ORDER
Lajja Ram, Member (T)
1. M/s. Steel Crafts, Hubli have filed the present appeal, being aggrieved with the Order-in-Original No. 1/85, dt. 6-2-1985, passed by the Additional Collector of Central Excise, Belgaum.
2. The appellants were engaged in the manufacture of Trailers, classifiable under Item No. 34III of the erstwhile First Schedule to the Central Excises and Salt Act, 1944 (hereinafter referred to as the Tariff’). On investigation and verification it was found that in addition to the declared prices for the trailers, extra amounts were collected by the manufacturer from their customers, by issuing separate invoices for certain items/fittings which were fitted/fixed to the trailers. In the show-cause notice dt. 31-5-1984 it was alleged that they had evaded central excise duty amounting to Rs. 54,954.27 during the period 9-4-1983 to 23-1-1984. The Addl. Collector of Central Excise, Belgaum, who adjudicated the matter, came to a finding that the value of the items (1) Heavy duty axle, (2) Show Grill, (3) Hooks, (4) Rope Tightening Pipes, (5) Tipping Attachment, (6) Military Hook, (7) Hood, (8) Hukka, (9) Tool Box & (10) Handles, fitted to the trailer, was includible in the assessable value of trailers, and ordered that the trailer fitted with any of the aforementioned items was to be assessed to duty after including the value of those items fitted to the trailer by the party. He, however, came to a finding that the blade harrow, blade leveller and blade etc. were agricultural implements and could not be considered as parts of trailers. The demand to the extent of Rs. 49,795.58 was confirmed and a penalty of Rs, 50,000/- was imposed on the appellants.
3. The matter was posted for hearing on 8-8-1994 when Smt. C.G. Lal, SDR appeared for the respondent. No one appeared for the appellants who had sought decision on merits and on the basis of their written submissions.
4. In the written submissions the appellants have contended that the various items mentioned in the order-in-original were not essential parts of the trailer, were in the nature of accessories and were supplied/fitted at the Option of the customers. It has also been stated that the words and expressions in the Tariff have to be construed in a popular sense, as held by the Supreme Court in the cases of : (1) Dunlop India Ltd. v. UOI-1983 (13) E.L.T. 1566 (S.C.), (2) Indian Aluminium Cables v. UOI-1985 (21) E.L.T. 3 (S.C.) & (3) Asian Paints India Ltd. v. CCE – 1988 (35) E.L.T. 3 (S.C.). Some other decisions were also referred to in support of their argument that in the value of the trailers, the value of the aforementioned items was not to be included.
5. Smt. G.G. Lal, the learned SDR stated that all the items enumerated in the order-in-original were parts of the trailer; they were fixed and supplied with the trailer. They were attached to the trailer and formed its part at the time of the clearance. By issuing separate invoices in the name of the above items, additional amounts which should form part of the assessable value of the trailer, were collected, and the central excise duty leviable on the value of such items, has been evaded. The learned SDR, however, admitted that the item ‘hood’ was for the tractor, and not for the trailer.
6. We have carefully gone through the facts and circumstances of the case and have given our due thought and consideration to the written submissions filed by the appellants, and the oral submissions made by the learned SDR on behalf of the respondent.
7. The issue for our consideration in this appeal is whether the value of (1) Heavy duty axle, (2) Show Grill, (3) Hooks, (4) Rope Tightening Pipes, (5) Tipping attachment, (6) Military Hook, (7) Hood, (8) Hukka, (9) Tool Box, & (10) Handles, should be included in the assessable value of trailer or not.
8. M/s. Steel Crafts were engaged in the manufacture of trailers. Trailer is a wheeled vehicle designed to be hauled by a motor vehicle. In the Motor Vehicles Act, 1939, it has been defined as any vehicle “other than a side car drawn or intended to be drawn by a motor vehicle. The trailers had to be pulled by another vehicle as they do not have a prime mover installed on themselves (refer Tribunal decision in the case of Karnataka Implements and Machinery Co. Ltd. v. CC, 1989 (41) E.L.T. 572 (Trib.).
9. The appellants have contended that the various items whose value as per the impugned order has been added to the declared value of their trailers, were in the nature of accessories and additional fittings, and their value was not to be included in the value of the trailer. Whether arty particular fitting or fixture is or is not a part of the goods which are the subject matter of assessment, would depend upon the facts and circumstances of each case. The term ‘accessory’ has been defined differently in different contexts. In Webster’s 9th New Collegiate dictionary, ‘accessory’ has been defined as “an object or device not essential in itself but adding to the beauty, convenience or effectiveness of something else.” In Webster’s New World Dictionary, it has been defined as equipment usually removable, replaceable for convenience, safety or completeness. It has also been referred to as an adjunct or accompaniment. It has also been mentioned as to mean a part, sub-assembly or assembly that contributes to the effectiveness of a piece of equipment without changing its basic functions (refer Tribunal decision in the case of Mangalore Chemicals & Fertilisers Ltd. v. CC, 1989 (40) E.L.T. 345 (Trib.). In the case of CC v. Jolly Exports (Pvt.) Ltd. -1990 (45) E.L.T. 612 (Trib.) – the Tribunal in para 7 of their decision had observed that an accessory means something which contributes in a subordinate degree to attain a general result or effect. In the case of Indian Mica and Micanite Indus. Ltd. v. UOI – AIR 1967 Patna 369 – the employer was a manufacturer of micanite sheets and mica folium. The Patna High Court held that though the employer was not engaged in manufacture of electrical goods as such, he was engaged in the manufacture of parts or accessories used as adjunct or accompaniment to electrical goods and hence the Employees’ Provident Fund Act, 1952 was applicable to them.
