ORDER
T.K. Jayaraman, Member (T)
1. These appeals have been filed against Order-in-Appeals No. 57/2003 (G), CE, dated 24-11-2003 and No. 53 and 54/2003(G)(D)C.E., dated 22-11-2003 passed by the Commissioner of Customs and Central Excise (Appeals), Guntur. Appeal No. E/168/2004
2. The facts leading to the passing of the Order-in-Appeal No. 57/2003, dated 24-11-2003 are as follows:
The Dy. Commissioner, Eluru Division sanctioned a refund of Rs. 1,24,930/- in respect of Excise Duty paid under protest on manifolds/iron cages manufactured by the appellants for transportation of compressed hydrogen gas. The Show Cause Notice was issued for recovery of the amount refunded on the ground that the refund claim filed is time barred, as the assessee had not followed the stipulated procedure under Rule 233B of the Central Excise Rules, 1944. The Dy. Commissioner vide his Order-in-Original No. 1/2001, dated 6-6-2001 held that the Respondents had followed the procedure under Rule 233B of Central Excise Rules, 1944. Against the order of the Dy. Commissioner, Revenue filed a file to the Commissioner (A) and the Commissioner (A) passed the impugned Order-in-Appeal No. 57/2003, dated 24-11-2003. In the impugned order, the Commissioner has held the following:
(i) The appellants are required to discharge the duty liability on the impugned goods at appropriate rate under heading 7311.00 of CETA. Further value of gas cylinders and other components and materials would be added to arrive at the value of the impugned goods.
(ii) Since the letter of protest given by the Respondents had not been acknowledged/received by the proper officer i.e. the Asst. Commissioner of Central Excise, Eluru, the requirement of Rule 233B of Central Excise Rules is not fulfilled by the Respondents and the claim for refund is time barred.
(iii) The order of the Day. Commissioner sanctioning refund amounting to Rs. 1,24,930/- is not legal and proper.
The appellants strongly challenged the above finding and hence, they have come before this Tribunal for relief.
3. S/Shri K.S. Ravi Shankar and N. Anand, learned Advocates appeared for the appellants and Shri R.K. Singla, learned JCDR appeared for the Revenue.
4. The learned Advocates urged the following points:
(a) The Commissioner (A) has traversed beyond the scope of the relevant departmental appeal/show cause notice/adjudication orders. The main question in the departmental appeal is as to whether the letter of protest made by the appellants is valid or not. In other words, departmental appeal does not seek anything about the correct classification or value of the manifolds cleared by the appellants during the material period of dispute. The Commissioner (A) has no jurisdiction to bring any other matters which are not relevant to the present case.
(b) The Commissioner (A) has wrongly concluded in his order that
the appellants have not followed the procedure as per Rule 233B of Central Excise Rules without mentioned as to what portion of the procedure they have violated. The following chronology of events relating to payment of duty under protest has been furnished by the appellants in their paper book of appeal filed before this Bench and the learned Advocates brought these facts to the notice of the Bench.
Annexure Document/Date Remarks
No.
4. Appellant's letter CFK/CE/98/865, dt. 5-12- Clearances of Manifolds
98 addressed to Superintendent of Central taken under protest
Excise along with invoices dt. 4-12-98.
5. Superintendent's letter R.O.R No. 4/98, dt. Asking the reasons for
10-12-98 issued by the Superintendent of Cen- under protest.
tral Excise
6. Appellant's letter EC/CHVR/KVR/HGC/ Explained the reasons for
98, dt. 16-12-98 addressed to Superintendent under protest.
of Central Excise.
7. Appellant's letter EC/CHVR/98, dt. 28-12- Duly acknowledged.
98 letter of protest addressed to Superinten-
dent of Central Excise.
8. Appellant's CFK/CE/99, dt. 2-1-99 ad- Further clarification for
dressed to Superintendent of Central Excise under protest.
9. I Appellant's letter EC/CHVR/KVR/MI/99, Informed Deputy Com-
dt. 9-7-99 addressed to Deputy Commis- missioner in clarification
sioner of price declarations.
10. Appellant's letter EC/CHVR/Manifolds/ In reply to the Show
KVR/99, dt. 15-9-99 addressed to Deputy Cause Notice dt. 18-8-99
Commissioner mentioned under protest
at page 5.
