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TMI Blog2014 (2) TMI 632X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to any goods in, the Section or Chapter notes of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as amounting to manufacture; or (iii) which, in relation to any goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer, and the word "manufacturer" shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account." 3. Vide Section 66 of the Finance Act, 2006 the Third Schedule to the Central Excise Act, 1944 was amended so as to include "Parts, components and assemblies of automobiles" falling under any heading of the Schedule to the Central Excise Tariff Act, 1975. 4. Section 4A of the Central Excise Act, 1944 empowers the Central Government to specify any goods, in relation to which it is required, under the provisions of Standar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be added, namely:- (1) (2) (3) (4) "97. Any heading Parts, components and assemblies of automobiles 33.5% 98. 3808 30 40 Plant-growth regulator 30% 99. 9603 21 00 Toothbrush 28.5%". 2. This notification shall come into force on the 1st day of June, 2006. [Notification No. 11/2006-C.E. (N.T.) dated 29.05.2006] 6. On 24 th December, 2008, above Notification was replaced by Notification No. 49/2008-C.E. (N.T.). However, there was no change in the description of entry with which we are concerned except that abatement percentage was reduced from 33.5% to 30%, and was listed as entry no. 108. The Notification No. 49/2008-C.E. (N.T.) was amended vide Notification No. 9/2010-C.E. (N.T.) dated 27.02.2010 and the said entry was replaced as:- S.No. Chapter Heading, sub-heading or tariff item Description of goods (1) (2) (3) "108. Any Chapter Parts, components and assemblies of vehicles (including chassis fitted with engines) falling under Chapter 87 excluding vehicles falling under headings 8712, 8713, 8715 and 8716 The said Notification was again amended vide Notification No. 19/2010- C.E. (N.T.) dated 29.04.2010 and a new e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the description "Parts, components and assemblies of automobiles" as appearing in Third Schedule or above mentioned Notification. The term 'Automobile' is not defined under the Central Excise Act, 1944 or the Central Excise Act. There is no dispute that goods are "Parts, components and assemblies of Loaders, Backhoe Loaders, Road Rollers." It is also a fact that numbers of such parts may be useable in other vehicles. However, since appellants assigns their own code number/ name to such parts, according to them all Parts are meant for Loaders, Backhoe Loaders, Road Rollers. 11. Two show-cause notices were issued to the appellant dated 22.12.2009 and 23.08.2010 demanding duty of Rs.9,03,39,053/- and Rs.10,09,33,274/- for the period June, 2006 to July, 2009 and August, 2009 to May, 2010 respectively. The notices inter alia stated that Loaders, Backhoe Loaders, Road Rollers, - (i) required registration with Road Transport authorities under Rule 2 (Ca) of the Central Motor Vehicles Rules, 1989 as "construction equipment vehicle." Further "construction equipment vehicle" is defined as:- "construction equipment vehicle" meant rubber t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t types of attachments are fitted with the chassis e.g. buckets to carry loads, road sweeper /sweeper collector, grabs & grapples, backhoe, loader, muck fork & grab, patch planer, quickhitch, trencher, shovel, earthdrill, hammer, kergmaster stump grinder, concrete skip, snow blade etc. Such type of attachments appear to indicate that these goods are motor vehicles which have the capabilities to perform versatile and multiple functions on road as well as off the road. (vi) Manufacturing process of Hydraulic Loader is as under:- (a) Stage-1 covers following activities like from axle oil filling, drop front axle on front chassis trolley, GA front axle, grease hose fitment from rear axle to rear chassis, engine dropping & fitment, hose fitment, transmission hose one side fitment, rear propeller shaft transmission side fitment; (b) Stage-II covers the activities like engine main harness fitment, front axle fitment with front chassis, centre pivoting fitment, front propeller shaft fitment, PVB & pump hoses fitment, intermediate shaft fitment, steps sub-assembly & fitment to the side of rear chassis' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls out that the said vehicles are meant for movement and transport of the material form one place to another place either on the public road, private road or in a working site. Further, the types of attachments like bucket, lifter etc. which are fitted to the said motor vehicles enable them to dump the materials at the desired place. Similarly the Road Rollers also are capable of moving on road and same are vehicles powered by internal combustion engine to drive by burning fuel. Therefore, the Loaders and Backhoe Loaders appear to fall under the category of motor vehicle which transport and dump the materials. Further, Road Rollers are powered by the IC engine and are capable of moving on road. As such, they also appear to fall under the category of motor vehicle. 