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2015 (12) TMI 224 - CESTAT MUMBAI

2015 (12) TMI 224 - CESTAT MUMBAI - TMI - Manufacture - scope of the term automobile - activity of packing/re-packing, labelling/re-labelling and fixing of MRP on automobile parts amounts to manufacture - Classification - Valuation of goods u/s 4 or 4A - MRP based valuation or transaction value - Confiscation of goods - Redemption fine - Held that:- Just because such automobiles have machinery aspect which helps them use in the construction and mining industry, will not take them away from the t .....

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ision taken by this Tribunal relating to the circulars. We also note that the purpose of judicial scrutiny in taxation matter is to reach to the truth of the matter and in reaching to the truth, incorrect interpretation taken by some authority cannot supersede the judicial decision on the issue. We also agree with the Commissioner (AR) that even the circular of 2008 was not binding circular and it would be seen from the circular that it is only suggestive and is not a conclusive or directive cir .....

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d position, we hold that even putting the tag on the unpacked parts will amount to manufacture and will be covered under Section 2(f)(iii).

For determining whether a particular process amounts to manufacture it is not relevant whether the inputs are locally produced or imported. What is important is the end product and whether the manufacturing process amounts to manufacture or not. In the present case, there is no dispute that the activity undertaken by the appellant amounts to manuf .....

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, even that was not done. Extended period of limitation as also imposition of penalty under Section 11AC is upheld.

Valuation - As per the said explanation to section 4, in the facts of the present case, the appellant would be entitled to cum-duty benefit. We accordingly extend the same and set aside the impugned order as far as the benefit of cum-duty is concerned.

Cenvat Credit - Keeping in view these facts and the fact that the matter was not examined by the Commissioner .....

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basic issues involved in the present case is whether certain activities undertaken by the appellant amounts to manufacture within Section 2(f)(iii) of the Central Excise Act, 1944 and whether for purpose of valuation, the goods viz. parts of certain earth moving/construction vehicle are covered under Section 4 or/and Section 4A of the Central Excise Act, 1944 as parts of automobile. 2. This Tribunal vide final order No. A/585-587/EB/C-II dated 23/07/2014 has disposed of all the three appeals fil .....

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nch and the hon'ble High Court vide order dated February 13, 2015 in Central Excise Appeal No. 32 of 2014 filed by the Commissioner of Central Excise, Nagpur II and Central Excise Appeal No. 3 of 2015 filed by M/s. Larsen & Toubro Ltd. passed the following order: Both these cross-appeals are filed by the Revenue as well as the Assessee being aggrieved by the order of the CESTAT dated 23.07.2014 The appeal before the CESTAT was filed by assessee challenging the order passed by the Commiss .....

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observed that the appellants have no case on merits. The Assessee is aggrieved with that part of the order wherein it is stated that the appellants have no case on merits whereas the Revenue is aggrieved with the findings of the learned CESTAT that the extended period of limitation was not invokable. We find that in the interest of justice both the appeals deserve to be allowed by remitting the matter back to the learned Members of the CESTAT for considering the issue afresh by considering the .....

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28/04/2015, at the request of the main appellant the matter was adjourned to 11/05/2015. The case was part-heard on 11/05/2015 and thereafter the matter was adjourned 2, 3 times, mostly at the request of the appellant as the Senior Counsel would not be available. Finally, the matter has been heard on 08/09/2015, 09/09/2015, 10/09/2015, 23/09/2015 and 24/09/2015. 4. After hearing both the sides at length, we find that there are number of factual variations in the present case compared to the case .....

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esent case are parts of scania trucks, dumpers, motor graders, wheel loaders, dozers and hydraulic excavators. It would thus be seen that the end vehicles are different, though these items are also used as earth moving vehicles in construction or mining industry. It is also to be noted that out of the earlier mentioned six items, two items, trucks and dumpers are classifiable under Chapter 87 while the remaining four are under Chapter 84. The second difference that we find in the case of JCB, al .....

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termined under Section 4. The third important difference in the present case is that while in the case of JCB Ltd. the demands were for the period prior to February/April 2010 and the appellants in that case were paying duty under Section 4A after February/April 2010, in the present case, demand is even for the period February/April 2010 April 2011, the appellants even after the removal of the word automobiles in February/April 2010 and specifying particular headings and Chapters both in the thi .....

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stay stage as also during investigation, learned counsel for the appellant has accepted duty liability of about ₹ 24 crores for the said period. 5. In brief, the appellants are dealing in parts, components and assemblies of certain earth moving vehicles, namely, scania trucks, dumpers, motor graders, wheel loaders, dozers and hydraulic excavators. These parts, components and assemblies are either imported by them or procured from a local associate of a foreign company, namely, Komatsu; and .....