11. Deputy Commissioner's order-in-original Noted by the Deputy
No. 37/99, dt. 29-11-99 Commissioner at Para 2,
line 5 of his order.
12. Appellant's Refund claim CFK/CE/2000, dt. Informed to the Deputy
11-1-2000 addressed to Deputy Commis- Commissioner as the duty
sioner. was paid under protest.
Deputy Commissioner order-in-original No. Deputy Commissioner
01/2001 dt. 6-6-2001 (Annexure 1 - Pages 23- himself admitted under
25). protest under Rule 233B
and
allowed
refund claim.
5. The learned JCDR reiterated the findings of the impugned order.
6. We have gone through the records of the case carefully. When the Order-in-Original No. 1/2001, dated 6-6-2001 was reviewed by the Commissioner, the following grounds were mentioned.
The order passed by the Dy. Commissioner of Central Excise, Eluru Division, is not legal and proper for the following reasons:
(a) The Rule 233B warrants to assessees to file their letter of protest with the proper officer who is nothing by the Jurisdictional Assistant Commissioner in terms of the delegation of powers and it is not further delegated to the Range Superintendent.
(b) The Honourable High Court of Bombay in the case of M/s. Roche Products Ltd. has also held that the letter intimating the Assistant Commissioner regarding payment of duty under protest is sufficient compliance of Rule 233B: 1991 (51) E.L.T. 238 (Bombay).
(c) The Adjudicating Authority has not substantiated his stand in OIO in question either with statutory provisions or with any judicial pronouncements.
Hence, the short point before the Commissioner is limited to the question whether Rule 233B was complied with by the appellants. In other words, Revenue has not asked the appeal to decide the classification and valuation of the impugned goods. Therefore, we are in agreement with the appellants that the Commissioner has traversed beyond the scope of departmental appeal/Show Cause Notice/adjudication order. Further from the chronology of events, it is very clear that even from the beginning the appellants paid the duty under protest and there is sufficient correspondence between the appellant and the department. Even in the Order sanctioning refund the Dy. Commissioner has recorded that duty was paid under protest. The following case laws come to the rescue of the appellants.
(i) I.C.EM. Engineering Co. P. Ltd. v. CCE , wherein it was held by the Hon’ble Tribunal that Superintendent being the officer in charge of Revenue supervising all the payments, records, etc., is a proper officer to receive letter of protest under Rule 233B of Central Excise Rules.
(ii) P.V.P Ltd. v. CCE , wherein it has been held that letter sent stating that amount of duty paid under protest is sufficient and the refund not to be subjected under Section 11B of CE Act, 1944.
(iii) M/s. D.C.M. Data Products . (iv) M/s. Andhra Cements Co. Ltd. . (v) Roche Products v. UOI .
6.1 In view of the above, the impugned Order-in-Appeal has no merits. The appellant has shown enough evidence to prove that they had paid the duty under protest and followed Rule 233B. Hence, we are allowing the appeal of the appellants by setting the Order-in-Appeal and restoring the Order-in-Original No. 1/2001, dated 6-6-2001.
Appeal Nos. E/455/2004 & E/191/2004
7. The facts leading to the passing of Orders-in-Appeals 53 & 54/2003, dated 22-11-2003 are as follows:
(i) The Dy. Commissioner of Central Excise, Eluru passed two orders-in-originals. In order No. 36/99, dated 29-11-99, he decided that the Manifolds are iron cages manufactured by the assessee would fall under 8707.00 and entitled to duty exemption under Notification No. 5/98 irrespective of the classification because according to the provision of the said Notification SI. No. 268 all the goods manufactured in the factory and used within the same factory for building a body or fabrication or mounting or fitting of a structure or equipment on a chassis of a motor vehicle is entitled to duty exemption. Hence, he dropped the proceedings initiated vide Show Cause Notice dated 24-6-99.
(ii) In adjudication order No. 37/99, the Dy. Commissioner has held that the value of the cylinder is excludable from the assessable value of the manifold because both have distinct names, tariff heading and usage. Therefore, he dropped the proceedings initiated in Show Cause Notice dated 18-8-99.
(iii) Revenue was aggrieved over the above decision of the Dy. Commissioner of Central Excise, Eluru. Hence, appeals were filed before the Commissioner (A).
