Super Steel Corporation vs Commissioner Of Central Excise, ...

(Arising out of Order-in-Appeal No. AT/M-II/115/2004 dated 5.1.2005 passed by Commissioner of Central Excise (Appeals), Mumbai-II)

For approval and signature:

Honble Mr. M.V. Ravindran, Member (Judicial) and Honble Mr. P.K. Jain, Member (Technical)

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1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the :

CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy : Seen of the Order?

4. Whether Order is to be circulated to the Departmental : Yes authorities?

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Super Steel Corporation Appellant Vs. Commissioner of Central Excise, Mumbai-II Respondent

Appearance: Shri Ragesh S. Mehta, Advocate, for appellant Shri Rakesh Goyal, Additional Commissioner (AR), for respondent

CORAM: Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. P.K. Jain, Member (Technical)

Date of Hearing: 17.12.2014 Date of Decision: 6.1.2015

ORDER NO

Per: M.V. Ravindran

This appeal is directed against order-in-appeal No. AT/M-II/115/2004 dated 5.1.2005.

2. The relevant facts that arise for consideration are the appellant herein is the manufacturer of LPG tankers and classified the final product under Chapter Heading 87.04 and discharged the duty liability availing the benefit of concessional rate of duty as provided in Notification No. 239/86 as amended. The Revenue authorities, after scrutinizing the records, came to the conclusion that the products manufactured by the appellant would get classified under Heading 8707.00 and raised the show cause notice demanding the differential duty. Five show cause notices were issued for demanding differential duty for the period 3.5.1988 to December 1989. The appellant contested the matter on merits before the adjudicating authority. The adjudicating authority did not agree with the contentions raised and confirmed the demands with interest and also imposed penalty. Aggrieved by such an order, the appellant preferred appeal before the first appellate authority. The first appellate authority, after following the due process of law, agreed with the order-in-original and upheld the demands raised along with interest and also the imposition of penalty.

3. The learned counsel would take us through the rival entries which are in dispute. Further, explaining the process of manufacture, he would submit that the appellant fabricates the tankers which are called as LPG tanks and mounts them on two different trolleys. One of which is called a prime mover and another one is without any prime moving activity. He would take us through the photographs of the vehicle which rolls out of their factory. He would submit that in their own understanding, they have classified the same under Heading 8704.00 as motor vehicles for transport of goods. It is his submission that the said tankers are used for transportation of LPG gas. He would then submit that the departments contention as to their products would get classified under Heading 8707.00, is incorrect as that heading would apply to bodies which are mounted on the chassis received from the customers. He would submit that in the case in hand, they are not mounting the bodies or the tankers on the chassis supplied by the customer. He would submit that in any case, the classification of the product under Heading 87.07 would also be eligible for the benefit of Notification No.217/86-CE inasmuch as there is no dispute that the said bodies are used/utilized by the appellant in the manufacture of motor vehicles for transport of the goods on which duty liability is discharged. It is his submission that the judgment of the Tribunal in the case of Kamal Auto Industries vs. CCE, Jaipur  1996 (82) ELT 558, is also in their favour as to the classification of the products manufactured and cleared by them.

4. The learned departmental representative, on the other hand, would submit that the LPG tanks which are on an attachment at one end to the running gear result in emergence of new products, viz. semi-tanker trailer coupled through a special coupling device to the prime mover. It is his submission that LPG tanks or bodies for the vehicles are correctly classifiable under Heading 87.07 and submit that this view has been taken by the Tribunal in the case of Heat Weld vs. CCE  1992 (57) ELT 432. He would also rely upon the CBEC Circular No. 2/89 dated 13.1.1989 and submit that it is clarified that container/tanker fabricated for mounting on chassis in the manufacture of road tankers would be regarded as fabrication of bodies for motor vehicles and would fall under Heading 8707.

5. We have considered the submissions made at length by both sides and perused the records. The issue involved in this case is regarding the classification of the container/tanks fabricated by the appellant.

6. Undisputed facts are the appellant herein had discharged duty liability on the products which roll out of their premises, under Heading 87.04 as motor vehicles for transport of goods, availing the benefit of exemption Notification No.239/86-CE as amended. It is also undisputed that the appellant is fabricating tanks in their premises and attaches one end to the prime mover while attaching the other end to a non-prime mover.

7. In our considered view, the entire issue can be disposed of on a very straight legal issue. It is undisputed that the appellant is discharging central excise duty liability of the products rolling out of their factory motor vehicles for transportation of goods classifying the same under Chapter Heading 8704.00. The Revenues contention that the products fabricated by the appellant  container/tanks  would fall under category of 87.07 and liable to duty even accepted, the benefit of Notification 217/86-CE needs to be extended inasmuch as it is undisputed that the said tanks which are fabricated in the appellants premises are fixed on one end on a running gear and the other end on a non-running gear. We find from the records that the lower authorities are accepting the fact that what rolls out of factory of the appellant is a Motor vehicle for transportation of goods, and have accepted the duty liability so discharged. We find that this is the view which has been expressed by the CBEC in Circular No.2/89 dated 13.1.1989 as is relied upon by the departmental representative. CBEC, in their circular at para 5, has stated as under:-

5. In view of the above, it is therefore clarified that container/tank fabricated for mounting on chassis (Heading No. 8706) in the manufacture of road tankers (Heading No.8704) would be regarded as fabrication of bodies for motor vehicles under Heading 8707, or fabrication of bodies for trailer/semi trailer Heading of 8716. However, these would be eligible for benefit of exemption under Notification 217/86, if the final product i.e. motor vehicles of Heading 8704 pay duty at appropriate rates.

8. In view of the foregoing, we hold that the appellant is eligible for the benefit of Notification No. 217/86, we find that the impugned order confirming the demands on the appellant is liable to be set aside and we do so.

9. On this neat question of law, we dispose of the appeal and are not recording any observation on the various other issues raised by both sides.

10. In view of the foregoing, the impugned order is set aside and the appeal is allowed.

(Pronounced in Court on 8.1.2015)

(P.K. Jain) Member (Technical) (M.V. Ravindran) Member (Judicial)

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