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ents and assemblies being dealt with by them are not covered under Section 2(f) (iii) read with third schedule or Section 4A. The other contention of the appellant is that even if the goods dealt with by him are covered by parts, components and assemblies of automobiles, even in that situation, as far as unpacked goods, parts are concerned, the activity undertaken by them will not amount to manufacture and, therefore, there cannot be any duty liability in respect of unpacked goods. 6. Before we .....

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se was also part of the Division Bench which had decided the case of JCB India Ltd. Shri K.M. Mondal, Special Consultant had argued for Revenue in the case of JCB India Ltd. However, in the present appeals Shri Hitesh Shah, Commissioner (AR) is representing the Revenue. Shri Hitesh Shah has provided additional material in support of Revenues contention. 7. Since main issue starts with the scope of the term automobile various case laws and Boards circular are the ones which were discussed at grea .....

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ave not subjected all the parts of hydraulic excavators, dozer, wheel loaders, motor graders, dumpers and tippers to packing, re-packing, or affixed MRP. The earth moving machinery like hydraulic excavator, dozer, wheel loaders, and motor graders are not automobiles. Automobile only refer to car or trucks carrying goods. Hydraulic excavator and bulldozer are chain mounted and hence not a motor vehicle. Department is bound by circular dated 16/12/2008. Parts of goods of chapter 84 were never cove .....

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rs8 dumpers and scania tippers, not re-packed but affixed with the tag bearing details of parts and name of L & T. The respondent committed an error of law in denying the credit of duty paid on the parts allegedly packed, re-packed, labeled or re-labeled by the appellants. In respect of the demand covered by Section 4 valuation, the appellants are entitled to cum-duty. The demand for beyond the normal period of one year from the date of service of the show cause notice is barred under Sectio .....

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ew of retrospective amendment. Learned senior counsel submitted catena of judgments for each one of the above proposition. 9. The learned Commissioner (AR) on the other hand relied heavily on this Tribunals decision in the case of JCB India Ltd. (supra). In connection with the scope of the term automobile, learned AR submitted that the Automotive Industry Standard AIS 53, published in 2005, by the Automotive Research Association of India, Pune applies to road vehicles includes construction equip .....

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and manufactured with on or off or on and off highway capabilities. The learned AR further submitted that the same definition appears in the IS 14272 (2011): Automotive vehicles Types Terminology published by the Bureau of Indian Standards. The above Standards indicate that all self propelled vehicles, whatever may be their use, are considered as automotive vehicles or automobiles. Vehicles with steel drum wheels i.e. crawlers or track laying or chain mounted vehicles are also considered as aut .....

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9.1. Another submission made by the learned Commissioner (AR) is that the automotive aspect of an automobile vehicle and the machinery aspects are two different aspects. It was further submitted that different machinery aspect of an automotive vehicle makes the automotive vehicle suitable for different purposes, but that in any case, does not mean that the automotive aspect of the overall vehicles gets lost. The learned AR submitted that in the case of various earth moving equipment/vehicles, t .....

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r made the following submissions in this context: (i) IS/ISO 6165 (2006): Earth Moving Machinery-Basic Types-Identification and Terms and Definitions deals with the Machinery aspect. It explains earth moving machinery as self propelled or towed machine on wheels, crawlers or legs having equipment or attachment (working tool), or both, primarily designed to perform certain functions. (ii) IS 14272 (2011) and AIS 053 mandate that the Rs.self propelled vehicle, whether on steel drum wheels (crawler .....

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motive aspect makes the impugned goods automobiles. The functional machinery is mounted on the automobile. Hence, goods are automobiles. 9.2. The learned AR further submitted that the all the six items undoubtedly indicates that these are self propelled vehicles which works either on rubber or pneumatic wheels or steel drum wheels. Hydraulic excavators are available with rubber/pneumatic tyres or with steel drum wheels. A perusal of the literature of each of the items would indicate that they ha .....

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It is further submitted by the learned AR that this Tribunal in the case of Sociedade de Formento & Ors. vs. Commissioner of Customs 1987 (29) ELT 620 (T), considered crawler type vehicles and held them to be conveyances. It is his submission that, automobile need not be classified under Chapter 87 alone it can be classified under Chapter 84 also and the goods do not lose its identity as automobiles based upon the classifiable under Chapter 84 or 87 of the schedule to the Central Excise Tari .....

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2 (T), it is held that a loader which picks up garbage and dumps it on a waiting garbage transportation truck is a motor vehicle. In Commissioner of Central Excise. Baroda vs. LMP Precision Engineers Co. Ltd. 2004 (163) ELT 290 (SC) it has been held that water well drilling rigs on motor vehicle is a motor vehicle. 9.5. The learned AR further submitted that taking cognizance of such automobile which have earth moving equipments affixed to them or as a part of such automobiles, common classificat .....