(iv) The Commissioner (A) took up both the appeals and passed the impugned orders. In the impugned orders, he allowed the departmental appeal holding that Manifolds will be appropriately classifiable under heading 7311.00 of CETA. Further exemption under Notification No. 5/98-CE, dated 2-6-98 will not be available for the Manifolds. The value of the duty paid gas cylinders and other components/raw materials has to be taken into consideration for arriving at the assessable value of the Manifolds. He demanded Rs. 8,38,460/- proposed in Show Cause Notice dated 18-8-99.
(v) The appellants challenge strongly the findings in the Orders-in-Appeal.
8. The learned Advocates urged the following points:
(i) The Adjudicating Authority has actually visited the factory and found that the Manifolds are fabricated bodies and fitted on the chassis of a motor vehicle. Hence, he has given a clear finding that they would be classifiable under 8707.00 and would be entitled for duty exemption under Notification No. 5/98, dated 2-6-98. Irrespective of its classification under 8707.00 or otherwise because according to provisions of the said Notification SI. No. 268 all the goods manufactured in a factory and used within the same factory for building a body or fabrication or mounting or fitting of a structure or an equipment on a chassis of a motor vehicle is entitled to duty exemption.
(ii) As regards the valuation point, the learned Advocate relied on the decision of this Bench in the case of JOCIL Ltd. v. CCE, Guntur , wherein it is held that Manifolds are not part and parcel of gas cylinders and the value of the Manifolds is not ineluctable in the value of the gas cylinders. The ratio of the above case is squarely applicable to the present case also.
(iii) The Manifolds are structures or equipment (as explained against S. No. 3 of HSN Notes of Chapter 87) and classifiable under SH No. 8707.00. After manufacture of manifolds with all accessories only about 134 duty paid empty cylinders will be simply fitted with the help of bolts and nuts. The manifolds with empty cylinders will thereafter mounted on the chassis of the vehicle.
(iv) Revenue’s contention that the manifolds fitted with cylinders are classifiable under S.H. No. 7311.00. S.H. No. 7311.00 refers to containers for compressed or liquefied gas or iron of steel. The above classification does not apply to the instant case because the containers are different finished products which are used fill up compressed gases for storage and further purposes. Containers are packing receptacles specially designed and equipped for carriage by one or more modes of transport not only by road but also by rail, water or air. They are equipped with nipples, nozzles, pins, etc., to facilitate to fill up and store the gases under vacuum pressure. They are suitable for transport of goods without any further repacking intended to be used repeatedly as durables. However, manifold is different item which by itself cannot fill up or carry compressed gases as mentioned under S.H. No. 7311.00. This is only an iron structure specially designed to accommodate the above said cylinders, which are classified under 7311.00. Just because cylinders are fitted in the manifold, it cannot be classified under 7311.00.
(v) The impugned goods are secured to the chassis of a motor vehicle and obviously these are covered under Chapter 87 which deals with exclusively vehicles/bodies/structures/cabs etc., for transportation of humans, things, oil, gases. In other words, manifolds fitted on a chassis of a vehicle are identifiable as being suitable to use solely or principally with the motor vehicles of S.H. No. 87.04 i.e. lorry. Therefore, manifolds are correctly classified under S.H. No. 87.07.
(vi) The appellants rely on Ministry of Finance Circular No. F. No. 156/34/88-CX4, dt. 13-1-89 wherein it was clarified as to how the items like tankers etc., fixed on chassis and used as containers for carriage of goods are classifiable under S.H. No. 8707.00 but not under any other Chapters of 73,83 and 86.
(vii) The appellants also rely on Board’s Circular No. F. No. 156/39/88-CX4, dt. 26-5-89 wherein it was clarified that the parts attached to Motor vehicles have been classified under S.H. No. 8707.00.
(viii)They relied on case law in the case of Maniar and Co. v. CCE wherein it is held that hydraulic equipment fitted on duty paid chassis for carriage of containers for evacuating garbage is classifiable as special purpose motor vehicle under S.H. No. 87.05.
(ix) Right from the issue of Show Cause Notice the dept. has no where quantified the duty liability under Section 11A of Central Excise Act. If there is no duty liability, the OIA becomes null and void.
