TMI Blog1976 (6) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... ssories as standard equipment, being a hydraulic lift, a three point linkage, power take off, lighting equipment, a set of tools and electric horn. The Government of India under powers confirmed under the Essential Commodities Act, 1955, promulgated an order known as the Tractors (Price Control) Order 1967. The said order defined a tractor to mean an agricultural machinery known by that name and fitted with the diesel engine of a capacity not exceeding 50 H.P.S. and defined the sale price `to mean the amount payable to a manufacturer as consideration for the sale of a tractor excluding tax. It empowered the Central Government to fix the sale price of tractors manufactured in India and provided that no manufacturer could sell a tractor for a sale price exceeding the sale price fixed by the Government of India and made a sale in contravention thereof criminal offence against the manufacturers. 3. In pursuance of the said order, the Central Government by notifications (Ex. A collectively to the petition) issued from time to time, fixed the price of tractors of different manufacture. The said notification while fixing the price in terms provided in column 5 thereof that the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. Explanations - The expression motor vehicles has the meaning assigned to it in Item No. 34 . Under the said Tariff Item 34(3a) excise duty applicable to tractors, including agricultural tractors, was 15% ad valorem. As a result of the subsequent notification tractors manufactured by the petitioners were to bear excise duty of 10% only. 7. By a notification dated 29th May, 1971 issued under sub-rule (1) of Rule 8 of the Central Excise Rules, 1944 the Central Government wholly exempted from excise duty all motor vehicles parts and accessories under the said Item 34A except those specified in the notification they were wholly exempted from excise duty. 8. According to the prevalent procedure, the petitioner had filed with the authorities from time to time for their approval a price list, showing the price of the said tractors, without including therein the value of either hour meters or wheel or front end weights and had effected clearance of the said tractors by paying Central Excise duty calculated on the basis of the price list supplied. 9. By a show cause notice dated 23-6-1972, issued by the Superintendent of Central Excise the petitioners were asked to show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellate Authority viz., the Collector of Central Excise on several grounds mentioned in paragraph 22 of the petition. The main ground of attacks is that (1) under the tariff Item 34 (3a) of the Central Excises Act, excise duty could be levied only on tractors and since neither the hour meters nor the wheel weights were essential components of tractors manufactured by the petitioners, orders passed for levying the duty on the petitioner s said tractors after taking the value of the said two parts into consideration was wrong, (2) that `a tractor generally known in the trade does not mean a tractor fitted with additional special components or accessories such as hour meters and/or wheel weights and therefore their value should not be taken into consideration while levying excise duty, (3) that under the provisions of section 4 of the said Act assessable value of any excisable article is the price for which the article is capable is capable of being sold and it was not permissible in law to disregard the provisions of the Tractors (Price Control) Order, 1967 and to determine the sale price of the petitioners tractors at a price higher than the price mentioned therein, (4) that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rately from the market by dealers and agriculturists. Further according to him, hour meter was an aid to an agriculturist who wished to find out the number of hours his tractor had worked in the field, and that, the tractor as understood in the trade did not include accessories such as wheel weights and hour meter. 15. Habibulla in his supporting affidavit has pointed out that he had contacted certain representatives in trade and persons amongst agriculcurists to find out according to them whether wheel weights and hour meter formed essential components of the tractors and accordingly he had filed affidavits of 3 persons (l) Sharma, (2) Virendra Mohan Roy, and (3) Dr. R.K. Srivastava Professor of Agricultural Engineering in Punjab Agricultural University. Sharma in his affidavit has stated that in his experience of 15 years of working with tractors, the tractors do not necessarily require wheel weights and hour meters, and that he had run the said tractors without wheel weights and hour meters and found the performance quite satisfactory, that he had also found that fitting of wheel weights and hour meters did not in any way improve the performance of International Tractor in no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cured or manufactured. Since the tractors manufactured by the petitioners were cleared from the licensed premises with hour meters and/or wheel weights attached to them, the value of hour meters and/or wheel weights were included for the purpose of determing the assessable value of the tractors. In paragraph 25 of the said affidavit they have admitted that the price fixed by the Government under the Tractors (Price Control) Order, 1967, was without taking into consideration certain accessories which were not normally supplied along with the tractors. According to them, however, if the tractors were fitted with additional accessories and there was an enhancement of value of account of such addition, it could not be contended that the value of such additional accessories should not be taken into account for the purpose of determining the assessable value under Sec. 4 of the Central Excises and Salt Act, 1944, as the tractors after additional accessories were fitted removed from the licensed premises. In paragraph 26 of the petition they have admitted, that if the petitioners were manufacturing wheel weights and/or hour meters and clearing them as such separately, no duty would have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said rival contentions may be considered in the background of certain admitted facts in this case. They are as under (1) Tractors manufactured by the petitioners fall within Item 34(3a) for the purposes of excise duty. (2) The price of the tractors of the type manufactured by the petitioners are fixed by the Central Government under several notifications issued from time to time in pursuance of the powers under clause 4 of the Tractors (Price Control) Order. (The said notifications are annexures I to Ex. A to the petition) (3) The sale price of the tractors fixed under the said notifications included the following accessories/attachment which were required to be supplied with every tractor viz - (a) Hyd-lift, (b) 3.pt. Linkage (c) Power take-off, (d) Lighting equipment, consisting of hd. light, tail light and plough light, (e) A set of tools, and (f) Elec. horn. (4). By a notification dated 29-5-1971 (Ex. C to the petition) the Central Government exempted from excise the duty motor vehicles parts and accessories falling under Item 34A, other than those specifically mentioned therein. Admittedly the hour meters and wheel weights (with which we are concerned not being amongst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fitted to a tractor nor would the people in the trade reject the same as a tractor without the said accessories or one of them being fitted to it. 22. The real test would be to find out at what point of time the petitioners could be said to have manufactured a tractor with all its essential parts, it would be at that point of time that it would be excisable to attract excise duty. In this case that could be even without any of the said accessories being fitted on it, for admittedly they are fitted to the tractor at the option of the purchaser subsequent to the tractor as such being manufactured by the petitioners. In that event, the excise duty could be ascertained only after assessing the value of the tractor as such excluding the price of the said two accessories, or to do otherwise, it would amount to levying excise duty not only on the tractor as such which is an excisable article, but on a tractor plus the said accessories. Further, it would also amount to indirectly levying excise duty on the said accessories which are exempted from duty which again would not be permissible. 23. This view is supported by the decision of the court, relied upon by the learned Counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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