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such automobiles as self propelled and other mobile machines under Chapter 84 as well as Motor Vehicles under Chapter 87. Hence, it provides elaborate Explanatory Notes, for classification of such goods under Chapter 84 or under Chapter 87, based on their mechanical configuration. Such Notes for the purpose of classification recognize the fact that there are automobiles which have earth moving equipment. However, the classification of the goods either under Chapter 84 or 87 or any other Chapter .....

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tandard Pencils (P) Ltd. vs. Collector of Central Excise, Madras 2002 (145) ELT 278 (SC); Swaraj Mazda Ltd. vs. Commissioner of Central Excise, Chandigarh II 2010 (257) ELT 264 (Tri.-Del.); The Western India Plywoods Ltd. vs. Commissioner of Central Excise 1985 (19) ELT 590 (Tribunal) 10. The learned AR further submitted that the goods cleared by the appellants have been subjected to the process amounting to manufacture as even in the case of unpacked goods it is not disputed that they were putt .....

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) of the Central Excise Act, 1944 is not relevant because it pertains to the Central Excise Tariff Act, 1985. It was further submitted that the Central Excise Act, 1944 makes no reference to excisable goods. Section 2(f)(iii) of the third Schedule refers only to the goods. This term has to be given its true and popular meaning and the goods would include imported goods also. It was further submitted that the explanation of Section 2(d) clarifies the position that for the purpose of this clause, .....

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E.L.T. 177 (Guj.); Prime Healthcare Products vs. Commissioner of Central Excise 2009 (245) E.L.T. 550 (Tri); Commissioner of Central Excise vs. Prime Healthcare Products 2011 (272) E.L.T. 54 (Guj.) Commissioner of Central Excise vs. Parveen Tobacco Co. (P) Ltd. 2013 (288) ELT 433 (T); BASF India Ltd. vs. Commissioner of Central Excise 2009 (245) ELT 381 (T) ; United Distributors vs. Commissioner of Central Excise (319) ELT 571 (T) Nitin Patki vs. Commissioner of Central Excise 2011 (273) ELT 10 .....

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hether by labelling or inscription or any other method, the process shall amount to manufacture. Section 2(f)(iii) deems, any process which involves any other treatment on the goods to render the product marketable to the consumer, as manufacture. It was also submitted that the term container has been considered in the following cases: G. Claridge & Co. vs. Commissioner of Central Excise 1991 (52) ELT 341 (SC); Parksons Printers vs. Commissioner of Central Excise 1996 (86) ELT 603 (T) It was .....

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ere unpacked and then put in pre-printed pouches. In some cases, goods are labelled whether with a tag or sticker or label containing relevant information which is important to the appellant and its buyer and to the process of sale and consumption of such goods. It was his submission that in view of this position the process undertaken by the appellant helps in marketing of the goods also. 11. Circular No. 22/90-Cx dated 11/07/1990 pertains to exemption Notification No. 61/86-CE and Circular No. .....

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LT A32 (SC); Parle Bisleri Pvt Ltd. vs. Commissioner of Central Excise 2011 (263) ELT 15 (SC) Commissioner of Central Excise vs. Super Synotex (India) Ltd. 2014 (301) ELT 273 (SC); 11.1. It was further submitted that CBEC Circular 167/38/2008 CX4 dated 16/12/2008 does not give any binding instruction., as it merely states at para 2.3 that, the above clarification/definition may be considered to interpret the scope of the term automobile. It was further submitted in the following cases it has bee .....

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LT 120 (SC) 11.2. The learned AR further submitted that the adjudicating authority is not bound by the Circulars of the Board as has been held by the Hon'ble Supreme Court in the following cases: UOI vs. Madras Steel Re Rollers Association 2012 (278) ELT 584 (SC) Commissioner of Central Excise vs. Minwool Rock Fibres Ltd. 2012 (278) ELT 581 (SC) 11.3. It was further submitted that as per para 7 of the judgment of the Constitution Bench of the hon'ble Supreme Court in the case of Commissi .....

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ating authority or before this Tribunal and hence there is no question of remand for deciding liability of CENVAT credit in view of judgment of Hon'ble Supreme Court in the case of Kores India Ltd. vs. Commissioner of Central Excise 2004 (174) ELT 7 (SC) which is re-affirmed in Kores India Ltd. vs. Commissioner 2015 (318) ELT A252 (SC). 12.1. As far as the plea of benefit of cum-duty is concerned, it is submitted that benefit of cumduty cannot be extended in the present case in view of the f .....

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ction 4A. Once at the time of import, they were paying duty under Section 4A, it was their duty to take Central Excise registration and inform their activities of labelling, repacking, etc. to the local excise authorities and file the returns. Further parts which were being imported by Komatsu India Ltd. were being purchased by them and other parts from other local producers (which were related to appellant). It would be natural to apply Section 4A valuation particularly when they are doing so w .....