(x) The OIA was first passed on 22-11-2003 proposing to recover the duty amount of Rs. 8,38,460/- and thereafter, a corrigendum was subsequently passed on 19-12-2003 to recover the duty amounts on the value of Rs. 8,38,460/- from which it is not possible to quantify the exact duty amounts in the absence of the number of manifolds involved, correct value of the goods, rates of duty, period covered.
(xi) When the demand was not raised in the Show Cause Notice under Section 11 A, the first authority has no jurisdiction to demand the duty amounts on some proposed value of the goods at the stage of appeal proceedings.
(xii) The quasi judicial authority has no authority to modify his own order by issue of corrigendum because he becomes functus officio and his any further dealing with his own order amounts to review, which is not permissible under Central Excise law.
9. The learned JCDR reiterated the findings recorded in Order-in-Appeals.
10. We have gone through the records of the case carefully. The issues involves in these appeals are as follows:
(i) Whether the manifolds manufactured by the appellants’ would fall under 8707.00 or 7311.00.
(ii) Whether the said manifolds are entitled for the benefit of exemption Notification No. 5/98.
(iii) Whether the value of the gas cylinders and other components/raw materials is includable in the assessable value of the manifolds.
10.1 It is seen that manifolds are structures manufactured from iron, brass, etc. First columns will be cut into required lengths. Individual header pipes and pigtails are made from brass, copper by silver brazing rods for which required components are made from the lathe machines viz., bull noses, bull nose nuts, brass blocks and pressure gauge adopters, etc. With fixation of tube components, a stand in the structure called manifold will be assembled and welded to suitably accommodate about 134 cylinders at a time. On completion of manufacture of the finished products, loose cylinders which were purchased from outside will be fixed with bolts and nuts. The cylinders are easily detachable whenever they are required to be removed. The cylinders are duty paid. The manifolds fabricated are mounted on the chassis of a truck. Entry 7311.00 reads as follows: containers for compressed or liquefied gas of iron or steel. For the manufacturing process of the manifolds, it would be very difficult to say that the manifolds are containers for compressed or liquefied gas. The gas cylinders only would be correctly classifiable under 7311.00. On this we find that there is no dispute. The manifolds are specially manufactured for fitting the cylinders and transporting the gas from the manufacturer premises to the premises of the customer. It is also seen that they are structures, which are mounted on the chassis of a vehicle. This is clear from the order of the original authority who has actually visited the factory and inspected the goods. The appellants have cited the two circulars of the Board dated 13-1-89 and 26-5-89. In the circular dated 13-1-89, it has been clarified that container/tank fabricated for mounting on chassis in the manufacture of road tankers would be regarded as fabrication of bodies for motor vehicles under heading 87.07. The principle enunciated in the above circular would be clearly applicable to the present case. Hence, we are of the view that the manifold, which is a structure to hold the gas cylinders and mounted on a chassis, would be more appropriately classifiable under S.H. 8707.00.
10.2 The appellants had claimed exemption of Notification No. 5/98 under SI. No. 268. We are reproducing the relevant entries of the exemption Notification:
All goods manufactured in a factory and used within the same factory for building a body or fabrication or mounting or fitting of structure or equipment on a chassis of a motor vehicle of heading No. 87.02 or 87.04.
A careful reading of the entry 268 would show that whatever be the classification of the goods, if they are used in the factory for fabrication of a structure to be mounted on a chassis, they are entitled for the benefit of the exemption. These conditions have been fulfilled, as the original authority has given a finding after visiting the factory. The Commissioner (A) has not properly discussed as to why the benefit of the exemption Notification cannot be given to the impugned goods. The fact that the structure manufactured is mounted on the chassis of a vehicle is not in dispute. Hence, the original authority is right in extending the benefit of the exemption Notification.
10.3 As regards the third issue, the question becomes irrelevant once the impugned goods are given the benefit of the exemption Notification. However, this Tribunal in the case of jOCIL (supra) has already held that gas cylinder and manifolds are distinct products and the value of the manifolds cannot be included in value of gas cylinder. In these circumstances, the Orders-in-Appeal have no merits. Further, we see that neither the Show Cause Notice nor the Or-ders-in-Appeal has quantified the duty liability. This is also a serious defect in the impugned order and also in the proceedings initiated by the Revenue. In any case, as the Orders-in-Appeal are not sustainable, we set aside the same and allow the appeals of the appellants with consequential relief.
(Operative portion of this Order was pronounced in open court on conclusion of hearing)