CX - Merely because specific entry was inserted which covers those goods which are already specified earlier, it cannot be said that these goods prior to 01.06.2006 were not falling under third schedule - CE duty rightly demanded: CESTAT
By TIOL News Service
MUMBAI, JULY 25, 2018: THE appellants are engaged in manufacture of Three Wheeled Motor vehicles and are also having Spare Parts Division (SPD) where they are carrying out activity of procuring spare parts from various vendors, packing/repacking them into unit containers, fixing MRP label on the same and clearing it to various Dealers/Customers etc. under their brand.
The case of the department is that the goods procured are falling under Chapter Heading 3208, 8536 and 8539 of the CETA, 1985 and the activity of Re packing/re- labeling of the same amounts to manufacture in terms of Section 2(f)(iii) of CEA, 1944 and the appellant is liable to pay CE duty on the basis of valuation arrived at in terms of s.4A of the CEA, 1944.
The CE duty demand was confirmed along with penalty and interest and the seized goods were confirmed with an option to pay redemption fine.
As the Commissioner(A) upheld this order, the appellant is before the CESTAT.
It is submitted that the period involved is 01.03.2003 to 19.08.2005 and the impugned goods namely switches, lamps falling under Chapter heading 8536 and 8539 respectively,which are spare parts of motor vehicles , have been notified only w.e.f. 01.06.2006 by insertion of Entry no. 97 in the Third Schedule by notification 11/2006-CE(NT) dated 29.05.2006. And, therefore, the demand for the prior period is not sustainable. The ground of the demand being hit by limitation is also raised. Reliance is placed on the decisions in G.S.Auto International Ltd. - 2003-TIOL-92-SC-CX& Hindustan Sanitaryware - 2002-TIOL-748-SC-CUS in support.
The AR justified the order of the lower authority.
The Bench considered the submissions and inter alia observed -
+ On perusal of third Schedule for the relevant period, we find that the goods falling under Chapter heading 3208 is covered under Sr. No. 34, the goods falling under Chapter 8536 is covered under Sr. No. 93 and the goods falling under Chapter 8539 is covered under Sr. No. 94 of the third Schedule issued under Section 2(f)(iii) of the Central Excise Act, 1944. Therefore on this undisputed position the goods of 3208, 8536 and 8539 when repacked/relabelled and rendered the same for marketable shall amount to manufacture.
+ The submission of the Ld. Counsel that there is specific entry inserted in the 3rd schedule w.e.f. 1-6-2006, we find that though the said specific entry was inserted/described as “parts, components and sub assemblies of automobile” but the fact remains that the goods falling under chapter heading 3208, 8536 and 8539 were already covered under 3 rd Schedule, therefore, in respect of those goods, the activity of repacking and re-labelling is amount to manufacture prior to 1-6-2006 also under specific entry in respect of goods 3208, 8536 and 8539 existing during the relevant period, merely because of specific entry was inserted which covers those goods which are already specified earlier cannot be said that these goods prior to 1-6-2006 was not falling under the third schedule.
+ Therefore, prior to 01.06.2006 goods falls under 3208, 8536 and 8539 indeed falling under third schedule, hence repacking and relabeling of these goods was amount to manufacture. Accordingly, appellant was liable to pay duty.
The case laws cited by the appellant were held to be distinguishable and not applicable to the facts of the present case.
The Bench added -
"…in the present case classification stands settled when the goods were received by the appellant. Since only activity was carried out by the appellant is of repacking and relabeling there is no question of change of classification. In the present case department has not insisted to change the classification, whereas the same classification which was applied by the supplier was applied mutatis-mutandis when it is cleared by the appellant, therefore, there is no quarrel as regard the classification in the present case…"
On limitation, the CESTAT noted that the activity undertaken by the appellant was not disclosed to the department, hence, there is clear suppression of facts and the extended period of limitation was rightly invoked.
The impugned order was upheld and the appeal was dismissed.
(See 2018-TIOL-2276-CESTAT-MUM)