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evade payment of duty. Learned AR further relied upon the following case laws. Kores India Ltd. vs. Commissioner of Central Excise, Chennai 2004 (174) ELT 7(S.C.) B.P.L. India Ltd. vs. Commissioner of Central Excise, Cochin 2002 (143) ELT 3 (S.C.); Mallur Siddeswara Spinning Mills (P) Ltd. vs. Commissioner of Central Excise, 2015-11-04 Air Liquide North India Pvt. Ltd. vs. Commissioner of Central Excise, Jaipur-I 2011 (271) ELT 321 (S.C.) Nicholas Piramal India Ltd. vs. Commissioner of Central E .....

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the hearing has produced a list of parts along with part numbers which were being sold and are matter of dispute. The list includes bolt, nut, washer, hose, dowel pin, o-ring, back-up ring, oil seal, plug, filter element, dust seal, elbow, hose suction tank to pump, tube, dry battery, horn, master bushing, dust seal, flexible coupling, bracket, oil cooler, fan for ROC, radiator, radiator cap, switch, wiring harness, bearing, pipe, swing machinery case, shaft, cylinder, collar, seal kit stick cyl .....

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which, in relation to the 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 excisabl .....

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he provisions of Standards of Weight & Measures Act, 1976 or the Rules made thereunder or under any other law for the time being in force, to declare on the package thereof the retail sale price of such goods. In respect of such goods, value for purpose of charging duty is deemed to be the retail sale price declared on such goods less such amount of abatement as notified. The said section is as under:- Section 4A - Valuation of excisable goods with reference to retail sale price.- (1) The Ce .....

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e with reference to value, then, notwithstanding anything contained in section 4, such value shall be deemed to be the retail sale price declared on such goods less such amount of abatement, if any, from such retail sale price as the Central Government may allow by notification in the Official Gazette. (3) The Central Government may, for the purpose of allowing any abatement under sub-section (2), take into account the amount of duty of excise, sales tax and other taxes, if any, payable on such .....

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ment of India in the Ministry of Finance (Department of Revenue) No. 2/2006-Central Excise (N.T.), dated the 1st March, 2006, G.S.R. 113(E), dated the 1st March, 2006, namely:- In the said notification, in the TABLE, after S. No. 96 and the entries relating thereto, the following shall 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 .....

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ub-heading or tariff item. Description of goods 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 14.7. The said Notification was again amended vide Notification No. 19/2010-C.E. (N.T.) dated 29/04/2010 and a new entry 109 was inserted which read as: (1) (2) (3) 109 Any Chapter Parts, components and assemblies of goods falling under tariff item 8426 41 0 .....

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substituted and shall be deemed to have been substituted with effect form the 27th day of February, 2010 namely:- (1) (2) (3) 100 Any Chapter Parts, components and assemblies of vehicles (including chassis fitted with engines) falling under Chapter 87 excluding vehicles falling under heading 8712, 8713, 8715 and 8716 (b) after S. No. 100 and the entries relating thereto, the following S. No. and entries shall be added and shall be deemed to have been added with effect form the 29th day of April, .....

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vertently mentioned and the same was corrected by an amendment vide Finance Act, 2012. 14.11. The following three circulars of the Board are relevant. (i) Circular No. 262/15/86-CX.8 dated 14.07.1987 (ii) Circular No. 22/90-CX.4 dated 11.07.1990 (iii) Circular No. 167/38/2008-CX.4 dated 16.12.2008 14.12. The first Circular is regarding leviability of cess under Automobile Cess Rules, 1984 on Earthmoving machinery. The said Circular is as under:- Automobiles - Cess not chargeable on earthmoving m .....

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d 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. 14.13. Board's Circular No. 22/90-CX.4 dated 11/07/1990 which reads as:- Circular No. 22/90-CX.4, dated 11/07/1990 [From F. No. 156/15/90-CX.4] Government of India Ministry of Finance (Department of Revenue) Central Board of Excise & Customs, New Delhi Subject: Whether benefit of Notification No. 61/8 .....

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w was expressed that hydraulic excavator was nothing but an automobile and therefore, seats were eligible for the benefit of exemption Notification No. 61/86-C.E., dated 10-2-1986. However, the Conference took note of the fact that, automobiles are conveyances for transportation of passengers, and goods on roads (Chapter 87), whereas hydraulic excavators were earth digging and earth loading machinery classifiable under Heading 84.20 of Central Excise Tariff Act, 1985. As such they cannot possibl .....

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ending assessments may be finalised accordingly. 6. Field formations and Trade may be informed suitably. 14.14. The said Circular is based upon Tariff conference where a view was expressed that hydraulic excavators was not but automobile as automobiles are conveyances for transportation of passengers, and goods on road and therefore decided not to extend the benefit of Notification No. 61/86-C.E. dated 10/12/1981 to driver seats of hydraulic excavators. However, this very circular was matter for .....

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oes not represent the correct legal position. In our considered view any reliance on the said circular would be contrary to judicial verdict. However, perhaps, unaware of the said judgment, Board issued Circular on 16/12/2008. 14.15. Boards 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-CX 4, dated 16-12-2008 Government of India Ministry of Finance (Department of Revenue) Central Board o .....

