ORDER
S.L. Peeran, Member (J)
1. This is a Revenue’s appeal against the Order-in-Original No. 33/2002 dated 31.12.2002 by which show cause notice issued to the assessee proposing denial of benefit of Notification No. 4/97 CE dated 1.3.1997 as amended by subsequent Notification Mos. 5/98 dated 2.6.98, 5/99 CE dated 28.2.99, 6/2000 C. Ex dated 1.3.2000 and 3/2001 CE. dated 1.3.2001. The Commissioner after due consideration of the assessee’s plea, he has noted that the activity of body building work was carried out when the duty paid chassis received by the assessee from chassis manufacturers. The Commissioner noted that the facts of the case were identical with the issue decided by the Tribunal in the case of Maniar & Co. v. CCE, Ahmadabad in the assessees favour. Applying ratio of the cited judgment, he dropped the proceedings and held that the assessee is eligible for benefit of the Notification. The findings recorded by the Commissioner in Paragraphs 42 to 49 of the impugned order are re-produced herein below:
42. I have carefully gone through the case proceedings the submission made by the assessee through their written reply and at the time of P.H. The issue before me is to decide the correct classification of dumper placer equipment and the skip loaders manufactured by the assessee and applicability of exemption Notification No. 5/98 dated 2.6.1998, 5/98 dated 28.2.1999, 6/2000 dated 1.3.2000 and 3/2001 dated 1.3.2001.
43. M/s. Kailash Auto Body Building have contended that dumper placer is used for transporting the garbage/refuse from various places to the dumping yard and that such vehicle are squarely covered by the description ‘Motor Vehicle for transport of goods’ classifiable under Chapter Heading; 8704. The assessee contention is that as per HSN Explanatory Notes to heading 8704 which specifically provide that refusal collectors are covered under Chapter Heading is 8704. Where as the Department has proposed to classify dumper placer as a special purpose vehicle under Chapter Heading 8705 of the CETA 1985. The contention of the assessee regarding its classification under Chapter Heading 8704 cannot be accepted, as collection of garbage cannot be treated as transport of goods. The very issue of classification of dumper placer were considered by the Tribunal in its decision in the case of Maniar A Co. v CCE Ahamadabed 2000 (119) ELT 418 (T). The fact of the case before the Tribunal were that the dumper placer was used to carry garbage collected in the container, placed at different collection center in the city. Garbage container were not attached to the chassis of the motor vehicle. The issue in the instant case is identical to the issue before the Tribunal. It was held by Tribunal that the garbage as such is not transported by the dumper placer hence held the Dumper placer cannot be said to be used for transport of goods. Therefore its classification was decided under chapter heading 8705 of the CETA 1985. The dumper placer manufactured by assessee does not have garbage container attached on the chassis of the motor vehicle. Dumper placer collects the garbage container from different point and after dumping the garbage at dumping ground, empty container are placed back at the points from where there are collected. In other words it dose not directly carry garbage but carries container-containing garbage. In term of HSN notes as referred to by the assessee, it is only such refuse collector which have fixed arrangement for collection of garbage on the motor vehicle, the ratio of the decision in the case Maniar & Co is squarely applicable to the classification under dispute. Therefore the classification of dumper placer is held to be more appropriate under chapter heading 8705 as proposed by the department and not under Chapter 8704 as claimed by the assessee.
