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M/s. Ford India Limited Versus Commissioner, LTU, Chennai

2017 (9) TMI 945 - CESTAT CHENNAI

Duty liability - appellants were regularly procuring various items from domestic as well as the foreign source and bring the same to the PDC for further process and distribution on sale - Revenue entertained a view that the appellants are not discharging applicable central excise duty on various items which are subjected to different process in the PDC - Held that: - the appellants are engaged in repacking and relabeling of indigenous items with FORD MRP labels and in respect of imported items o .....

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in the said Schedule which is applicable with effect from 1.3.2003 - the appellant is liable to duty of their activities in respect of three products from that date. - Classification of goods - emblem radiator grill, cap assembly oil filter, audio players with or without speakers, bulbs, switches, fuses and relays - Revenue classified these items under Chapter 39 and 85 - deemed manufacture - Held that: - audio players with or without speakers, radio assemblies are sound reproducing equipme .....

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original authority also in more than one place of the impugned order, we find no justification to call these items as generic articles of plastic when they are admittedly principally and solely usable in the automobiles. As such, the duty liability in terms of the above Schedule r/w section 2(f)(iii) will not raise prior to 1.6.2006. - Regarding duty liability of the appellant on bulbs, switches, fuses and relays, we note that the original authority classified the same under Chapter 8536/853 .....

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ents, parts and accessories, they have to be classified under Chapter 87. Heading 812 is not discussed for a decision in the impugned order. - Extended period of limitation - penalty - Held that: - there can be no positive sustainable allegation of willful mis-statement, fraud, collusion etc. to invoke the extended period or to impose penalty - demand upheld for normal period - penalty set aside. - Appeal allowed - decided partly in favor of appellant. - E/500/2008 - Final Order No. 4206 .....

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ed Parts Distribution Centre (PDC) for which separate central excise registration was obtained. The appellants were regularly procuring various items from domestic as well as the foreign source and bring the same to the PDC for further process and distribution on sale. The dispute in the present case relates to the duty liability of the appellant with reference to activities in PDC. The Revenue after conducting certain enquiries entertained a view that the appellants are not discharging applicab .....

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mount under section 11AC of Central Excise Act, 1944. 3. The ld. counsel for the appellants submitted that the dispute relates mainly on lubricating oil, adhesive kits, coolants, emblem radiator grill and cap assembly oil filter, audio players with or without speakers and radio assembly, bulbs, switches, fuses and relays. He summarized the position of the appellant as below:- Product Classification as Per Department Assessees contention 1.6.2002 to 28.2.2003 1.3.2003 to 31.5.2006 Lubricating Oil .....

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, the excise duty is not leviable on lubricant oils, adhesive kits, coolants etc. as the Chapter Notes under the respective Chapters namely 27, 35 and 38 r/w section 2(f)(ii) is not attracted in their case. The Chapter Notes stipulate that in relation to these products, labeling or relabeling of containers and repacking from bulk to retail packs or the adoption of any other treatment to render the product marketable to the consumer shall amount to manufacture . Relying on the decision of the Hon .....

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the ld. counsel submitted that the department classified these items under 3919 / 3923,8527, 8536/8539, as parts or components falling under the respective Chapters. It is submitted by the appellant that these items are specifically designed and are functional only as components of automobile, in their case passenger cars. They have strongly contested the findings of the original authority for classification as recorded in the impugned order. Reliance was placed on the decision of Apex Court in .....

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d be seen from the proceedings, the whole issue is relating to interpretation of deemed manufacture as admittedly, the appellants are not involved in regular manufacture of these items. Further, the dispute involving classification with an implication on manufacture and the existence of PDC with the nature of activities carried down by the appellants are well within the knowledge of the department and there is no question of invoking suppression, willful mis-statement etc. in this case. He submi .....