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ule. Description of goods Abatement as a percentage of retail sale price 97 Any heading 33.5% 2.1 The first issue is regarding interpretation of term automobiles. The said term has not been defined in the Notification, hence its general meaning needs to be considered. In this regard, reference may be made to the Circular No. 22/90-CX.4, dated 11/07/1990. In this circular at para 2, it has been stated that automobiles are conveyances for transportation of passengers and goods on roads (Chapter 87 .....

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) Automobiles (motor cars, buses, trucks, motorcycles, scooters and the like) 2.3 It is also to clarify that the term automobiles does not include animal driven or manual driven vehicles. The above clarification/definition may be considered to interpret the scope of term automobile. 3.1 Another issue that has arisen in the scope of the term part as used in the aforementioned entry. Chapter 87 of the Central Excise Tariff covers parts of different vehicles. Further, Section Note 2 of the Section .....

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ll 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, bal .....

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Loader and Road Roller are self propelled, work with internal combustion engine using fuel such as diesel, have four wheels and are rubber tyred (road roller may have two rubber tyres and one roller, or only rollers). These move also on roads. Thus, these have all the characteristics of motor vehicles. In addition, these items have attachments which enables to execute and move earth, mud etc. from one place to another. In case of road rollers, it helps in compacting and setting the road due to v .....

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appellant had approached the Automotive Research Association of India, Pune who after examination has granted the requisite certificate. A perusal of the application and certificate indicates 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 cas .....

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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. Merely because a motor vehicle is put to a specific use such as being confined to an enclosed premises, will not render the same to be a d .....

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rt in the case of M/s. Central Coal Fields Ltd. (supra), while considering the issue about taxation of Dumper and Rocker under motor vehicle Act, 1988 has observed as under:- 7. Learned Counsel for the appellants in these appeals have not challenged the view of the High Court regarding vires of the impugned Act before us or to its retrospectively but have addressed us only on the fact situation to contend that the Dumpers (which includes Rockers) are vehicles not adapted for use upon roads and, .....

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ed for use on roads. Not it has to be seen whether Dumpers and Rockers are motor vehicles adapted for use on roads. 8. Reverting back to Bolani Ores case, it would be found that the preamendment definition of Section 2(18) conveyed that though they were motor vehicles as such, within the meaning of the first part of the definition, but nonetheless were not so because of their specified user, i.e., if they were used solely upon the premises of the owner. It would also be found that under the post .....

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nded 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 tr .....

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principles. Pictures of various types of Dumpers have also been sent to us which indicate prominently one factor that these Dumpers run on tyres, in marked contrast to chain plates like cater pillars or military tanks. By the use of rubber tyres, it is evident that they have been adapted for use on roads, which means they are suitable for being used on public roads. The mere fact that they are required at places to run at a particular speed is not to detract from the position otherwise clear th .....

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I of the Constitution. Thus on that basis it was idle to contend on behalf of the appellants that Dumpers and Rockers were neither adaptable nor suitable for use on public roads. Thus on, the fact situation, we have no hesitation in holding that the High Court was right in concluding that Dumpers and Rockers are vehicles adapted or suitable for use on roads and being motor vehicle per se, as held in Bolani Ores case, were liable to taxation on the footing of their use or kept for use on public r .....

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the road and is also capable of carrying loads over long distances, it does not cease to be an equipment coming within the definition of a motor vehicle'. Even though Beaver Rear Dumper would not come within the definition of a vehicle used for weight lifting or earth moving, it is not in dispute that it is a specialized material 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 ma .....

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(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 judgment 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. .....

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such tyres cannot be considered tyres of motor vehicles. In present case issue is whether parts, components and assemblies of Loader, Backhoe Loader & Road Roller can be considered as Parts, components and assemblies of automobiles. In our view, Hon'ble Supreme Court judgment does not help the cause of Respondents. 17.9 Another judgment quoted is that of Hon'ble Rajasthan High Court, in the case of Commissioner of Income Tax Vs. Gotan Lime Stone Khanij Udyog reported in 2007(173)-GJ .....

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nsport vehicles. 17.10 To us the inevitable conclusion from the facts as also various judicial pronouncement is that Loader, Backhoe Loaders & Road Rollers are motor Vehicle. 18.1 The next question that arises is having come to the conclusion that Loader, Backhoe Loaders & Road Rollers as motor vehicle, whether parts, components and assemblies of three items are "Parts, components and assemblies of Automobile." 18.2 The word automobile' is not defined in the Central Excise .....

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, 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. .....

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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:- "38. The expression automobile' has a wider connotation - one which runs by its own motor - internal combustion engine. 39. Motor vehicle has been defined as a motor driven vehicle for use on roads and highways. 40. In both the exemption Notifications No. 91/68-C.E. and No. 61/86- C.E., the expression & .....