10. In the case before us it is seen that all the items [except (1) Military hook, (2) Hood and (3) Tool box], as enumerated in the impugned order, were at the time of clearance part and parcel of the trailer. They were fixed to the body of the trailer, and once affixed, they no more could be considered as separate from the trailer. As regards heavy duty axle, they were a part of the vehicle and were fixed to the trailer. In the written submissions dated 6-10-1992 it has been mentioned that “wherever heavy duty axle is fixed to the trailer then it may form part of trailer since it is very essential for the use.” The show grill is also fixed to the body of the trailer. The appellants have mentioned that “all the trailers are not being fixed with this show-grill”, but wherever the show-grill has been fixed, it forms part of the trailer and cannot be detached at will. The hooks, hukka and handles were fixed to the body of the trailer, and once affixed, they become part and parcel of the trailer. Similarly, rope tightening pipes are functionally essential for the purposes for which the trailers are manufactured and purchased. As regards tipping attachments, it is fixed to the brackets at the bottom of the platform and on the chassis. Tripping is performed by releasing the locking device retaining tipping body. The appellants have pleaded that it is not fixed to the trailer at the time of delivery and only the demonstration of the item is given. It is not understood as to how without fixing, the demonstration of the tipping mechanism could be given. The tipping attachment in the case before us cannot be considered as a weight lifting or any specialised material handling equipment for the purposes of explanation II under Item No. 34 of the Tariff. In the case of Ashok Leyland Limited, 1982 (10) E.L.T. 684 (GOI), the matter before the Government of India related to the value of specialised handling equipment like cab, tipping gear and steel body which was mounted on dumpers. Trailer is a vehicle but it is not a motor vehicle. Thus explanation II under Item No. 34 of the Tariff which relates to motor vehicle, will not be applicable to trailer.
11. The point regarding hood, tool box, and military hook, however, appears to be different. Hood is reported to be the protective cover of the driver of the tractor. Although as per the design of the trailer, it has an attendant’s seat, but in this case it has been submitted that the hood is fixed to the tractor to protect the driver from sun and rain, and it was not meant for the attendant’s seat of the trailer. The learned SDR appearing for the Revenue has admitted that the hood was not for the trailer but for the tractor. In such circumstances when the hood was not for the attendant’s seat in the trailer but for the driver of the tractor, the value of the hood does not appear to be includible in the value of the trailer. As regards the tool box the appellants have stated that it is a separate item and that the customer is using this box to keep small tools. From the sketch at page 8 of their write-up annexed to letter dt. 10-5-1993, it is seen that the tool box has a handle on the top and locking arrangement on the side. There is nothing to show that it is built in the body of the trailer or is attached/fixed to the body of the trailer. In the case of Amkar Engineering Works v. Superintendent of Central Excise – 1979 (4) E.L.T. Q 145) – the Gujarat High Court had observed that a tool box or a jack or angles supporter or chains could not be construed as forming integral or components of a trailer. About tool box it was mentioned that it was a separate box where tools were kept. The Hon. Gujarat High Court held that “unless it is shown that the items in question are components or integral parts of a trailer, and without them a trailer is not a complete manufactured item and cannot be used, it would be difficult to hold that these items which are only in the nature of accessories could be characterised as components or integral parts of a trailer.” Accordingly the value of the tool box also does not appear to be includible in the value of the trailer. As regards the military hook, the appellants have stated that it is only attachable to the tractor. They have further stated that during the entire period in dispute they have supplied only one military hook under Bill No. 21, dated 11-6-1983. As per the printed leaflet of Shakthi Indus. Meerut, the steel hooks have the following uses “indispensable to all original equipment manufacturers of jeep, trucks, tractors, heavy boats and for all types of towing.” From the design of the trailer it is seen that it has to be linked to the motor vehicle through the eye-bolt. The military hook attached to the back of the towing motor vehicle will have to be fastened to this eye bolt for towing. In the circumstances the value of the military hook also does not appear to be includible in the value of the trailer.