44. With regard to applicability of Notification No. 5/98, 5/99, 6/2000 and 3/2001, it is the contention of the assessee that they got duty paid chassis from customer other then manufacture of chassis and other duty paid components like oil tanks, gear pump, hydraulic cylinder, rolled steel section, MS plates etc., from the open market which are subject to cutting, fabrication and fitment on the chassis. First platform is fabricated on the chassis using MS plates and sheets and then arms and crossbars are fabricated and fitted to the platform made on the chassis. Hydraulic cylinder and fabricated tanks are fixed to the platform, pipeline are fitted to cylinder, tank gear pump etc. over the platform. Bucket is fabricated and mounted on the platform for operation. Oil sucked from the hydraulic oil tank by gear pump is transmitted to hydraulic cylinders through the control value for the operation of fitted arms. Two stabilizing cylinders fixed with resting pads are fitted on the rear side of the skip loader beneath the platform in order to keep the vehicle stabilized on the ground while loading and unloading operation carried out. The aforesaid fabricated body on the chassis is painted as per the customer’s requirement. By emphasizing upon the aforesaid process employed on the chassis, it is contended that dumper places does not come into existence independently before it is placed oh the chassis and hence it cannot be said to be goods. Also it emerge out of duty paid component or bought out items from the open market which are assumed to be duty paid. Accordingly the benefit of the Notification cannot be denied.
45. Further the allegation of the Dept is that the activity involved is not merely body building activity to make special purpose vehicle, but is clearly distinguished into two parts – i.e., to fit the base platform on the chassis and then mount by assembling the dumper placer equipment. The SCN refers to Section Note 4 of the Sections XVI, in terms of which a machine “including combination (whether separate or inter connected by piping be transmission derives by electrical cables or by other devices) intended to contribute together to a clearly defined function Covered by one of the heading is Chapter 84 or 85, then the whole falls to be classified under heading appropriate to that function. Undoubtedly, for the purpose of classification of machine which comprises of different machines or component, which are interconnected, the totality of functions of the machines have to be taken into consideration and classification decided in terms of the function which machine performs. Nevertheless as mentioned herein, above the process of manufacture of dumper placer involve not only fabrication, of duty paid component be also performing certain process of cutting, welding, fixing of iron and steel sheet, plates etc. The total process is carried out by assembly or fabrication piece by piece on the chassis. In other words, the equipment became functional after it is fitted on the chassis piece by piece. It does not come into existence as the total system before it is placed on the chassis. In view of this position the contention of the assessee appears acceptable that the specialized equipment dose not come into existence as independently identifiable equipment before it is placed on the chassis.
46. The assessee has relied upon decision of the Tribunal in the case of Indian Hydraulic Industries Pvt. Ltd. v. CCC 1998 (37) ELT 213 (T) and CCE v. Indian Hydraulic Industries Pvt. Ltd. in order to support their contention that specialized equipment fitted on motor vehicle is not to be assessed separately.
47. A perusal of the first quoted decision in the case of Indian Hydraulic Industries Pvt. Ltd., show that the appellant were engaged in mounting/fixing/ fitting the specialized equipment on duty paid chassis and converting such chassis into High -lift commissary van, Baggage conveyer, passenger steps, Tow Tugs, Pilot Dollies, water and lock lets, Aerial Tower Wagon, Truck Dumping Platform etc. The Department assessed the specialized equipment separately under tariff item 68, which view was confirmed in appeal. However, the case went before the Tribunal in appeal, who after considering the fact that prior to removal for mounting on the vehicle, what is there is only a heap of parts which are mounted on the vehicle part by part and it is only when the mounting of all the parts is complete that the specialized equipment is identifiable but at that stage the whole thing is a vehicle with the equipment fitted on it and not the equipment as such and it is the specialized vehicle which is removed from the factory and not the equipment as a separate article. Accordingly it was held that the specialized equipment was not taxable under tariff item 68 of the old Central Excise Tariff. The Tribunal also observed that even of is assumed that specialized equipment is taxable under tariff item 