By TIOL News Service

MUMBAI, JAN 21, 2013: THE applicants are engaged in the manufacture of Tractors and the dispute in the present proceedings is in respect of the model “Arjun-Ultra-1 CE”. The applicants were clearing this model by claiming the classification under Chapter Heading 87 of the Tariff as “Tractor” as the same was exempted from the payment of Central Excise duty.

The Revenue wants to classify the same under sub-heading 8429 5100 of the Tariff specifically as ‘Front End Shovel Loader' and accordingly charge the same to Central Excise duty.

The proceedings resulted in confirmation of the demand of Rs.17,26,89,200/- along with penalty and interest by the CCE, Nagpur.

The appellant, therefore, in his “Arjun-Ultra-1” drove all the way to the CESTAT with a Stay application.

These are some of the submissions made -

+ that they manufactured Tractor model ‘Arjun-Ultra 1CE' and cleared the same by classifying under sub-heading 87019090 of the Tariff and were paying the duty, however, tractors were granted exemption from July, 2004.

+ The applicants were clearing only tractor to their various dealers and the dealers were procuring certain attachments, which were cleared with the tractors. The dealers are fitting the additional items in the tractors such as chassis assembly frame, direction control valve and additional hydraulic system for actuating the front end loaders, lifting cylinder, bucket cylinder, bucket assembly, counter weight at the back of the tractor. These equipments were procured from the market and the same are duty paid.

+ during the period in dispute, the applicants manufactured and cleared 2978 tractors of ‘Arjun-Ultra 1CE' model to various dealers and the dealers further cleared only 405 tractors with the additional assemblies such as dozer and loader.

+ In these circumstances, it cannot be said that all the tractors manufactured by the applicants are cleared by the dealers with the additional equipments and are classifiable under Chapter 84 of the Tariff as ‘Front End Shovel Loader'.

The Revenue representative relied upon the statement of the Dy. General Manager, who explained that in model “Arjun-Ultra 1 CE”, the word ‘CE' stands for Construction Equipment. The additional equipment is designed by the applicants and the additional equipments are attached by the various dealers. The additional equipment is designed as per the specification supplied to the dealers by the applicants and the same was fitted with the machine. The customers of the applicants also say that the machine in question is used in alternative to the JCB. All the evidences show that the machine in question is not a tractor classifiable under Chapter 87 of the Tariff. The Revenue also submitted that the evidence on record shows that the additional equipment is fitted with the machine in the supervision of the applicants and also having the brand name of ‘Mahindra & Mahindra'. It is also submitted that the machine in question is manufactured with the special grade front axle which is not for ordinary tractor. Hence, the demand is rightly made.

The Bench observed -

“6. The applicants manufactured during the period in dispute total 2978 numbers of machine in question and only in respect of 405 numbers of machine, the same were cleared with the additional equipments which was fitted at the place of the dealers. It is not a case of the Revenue that all the machines, which were classified by the applicants as tractor, are cleared with the additional equipment and cleared the same as dozer and loader. Only 405 numbers of machine cleared with additional equipment out of the total 2978 numbers of machine manufactured by the applicants and this fact was specifically mentioned in the reply to the show-cause notice and in the adjudication order, we find that this fact is not disputed.

7. In view of the fact that out of total 2978 numbers of machine which were cleared claiming the classification as tractor under Chapter 8701 of the Tariff, only in respect of 405 numbers of machine, the additional equipment was added at the place of the dealers of the applicants. In these circumstances, it cannot be said that all the machines manufactured by the applicants are classifiable as Front End Shovel Loader classifiable under sub-heading 84295100 of the Tariff. In these circumstances, we find that prima facie the applicants have made out a case for total waiver of dues.”

In fine, the Stay petition was allowed.

In passing: The real problem is not whether machines think, but whether men do. - B.F.Skinner, Contingencies of Reinforcement.

(See 2013-TIOL-128-CESTAT-MUM)