12. Thus, it is seen that except the hood, the tool box and the military hook, all other items enumerated in the impugned order were fixed to the trailer or formed its part at the time of the clearance of the trailer. They were nailed, bolted or fixed to the body. They were not detachable or usable at will or according to need. They were there all the time and were completely identified/integrated with the trailer. It is of no consequence that they were bought out items. In the case of Kerala State Electronics Development Corpn. Ltd. v. CCE, Cochin, 1994 (71) E.L.T. 508 (Trib.), the Tribunal, with reference to the battery for the uninterrupted power supply system, had observed that the value of battery was includible in the assessable value of the uninterrupted power supply system, and that battery being bought out item, being exempted from duty and being invoiced to the customers separately by the assessee, was immaterial. In the case of Dayaram Metal Works (P) Ltd. v. CCE -1985 (20) E.L.T. 392 (Trib.) -also the Tribunal had held that the value of bought out parts was to be included in the value of clearances.
13. In the case of Collector of Central Excise, Bombay v. Lawkim Pvt. Ltd., Thane -1987 (31) E.L.T. 700 (Trib.), the thermal over load protectors, although were only devices, but when they were installed they were installed in such a way that they integrated into the system, and became part of the motor winding/rotor, stator set. By the majority decision it was held that over load protectors should have their values included in the assessable value of the rotor/stator set. It was observed that “in principle it would not be open to a manufacture to market a particular article and yet seek the exclusion from its assessable value of certain ‘parts’ of the article as cleared and marketed on the ground that they are not incorporated in his main article or are not essential to its operation.” (para 88). Paras 61,62 and 65 from that decision are also relevant and are reproduced below:-
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In the case of Bajaj Auto Ltd. v. CCE – 1989 (44) E.L.T. 763 (Trib.) – the matter related to the foot rest of the scooter. The Tribunal observed that “for comfortable sitting on the pillion seat he has to sit and has to keep his both legs and foot on the left side and necessary resting place to the feet has to be given and for giving the necessary resting place to the feet, foot rest is very essential.” The Tribunal held that “foot rest is an essential part of the scooter and as such the value of the same was rightly includible in computing the assessable value of the scooter.”
14. Most of the decisions relied upon by the appellants relate to the classification. Here in this case we are concerned with the valuation. In the case of Col-Tubes (P) Ltd. v. CCE, Indore – 1994 (2) RLT 129 (CEGAT-A), by the majority decision, the Tribunal has held as under :-
“Classification or valuation are two separate aspects of the matter. The classification is to be done keeping in view the Tariff read with the rules of interpretation, Section Notes and Chapter Notes, whereas the value has to be determined in terms of Section 4 of the Central Excises and Salt Act, 1944, read with Central Excise Valuation Rules.”
15. In the case of Andhra Pradesh Paper Mills Ltd. v. CCE -1993 (65) E.L.T. 447 (Trib.) – the Tribunal in para 8 of their decision had held as under :- “It has to be observed that Section 4 exclusively deals on principles of valuation and the factors governing valuation need not necessarily govern the aspect of classification, as classification of items is done on the basis of a separate legislation, namely, Central Excise Tariff Act, which lays down interpretative rules and chapter notes for the purpose of classification.”
16. It thus appears that the value of (1) heavy duty axle, (2) show-grill, (3) hooks, (4) rope tightening pipes, (5) tipping attachment, (6) hukka and (7) handles, are Includible in the value of the trailer; however, in respect of hood, tool box, and military hook, position appears to be different as already indicated above, and their value is not so includible.
17. With regard to limitation it is seen that the manufacturers were issuing separate invoices, and the details of these separate invoices were not disclosed to the Revenue. The Tribunal in the case of Kerala State Detergents and Chemicals Ltd. v. CCE, Cochin – 1987 (27) E.L.T. 323 (Trib.) in para 3(a) had observed as under :-
* * * * * * * Reference may also be made to the Tribunal decision in the case of Collector of Central Excise v. Metal Box India Ltd. -1989 (39) E.L.T. 679 (Trib.). Para 22 of that decision is extracted below :- * * * * * * * In the case of Jeypore Sugar Co. Ltd. v. CCE - 1991 (56) E.L.T. 104 (Trib.), the Tribunal had observed that non-disclosure of fact of receipt of excess payments from the customers being suppression of fact, extended period of limitation was invokable.
18. Taking all the relevant considerations into account, we order that the value of (1) heavy duty axle, (2) show grill, (3) hooks, (4) rope tightening pipes, (5) tipping attachment, (6) hukka and (7) handles, shall be included in the assessable value of the trailer in case the trailer is fitted with any of these items. The value of the (1) hood, (2) tool box and (3) military hook is however, not so includible. The amount of the Central Excise duty demanded has to be re-worked out in terms of the above order. In the circumstances of the case the amount of penalty is reduced from Rs.50,000/- (Rupees fifty thousand) to Rs.10,000/-(Rupees ten thousand only). The appeal is disposed of in the above terms.