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is not open to the appellant to reclassify the product to their convenience. He submitted that electric bulbs, relays and car receivers, audio players with or without speakers are clearly covered under Chapter 85 and the original authority is right in distinguishing the facts of the case in not applying the ratio of the Hon ble Supreme Court in G.S. Auto International Ltd. (supra). Simply because a particular item is designed for automobile does not make it an automobile component when there is .....

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ding correct classification of these items. These are to be classified respectively under Chapter 27, 35 and 38. The duty liability of the appellant is dependent on the Chapter Notes appearing in each one of these Chapters. As already noted that the Chapter Notes which are almost identically worded stipulated that labeling or relabeling of containers and repacking of bulk to retail pack or adoption of any other treatment to render the product marketable to the consumer shall amount to manufactur .....

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x Court held that the assessee should not only do the packing, for being marketing the product, repacking should be from bulk to retail pack to render the product marketable. We note that the Chapter Notes as they existed during the relevant period carried both the conditions of relabeling or bulk to retail pack. The appellant would not be put to duty liability based on these Chapter Notes r/w section 2(f)(ii). In respect of these items, upto the period 1.3.2003. We note that lubricating oils, a .....

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ems under Chapter 39 and 85 and demanded duty from the appellant on the ground that they are liable to discharge duty as a manufacturer with effect from 1.3.2003 in terms of Schedule III r/w section 2(f)(iii). The appellant contended that they are liable to duty only with effect from 1.6.2006 after the introduction of Sl.No. 100 in the said Schedule and not prior to that date. As such, the whole issue boils down to classification of these products and thereafter the concept of deemed manufacture .....

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.3.2003. 11. The emblem radiator grill and cap assembly oil filters are admittedly specific parts which are manufactured and used only in automobiles. We are not in agreement that this can be called as items of Chapter 39 as articles of plastics . Considering that these are items are designed for manufacture for use in automobile industry and same was recorded by the original authority also in more than one place of the impugned order, we find no justification to call these items as generic arti .....

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ectrical circuits, for a voltage not exceeding 1000 volts and electric filament or discharge lamps including sealed beam lamp units and ultra-violet or infrared lamps, arc lamps. We note that the impugned order in more than one place recorded that these are specifically meant for automobiles. But, relying on the classification of the supplier of the goods, the original authority held that the product should be classified under 85. Further, the original authority relied on the decision of the Tri .....

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f the Tribunal in Perfect Electric Concern Pvt. Ltd. (supra) dealt with classification of wind screen wipers, head lamps of all kinds and classify the same under Heading 8512 and switches and starting switches, changeover switches for electric vehicles were classified under Heading 85.36. We note that the appellant relied on GS Auto International Ltd. (supra) and also contended that they did not deal with heading 8512. We have perused the Apex Court decision in G.S. Auto International Ltd. (supr .....

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t earlier and it was laid down that the true test for classification was the test of commercial identity and not the functional test. It needs to be ascertained as to how the goods in question are referred to in the market by those who deal with them, be it for the purposes of selling, purchasing or otherwise. xxxx xxxx xxxx xxxx 26. A conjoint reading of the Notes, referred to above, would show that the expression parts of general use throughout the Schedule, means, inter alia, articles of Head .....

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th articles of Chapter Heading Nos. 87.01 to 87.05; if the answer is in the affirmative, the goods will be classifiable under Chapter Heading 87.08, but if the answer is in the negative, they would have to be classified under Chapter Heading No. 73.18. Having regard to the finding that the goods in question cannot but be regarded as parts of automobiles, it has to be held that they are suitable for use primarily with articles of Chapter Heading Nos. 87.01 to 87.05. It follows that the goods in q .....

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omobile except when they are excluded to be classified under Chapter 87 as components, parts and accessories, they have to be classified under Chapter 87. Heading 812 is not discussed for a decision in the impugned order. 13. Considering the ratio of the Hon ble Supreme Court and the findings in the impugned order, regarding specific usage of these items, we hold that duty liability of the appellants will arise only with effect from the introduction of Sl. 100 in Schedule III of the Central Exci .....

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