68, it was entitled to exemption under either of the Notification No. 167/79 CE dated 9.4.97 and 118/75 -CE dated 30.4.75. The Tribunal decision was upheld by the Supreme Court upon appeal by the Department. The Supreme Court while confirming the view of Tribunal even went to the extent of pointing out that, the view being so plainly correct, it was not necessary to go into the alternative contention regarding exemption made on behalf of the assessee. Applying the ratio of these decision of the Tribunal as confirmed by the Supreme Court, it is to be held that special equipment manufactures on the chassis comes into existence and became functional as a result of piece by piece assembly or fabrication of market purchased parts/materials on the chassis it self. It is not separately manufactured and the mounted on the chassis. In such a situation, there cannot be said to be manufactured of marketable goods and hence no duty can be levied thereon. Consequently, it cannot be held that since no duty has been paid on ‘Dumper Placing equipment’ a composite machine, the assessee is not entitled to exemption in terms of Notification No. 5/98 CE, 5/99 CE 6/2000 as 3/2001. On the contrary, the piece-by-piece assembly is made out of parts/materials which are bought out from the market. Whatever small processes are carried out-in-house on the material obtained from market relate to cutting, fabricating, welding and cannot be treated as amounting to manufacture. No CENVAT/MODVAT has been availed of an any of these parts/materials. Accordingly, it is covered under exemption at Sl. No. 241 to special purpose motor vehicle classifiable under Chapter heading 8705 vide Notification No. 5/98 CE dated 2.6.98 on condition laid down therefore at Sl. No. 45 of that Notification relating to manufacture out of chassis and equipment on which duty of excise or additional duty leviable under Section 3 of the Custom Tariff Act has already been paid is satisfied. Similar condition is there in other notifications.
48. It may also be observed that Section Note 4 referred to in the Show Cause Notice is applicable for the purpose of classification of a Composite machine as a whole for the purpose of assessment of duty. However it will not interfere with the scope and legal interpretation of ‘manufacture’, ‘goods’, ‘marketability’; and ‘removal’ thereof for the purpose of assessment of duty, which aspects are settled and have remained unchanged under the old Central Excise tariff and the Central Excise Tariff Act 1985 as per various pronouncement of the appellate authorities including the Apex Court. In term of settled law, the assembly of part, it give raise to “goods’ which are marketable, will amount to manufacture and duty will be charged thereon. In assessee’s case, no such independently marketable goods i.e. bumper Placing Equipment came into existence and hence it cannot become changeable to duty in terms of Section Note 4 to Section XVI of Central Excise Tariff Act 1985.
49. As discussed in the proceeding paragraph, there is no case on merit against the assessee. Accordingly it is not felt necessary to go into the aspect of limitation for raising of demand or for imposing of penalty upon M/s. KABL and Shri. L. Viswanath Sing Vice President of M/s. KABL. In view of the above findings I pass the following order.
ORDER
The proceedings initiated vide Show Cause Notice F.No. INVDSCEI/SZU/38/2002 dated 28.6.2002 are here by dropped.
The Revenue is aggrieved with the above findings. They have raised several contentions and grounds to distinguish the Tribunal’s judgment in Maniar & Company’s case (supra) relied on by the Commissioner.
2. The learned JDR submits that the grounds distinguishing the judgment should be accepted and the benefit of notification has to be denied to the assessee.
3. On the other hand, the learned Counsel took us through the facts of the present case vis-a-vis ruling of the Tribunal in Maniar & Company’s case (supra) and submits that fresh grounds raised by the Revenue in the appeal cannot be accepted. He submits that this grounds were not a subject matter in the show cause notice and therefore, fresh grounds cannot be accepted in terms of the Apex Court judgment rendered in the case of Gujarat State Fertilizers Co. .
4. On a careful consideration of the matter, we notice that the Revenue has now taken up fresh grounds which cannot be accepted in terms of the Apex Court judgment cited supra by the learned Counsel. The Commissioner has considered all the fads of the present case and noted that in the similar facts and circumstances of the case, the very issue has already been decided by the Tribunal in the case of Maniar & Company v. CCE, Ahmadabad , in the assessee’s favour. Following ratio of the cited judgment, we notice that the Commissioner’s order is legal and proper. We do not find any merit in the Revenue’s appeal and the same is rejected.
(Dictated and pronounced in the open court)