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y, it means a self-propelled vehicle. 42. While its dictionary meaning is motor-car', the way the expression "automobile" has been used in the Notification along with railway carriages and the aircrafts, any restricted meaning given to it does not appear to be consistent with the scheme discerned from the reading of the notifications as a whole. 43. As observed by the Hon'ble Supreme Court in the case of Jain Engineering Company v. Collector of Customs, Bombay, 1987 (32) E.L.T. .....

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s of it should be read harmoniously in aid of and not in derogation of that purpose. 45. According to the "Noscitur A Sociis" principle, which means that "the meaning of a word is to be judged by the company it keeps", it could be safely said that the exemption was intended to all variants of steel seats for carriage or conveyance used on land, on rails or space. Of course here in place of a restricted meaning, by the principle of Noscitur A Sociis, it appears natural that a .....

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uot;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 indifferen .....

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le, (being not defined in Act/Tariff) specific heading of the Central Excise Tariff were introduced in the Notification No. 49/2008-C.E. (NT) in February 2010 vide Notification No. 9/2010-C.E. (N.T.). Apparently this was done in haste and Government had to further amend the amendment made in February, 2010 within two months to specifically include headings relating to earth moving machinery. Not only this, corresponding amendment in Third Schedule was forgotten and the next year retrospectively .....

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contrary to that is not permissible. We have gone through this Circular. We note that this is not a Circular under Section 37B of the Central Excise Act so as to make it binding on the officials. We also note that this Circular does not clarify which type of hydraulic excavators is being discussed. Hydraulic excavators having their own track are not considered as motor vehicle or automobile. Further we note that this Circular is based upon Circular No. 22/90-CX. 4 dated 11.07.1990. At that poin .....

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consideration above mentioned judicial decisions. We also note that this circular was not issued in 2006 when "Parts, components and assemblies of Automobiles" were brought into Third Schedule to the Central Excise Act or specified under Section 4A (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 .....

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t; 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.) - 2004-TIOL-82-SC-CX 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 .....

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n Chemical's case, the Revenue was likely to reopen cases. Thus Para 9 was incorporated to ensure that cases where benefits of exemption Notification had already been granted, the Revenue would remain bound. The purpose was to see that such cases were not reopened. However, this did not mean that even in cases where Revenue/Department had already contended that the benefit of an exemption Notification was not available, and the matter was sub-judice before a Court or a Tribunal, the Court or .....

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Chemical's case." 18.9 Hon'ble Supreme Court in the case of Commissioner of Customs, Calcutta Vs. Indian Oil Corporation Ltd. reported in 2004 (165) ELT 257 (S.C.) - 2004-TIOL-23-SC-CUS has observed as under:- "25. As is evident from Section 151A the Board is empowered to issue orders or instructions in order to ensure uniformity in the classification of goods or with respect to levy of duty. The need to issue such instructions arises when there is a doubt or ambiguity in relat .....

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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 .....

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tory to continue to follow the circular? These are the questions which puzzle me and these are the conclusions which follow if the observations of this Court in the two cases of Dhiren Chemicals Industries are taken to their logical conclusion. 26. I am of the view that in a situation like this, the Customs authority should obey the constitutional mandate emanating from Article 141 read with Article 144 rather than adhering to the letter of a statutory provision like Section 151A of the Customs .....

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In view of above case laws, we are of the view that even if the Circular dated 16.12.2008 is with reference to Hydraulic Excavators which are motor vehicle, the same is required to be ignored in view of decisions on the issue by Higher Judicial forums. We therefore do not find any merit in this contention. 18.11 Another contention of Ld. Senior Advocate was that in chapter 73, Heading 7326 910 the words used are "For automobiles and earth moving equipment" and therefore two are differe .....

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he equipments viz: Loaders, Backhoe Loaders and Road Rollers, while in the present case the parts are of scania trucks, dumpers, motor graders, wheel loaders, dozers and hydraulic excavators. 16.1. As far as parts of scania trucks are concerned, even the appellant themselves were paying countervailing duty under Section 4A. Thus, they themselves are admitting that scania trucks are nothing but automobiles. They never disputed the same before the Customs authorities. 16.2. The next item is parts .....

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ill not change the character from automobile to something else. We therefore out rightly reject the appellants contention as far as dumpers are concerned and hold that dumpers are automobile. 16.3. The other items are motor graders and wheel loaders. Both the items work as internal combustion engine and are tyred wheeled. Wheel loader is an item which is used even in cities for removing the garbage from one garbage collection point to dumpers and the trucks. Thus motor graders and wheel loaders .....

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s i.e., there is a steel drum and below the steel drum there is a chain on which these items move. Learned counsels submission is that since tyres are not used in these two equipments these cannot be considered as automobiles. We would like to mention that in the case of JCB India Ltd. (supra), equipments which have on a steel drum wheel and move on chain system or crawler, were not being discussed and therefore, the discussion was confined to the tyred wheel mounted equipment. 16.5. We also not .....