12. Revenue also relied upon the following case laws to support that goods in question are Parts, components and assemblies of automobile. (i) M/s Central Coal Fields Ltd. Vs. State of Orissa & Ors. -1992 AIR SC 1366 (ii) Apex Court's judgement in the case of Bose Abraham Vs. state of Kerala & Anr. Dated 01.02.2001. (iii) Ashok Leyland Ltd. Vs. UOI - 1991 (62) ELT 32 (Mad.) &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8, dated 14.07.1987 Government of India Ministry of Finance (Department of Revenue) New Delhi Subject: Cess on automobiles - Clarification Regarding. A doubt has arisen whether Earthmoving machinery is leviable to cess under the Automobiles Cess Rules, 1984. 2. The matter has been examined in consultation with the Ministry of Law which has opined that since Earthmoving machinery including dumpers fall under Item 11 of the 1st Schedule to the I (D & R) Act, 1951 and not under Heading 7(5) of the said schedule, no cess would be chargeable on the same under the Automobile Cess Rules, 1984. The opinion of the Law Ministry has been accepted by the Board." Ld. Special Counsel also took us through the definition of Automobile under the Automobile Cess Rules, 1984 which defines as :- "Automobile' means motor cars, buses, trucks, jeep type vehicles, vans scooters, motorcycles, mopeds, and the like" Ld. Special Counsel further stated that Automobile Cess is collected form vehicle used in transportation sectoralone. 15.2 Ld. Special Counsel also took us through the Board's Circular No. 22/90-CX.4 dated 11.07.1990 which reads as:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his very circular was matter for decision before this Tribunal in the case of Krishna Fabricators P. Ltd. (supra) and after detailed discussion and based upon various judgements of the hon'ble Supreme Court and Madras High Court, this tribunal came to the conclusion that Automobiles includes 'tractors' and "earth moving equipments". Thus Tribunal took a view contrary to the said Circular. Revenue has not challenged the said judgement and therefore the Circular dated 11.07.1990 is no more valid and this does not represent the correct legal position. Any reliance on the said circular would be contrary to judicial verdict. 15.4 Ld. Special Counsel thereafter submitted that Board's Circular No. 167/38/2008-CX.4 dated 16.12.2008 is as under:- "Automobile parts, components and assemblies- Scope, for MRP based valuation F.No. 167/38/2008-CX4,dated 16-12-2008 Government of India Ministry of Finance (Department of Revenue) Central Board of Excise & Customs, New Delhi Subject: MRP based assessment-Clarification regarding the scope of entry No.97 of the Notification No. 2/2006-CE(N.T.) inserted vide the amending Notification No.11/06-CE(N.T.)(present entry no 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ' falling in any heading in the Tariff are covered. Therefore, it is logical that all 'parts, components and assemblies,' irrespective of their classification shall be covered. It is also important to note that there is no specific entry for 'components' or 'assemblies' of automobiles in the Tariff, therefore, this also supports the view that all goods which are commonly known and sold in the trade as 'parts, components and assemblies ' are covered by said entry, irrespective of their clarification in the Tariff. Hence, the term 'parts, components and assemblies' of automobiles includes items like batteries, brake assembly, tyres, tubes and flaps, IC engines, ball bearing, etc. 4. The contents of this clarification may be brought to the notice of trade and industry." 15.5 Ld. Special Counsel stated that Board in this Circular has reiterated circular dated 11.07.1990 which has already been negated by this Tribunal based upon detailed discussion and various case Laws of Hon'ble Supreme Court and therefore needs to be ignored. Ld. Special Counsel further submitted that is settled law that interpretation given by Supreme Court/High Court/Tribunal has to pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per manufacturing process, first a vehicle comes into existence and on that other construction equipment are fitted. In case of tractor various agriculture implants are fixed as per requirement and used infarms but are undoubtedly vehicles. 