted on the chassis and necessary modification are carried out to achieve this objective. It was submitted that the above activities were recorded in the decision of the Tribunal in the appellants' own case as reported in 1994 (73) E.L.T. 53 (Tribunal). (iii) The goods mentioned under CH 84.25 to 84.30 are basically items that are function based and the emphasis is on the structure of the machinery designed to aid and assist a particular function. But, the goods in CH 87.05 are vehicles, which carry an additional facility and can be used for other purposes also. Therefore, the classification of a Drilling Rig on a Chassis under CH 84.30 or 87.05 would depend on the extent o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... L.M.P. Precision Engg. Co. Ltd., is not applicable to the present case. (v) Building of body on chassis does not amount to manufacture. The following case-laws are relied on :- (i) CCE v. Ram Body Builders - 1997 (94) E.L.T. 442(S.C.) (ii) G & P Engineering Co. v. CCE, Surat - 2001 (130) E.L.T. 197 (Tri.-Del.) (The Tribunal's decision in the G & P Engineering Co. case has been accepted by the Revenue.) (vi) The department commenced enquiries against the appellants on 27-8-1998 but, the Show Cause Notice demanding duty from July 1996 to March 1997 was issued on 3-10-2001. Thus, it is seen that the Show Cause Notice has been issued after a period of more than 3 years. The failure of the department to issue a Show Cause Notice within normal period cannot be overcome by invoking the longer period of limitation. Further, the appellants classified the impugned goods under CH 84.30 in terms of the law as settled by the following decisions during the period under dispute. (i) Sparr Equipments (P) Ltd. v. CCE, Bangalore - 1994 (73) E.L.T. 53 (Tribunal). P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se that the goods in question are to be considered as Special Purpose vehicles. (xi) In the course of personal hearing, the learned Advocate did not contest the demand of Rs. 1,30,000/- under Section 11D of the Central Excise Act, 1944. 5. The learned JDR reiterated the findings of the lower authorities and urged that the issue is covered by the Apex Court's decision. 6. We have gone through the records of the case carefully. The issues to be decided in this appeal are as follows :- (i) The correct classification of the impugned goods. (ii) The sustainability or otherwise of the demand of Rs. 11,81,168/- under proviso to sub-section (1) of Section 11A of CE Act, 1944. (iii) Confirmation of demand of Rs. 1,30,000/- under Section 11D. (iv) Imposition of penalty of Rs. 1,00,000/- under Section 11AC as decided by the Commissioner (Appeals). (v) Demand of interest. 6.1 The competing entries are as follows :- Appellants claim : CSH 8430.00 - Other moving, grading, levelling, scraping, excavating, tamping, compacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncorporating a transfer gear box or by fixing an extra gear box in the gear box to draw power and connect it to another power take off unit, the chassis gets integrated with the drilling rigs." From the activities undertaken, we find that the Drilling Rig is not simply mounted on the Chassis. The power required for driving the Hydraulic pumps, which in turn operate the drilling rig, is drawn from the engine mounted on the Chassis and lot of modification is necessary for this. The front side of the Chassis is altered to accommodate the hydraulic leveling jacks. The length of the chassis is also altered on the basis of the specification given by the customer. The number of leaf springs on the rear axle is increased and the chassis channels are also strengthened so that the full load of the drilling rig can be borne by the chassis. All these indicate that the extent of integration is total. In these circumstances, in view of the HSN Explanatory Notes under Chapter 84 and 87, the impugned item would be more appropriately classifiable under CH 84.30. Chapter 87 contains an exclusion clause which reads as follows :- "Similarly, this heading excludes self-propelled wheeled machines in w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld show that there is suppression of facts or wilful mis-declaration with an intend to evade duty. The Show Cause Notice for the period from July 1996 to March 1997 was issued on 3-10-2001. The appellants have shown that during the relevant period, there were many Tribunal decisions in their favour on the classification of the impugned goods. It has already been pointed out that in their own case, the Tribunal has decided the classification under CH 84.30. The apex Court's decision in the L.M.P. Precision case was pronounced only on 16-12-2003. In view of this, we cannot come to the conclusion that the assessee misrepresented the facts to evade Central Excise duty. Thus, there is force in the appellant's contention that the Show Cause Notice is time barred. As the facts were clear and during the relevant period, the decisions of Tribunal were in the appellants' favour, the allegation of suppression of facts or willful mis-statement with an intent to evade payment of duty cannot stand. Hence, the demand of duty of Rs. 11,81,168/- under the provisions of sub-section (1) of Section 11A of CE Act, 1944 is clearly time barred. 6.4 Since the demand of duty under Section 11A has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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