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rubber padded or steel drum wheel mounted, self-propelled, excavator, loader, backhoe, compactor roller, dumper, motor-grader, mobile crane, dozer, fork lift truck, self-loading concrete mixer or any other construction equipment vehicle or combination thereof designed for off-highway operation in mining, industrial undertaking, irrigation and general construction but modified and manufactured with on or off or on and off highway capabilities. The said definition includes excavator and the defini .....

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of Indian Standards viz. IS 1427 (2011). Thus, whether the excavator/dozer that is rubber tyred or steel drum wheel mounted, these are considered as construction equipment vehicle and automotive vehicles and are therefore, would be covered under the broad definition of automobile. 16.6. We also note that the Commissioner (AR) has clearly explained the automotive aspect and the machinery aspect in such automobiles. Just because such automobiles have machinery aspect which helps them use in the co .....

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ned senior counsel has give lot of emphasis on a sentence in para 18.7 of this Tribunals judgment in the case of JCB India Ltd. (supra), wherein, it is mentioned that: Hydraulic excavators having their own track are not considered as motor vehicle or automobile. We find that this sentence is being taken out of context by the learned senior counsel. The said sentence was written while trying to discuss the Boards Circular dated 06/12/2008 as the said circular though talked about hydraulic excavat .....

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he hearing, has submitted that the said details relating to AIS/53 or BIS 14172 (2011) should not be taken into account as these are not forming part of the show cause notice and the Commissioner (AR) has not followed the CESTAT procedure to produce the same. We do not find any merit in the contention. First of all, the show cause notice propose to consider all the six items including excavator, motor graders, wheel loaders, dozers, etc. under the category of automobiles. It is just that to reac .....

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mmissioner (AR), which he did after a day. Thus, the learned counsel has been given sufficient opportunity to rebut the same. 19. We also note that the learned counsel for the appellant has argued on the binding effect of the circulars. This whole issue has been discussed in para 18.7, 18.8 and 18.9 of this Tribunals order in JCB India's case reproduced earlier. 20. We also note that Commissioner (AR) has rightly pointed out the judgment of the Constitution Bench of the hon'ble Supreme C .....

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a decision of this Court on the point being rendered. Obviously, the assessee will not file an appeal questioning the view expressed vis-a-vis the circular. It has to be the revenue authority who has to question that. To lay content with the circular would mean that the valuable right of challenge would be denied to him and there would be no scope for adjudication by the High Court or the Supreme Court. That would be against very concept of majesty of law declared by this Court and the binding e .....

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s not binding circular and it would be seen from the circular that it is only suggestive and is not a conclusive or directive circular. 22. We also note from the list of parts submitted during the hearing, the parts are of a type used in various automobile items and keeping in view the fact that the term used in the Notification and Third Schedule is parts, components and assemblies of automobiles, falling under any Chapter (thus not restricted to few parts) which is a very wide term, we are of .....

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it was clarified that this would be applicable to items covered under Section 4A. We have gone through the definition as provided under Section 2(f)(iii) which is also reproduced in the earlier part of this judgment. We do not find anything in Section 2(f) (iii) linking the said definition of manufacture to only goods covered by Section 4A. In fact, if that was the intention, there was no need to create a Third schedule in the Central Excise Act, and there should have been a straight linkage in .....

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pose of valuation Section 4A will be followed, otherwise valuation will be done under Section 4. In the present case, it is the claim of the appellant that due to the size, certain parts are received in unpacked condition and they are also selling the same unpacked and, therefore, the provisions of Section 4A will not be applicable. Revenue has accepted this position and in respect of such parts, they have proposed valuation under Section 4. We do not find anything wrong in such an approach acco .....

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y part. In fact, even the list of parts submitted during the hearing by learned Commissioner (AR), indicates part number for each item. In view of this fact even putting a tag whether on individual or group would amount to labelling the goods. The fact that these are not put in a container is immaterial. 24. We also note that purpose of Section 2(f)(iii) is to capture value addition and tax the same in respect of items when the retail selling price is very high compared to the ex-factory price. .....

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bmitted that since the definition of manufacture under Section 2(f)(iii) is a deeming provision, strict interpretation of the same should be given. While we do agree that there should be strict interpretation, however, interpretation should not be so strict so as to defeat the very purpose of deeming provision. In this context we refer to the decision of the hon'ble Supreme Court in the case of Industrial Supplies Pvt. Ltd. vs. Union of India & Others (1980) 4 SCC 341 wherein it was held .....

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llings Co. Ld. v. Finsbury Borough Council (1952) A.C. 109, said: If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from, doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it. 25.2. In the State of Bombay v. Pandurang Vinayak Chaphalkar and Others [1953] S.C.R. 773, Hon'ble Supreme Court held (at page 132) while approving .....