16.1 Ld. Senior Advocate for the respondents cited definition of Automobile from various dictionaries such as Chamber Dictionary, American Heritage Dictionary, Cambridge International Dictionary of English, The New Encyclopaedia Dictionary, Dictionary of Automobile Engineering, Encyclopaedia of Invention and Technology, and other dictionaries. The Chamber Dictionary explains automobile as self-moving, a motor car. The American Heritage Dictionary explains automobile as a self-propelled passenger vehicle that usually has four wheels and an internal combustion engine, used for land transport. The new Encyclopaedia Britannica explains automobile as a usually four-wheeled automotive vehicle designed primarily for passenger transportation and commonly propelled by internal-combustion engine using a volatile fuel. Dictionary of Automobile Engineering explains automobile - dated or formal work for motor car in British English, but still widely used i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ates that the items in question have all ingredients of motor vehicle. 17.3 We also note that the items in question are considered as Automobiles and requires to meet Air Pollution norms and under the Air (Prevention and Control of Pollution) Act, 1981. 17.4 We also note that Hon'ble Supreme Court in the case of Bose Abraham Vs. State of Kerala & Anr. (supra), while considering the exigibility of excavators and road rollers to tax under the Entry Tax Act, has observed: "The short question that arises for consideration in these appeals is whether motor vehicles as defined in Section 2(28) of the Motor Vehicles Act would include excavators and road rollers so as to attract the levy under Kerala Tax on Entry of Motor Vehicles into Local Areas Act [hereinafter referred to as the Act]....... We hold that the excavators and road rollers are motor vehicles for the purpose of the Motor vehicle Act and they are registered under that Act. The High Court has noticed the admission of the appellants that the excavators and road rollers are suitable for use on roads. However, the contention put forth now is that they are intended for use in the enclosed premises. Me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en pleaded by the appellants before the High Court as to how the Dumper/Rocker was a vehicle of a special type, adapted for use only in a factory or in any other premises. When Dumpers and Rockers were held registrable by this Court under the Act, it commended to this Court to hold that Dumpers and Rockers were definedly motor vehicles adapted for use upon roads, as otherwise they would have been held not so within the meaning of 'motor vehicle'. Rather the case of Bolani Ores (one of the appellants before us) then pointedly pleaded was that Dumpers were used for transporting ore from the mining faces to the crushing and screening plant or from head mine stock pile to near railway siding. Dumpers were thus shown to be vehicle engaged in the transport of goods. 9. It would be appropriate now to mention that some documentary material was sent to us by the appellants by means of an affidavit after we had reserved judgment. That material is suggestive of the fact that Dumpers in some States are granted permission to run on public roads at a speed not exceeding 10 kms. Per hour and on bridges and culverts at a speed not exceeding 8 kms. Per hour. From this it is suggested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial handling equipment. This specialized material handling equipment i.e. the tipping gear and the steel body, which forms the container for moving and handling the material, is mounted on the chassis. This mechanism is intended to move materials from one place to another and to dump them in a chosen site. Such a specialized material handling equipment is similar to earth moving machineries and, therefore this vehicle as a whole would come within the definition of 'motor Vehicle' and would attract the benefit of The Explanation of Tariff Item 34." 17.7 We also note that three member bench of this Tribunal in the case of Sociedade De Fomento And Others (supra) while considering question whether Dumpers, Loaders and Tractors are classifiable as conveyances under Item 75 of the Indian Tariff Act, 1934 or a mining machinery under item 72(18) ibid has held that Dumpers, Loaders and Tractors are conveyances and not a mining machinery. 