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erved: The effect of a statute containing a legal fiction is by now well settled. The Legislature by a statute may create a legal fiction saying that something shall be deemed to have been done which in fact and truth has not been done, but even then Court has to give full effect to such statutory fiction after examining and ascertaining as to for what purpose and between what parties such statutory fiction has been resorted to. 26. Thus, considering that putting a tag is not labelling or there .....

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licable only for the excisable goods. Learned Commissioner (AR), on the other hand, submitted that the term excisable goods is used under Section 2(d). In third schedule to the Central Excise Act, the term used is goods. Similarly, under Section 2(f)(iii) there is no such requirement that the inputs should be manufactured in India only and cannot be imported. 27.1. We have considered the submissions made by both the sides. For determining whether a particular process amounts to manufacture it is .....

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g to Section 4A were amended on 27/02/2010 and 29/04/2010. Under the said Notification the term automobile was replaced by specific headings of the Central Excise Act Tariff. Thus, after the said date, there can be no confusion or dispute about the fact that the goods are covered by Section 2(f)(iii) and appellant's activities amounts to manufacture. But appellants still did not pay duty. Not a single word is being uttered for such a conduct. 29. Learned senior counsel for the appellant subm .....

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ay 2011. Such a conduct is not expected from a reputed company. In fact, we also observe that at the stay stage the, advocate for the appellant has submitted a worksheet where he claimed that duty liability from February/April 2010 to 30/04/2011 works out to approximately ₹ 24.33 crores as against ₹ 27.00 crores already deposited by them during investigation and after issue of demand notice. This duty liability was worked out after adjusting CENVAT credit that would be available to t .....

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facts as also contravention of various provisions of Central Excise Rules with intent to evade payment of duty. We therefore, hold that extended period of limitation is correctly invoked. 30. We find that learned counsel for the appellant has given lot of emphasis on the fact that in the case of JCB India Ltd. (supra), this Tribunal has upheld the case on merits in favour of Revenue, however, the benefit of extended period of limitation was extended to the assessee, therefore, similar benefit s .....

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4A is required to be levied. Once the duty under Section 4A is chargeable on any item, then if such an item is again repacked or relabelled or any process are undertaken, such activity is considered as an activity of manufacture, then the appellant is required to pay excise duty on the same. It is a different matter that in such cases, at the time of importation CVD would have been paid and the manufacturer will be entitled to take credit of the same and it is possible in some cases there may no .....

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ks. Other parts, we observe were not being imported by them and were being imported by Komatsu India Pvt. Ltd. and thereafter being transferred/purchased by the present appellant. They were also getting the parts from other local sources. It is also an admitted fact that thereafter they were doing labeling, re-labelling, etc. Such parts included that of dumper. Under the circumstances, it cannot be said that the appellant were not aware of the fact that the goods are covered under Section 4A. Th .....

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d have been no doubt or dispute about the coverage of the items under Section 4A. Even then the appellant did not pay the duty under Section 4A. They did not take any registration and continued to do the manufacturing activity and cleared the goods without payment of duty. All the arguments which have been extended by them relating to the scope of the term automobile are not of any relevance or consideration after the said date. There was no reason for them not to pay duty. Even in 2011, when th .....

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old the penalty imposed. Ratio of JCB India Ltd. case (supra) is not applicable. 32. Another contention of the appellant is that in respect of the unpacked goods where the demand has been raised under Section 4, they are entitled to cum-duty benefit. We find that the learned Commissioner (AR) has opposed the same and quoted certain judgments of this Tribunal. We find that on this issue there were contrary judgments of various High Courts/Supreme Court and in order to resolve the issue, under Sec .....

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other taxes, if any, actually paid, shall be deemed to include the duty payable on such goods. 33. As per the said explanation, in the facts of the present case, the appellant would be entitled to cum-duty benefit. We accordingly extend the same and set aside the impugned order as far as the benefit of cum-duty is concerned. 34. Learned senior counsel for the appellant has submitted that in the event the goods are being held as chargeable to duty under Section 4/4A they would be entitled to avai .....

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e invoices and other documentary evidence to prove the duty-paid nature of the goods received by them and also evidences about the receipt of the goods, etc., in our view, it will be appropriate that benefit of CENVAT credit be extended to them. We also note that during the hearing the learned senior counsel has submitted a chart in respect of parts of each vehicle claiming how much the CENVAT credit would be available. Keeping in view these facts and the fact that the matter was not examined by .....

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s order. If the duty liability gets reduced due to the said exercise, as also cum-duty benefit, penalty imposed under Section 11AC will also get reduced to the same extent. 35. We find that in the impugned order, the goods cleared during the period 2007 to 2011 were confiscated under Rule 25 and redeemed on redemption fine. We note that the goods which are liable for confiscation but are not available for confiscation. Moreover, keeping in view the nature of the dispute, in our opinion, confisca .....

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