17.8 Ld. Senior Advocate for the appellant has relied upon Hon'ble Supreme Court judgement in the case of Goodyear India Ltd. Vs. U.O.I reported in 1997 (92) ELT 14 (S.C.). We have gone through the said judgment. The issue before the Hon'ble Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... motorcycle, moped and the like. If one goes by dictionary meaning buses, tracks, vans, scooters, motorcycle, moped are not automobiles. The term automobile is defined in the Air (Prevention and Control Pollution) Act to mean any vehicle powered either by internal combustion engine or by any method of generating power to drive such vehicle by burning fuel. In our view this definition though indifferent Act with different purpose will be nearer to the normal understanding of the term as on day. It may be true that concept of automobile started with car, which was thereafter technologically advanced to buses, truck, scooters, motorcycle, moped and then various special purpose vehicles such fire tender, ambulance, as also agricultural tractors, construction equipment vehicle etc. The term automobile, therefore might have started with car to carry few person but as on day extends to whole range of motor vehicles. 18.3 In fact, almost similar issue arose before this tribunal in relation to seats of tractors and earthmoving machinery, to be considered as seats of automobile or not in the case of Krishna Fabricators P. Ltd.(supra). In the said case, this tribunal observed:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Even in the Automobile Cess Rules, 1984, relied upon by the Collector of Central Excise, Bangalore, a wider meaning has been given to the expression "automobiles"." 18.4 We find that in the impugned order, adjudicating authority has brushed aside the said case law on the grounds that it is in the context of exemption and not classification. We are unable to appreciate this reasoning. 18.5 We also note that "Parts, components and Assemblies of Automobiles" is further qualified by "falling under any heading of the tariff", both in the third Schedule to the Central Excise Act as also Notification No. 11/2006. Thus the expressions used are very very wide and does not restrict to few parts or assemblies but to all parts and falling under any heading of the whole schedule to Tariff. We also note that a large number of such parts, components and assemblies are interchangeable indifferent types of vehicles (though manufacture assign their part numbers). Thus keeping in view the way the two expression "parts, components and Assemblies of Automobiles" and "Any heading" is used, we consider that Parts, components, and assemblies of Loader, Backhoe Loader and Road Roller are covered by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A (which would have indicated the objects and purpose of amendments). It has been issued after almost three years. In any case, it is settled legal position, that Circular contrary to the judicial decision are not binding. A five member Bench of Hon'ble Supreme Court in the case of Collector of Central Excise, Vadodara Vs. Dhiren Chemical Industries reported in 2002 (139) ELT 3 (S.C.) observed:- "9 We need to make it clear that, regardless of the interpretation that we have placed on the said phrase, if there are circulars which have been issued by the Central Board of Excise and Customs which place a different interpretation upon the said phrase, that interpretation will be binding upon the Revenue." 18.8 Hon'ble Supreme Court further clarified in the case of Kalyani Packaging Industry Vs. Union of India reported in 2004 (168) ELT 145 (S.C.) as under:- "6. We have noticed that Para 9 of Dhiren Chemical's case is being misunderstood. It therefore becomes necessary to clarify Para 9 of Dhiren Chemical's case. One of us (Variava, J.) was a party to the Judgment of the Dhiren Chemical's case and knows what was the intention in incorporating Para 9. It must ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded by the Court at the highest level, the very basis and substratum of the circular disappears. The law laid down by this Court will ensure uniformity in the decisions at all levels. By an express constitutional provision, the law declared by the Supreme Court is made binding on all the Courts within the territory of India (vide Article 141). Proprio vigore the law is binding on all the Tribunals and authorities. Can it be said that even after the law is declared by the Supreme Court the adjudicating authority should still give effect to the Circular issued by the Board ignoring the legal position laid down by this Court? Even after the legal position is settled by the highest Court of the land, should the customs authority continue to give primacy to the circular of the Board? Should Section 151A be taken to such extremities? Was it enacted for such purpose? Does it not amount to transgression of constitutional mandate while adhering to a statutory mandate? Even after the reason and rationale underlying the circular disappears, is it obligatory to continue to follow the circular? These are the questions which puzzle me and these are the conclusions which follow if the observation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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