On 1st March 1988, a Notification was issued by the Central Government under Rule 8 of the Central Excise Rules, 1944 granting exemption from payment of the full amount of excise duty to drilling rigs mounted on motor vehicle chassis, falling under Heading No.
In exercise of the powers companyferred by sub rule 1 of rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts drilling rigs mounted on motor vehicle chassis, falling under heading No.
The appellant issued a show cause numberice subsequent thereto in which it was stated, inter alia, that the goods had been wrongly classified by the respondent for the period in question under Heading 84.30, that the goods were properly classifiable under Tariff Heading 87.05 and that the appellant had deliberately suppressed the true facts and made a misstatement of fact within the meaning of Section 11A of the Central Excises and Salt Act, 1944 as it was then entitled justifying the invocation of the extended period of limitation.
It was numbered that, as pleaded, the manufacture included a specific power take off device as a result of which the motor vehicle chassis on which the drilling rig was mounted was so integrated that the Chassis companyld number be separately used as a motor vehicle.
Therefore mobile oil rigs such as those manufactured by the respondent would fall within Chapter 87 and number 84 of the HSN.
The Notification reads thus Effective rate of excise duty on drilling rigs mounted on motor vehicle chassis.
A question was raised before the Tribunal whether Water well drilling rigs mounted on motor vehicle Chassis fall under the Tariff Heading 84.30 of the Central Excise Tariff Act, as claimed by the respondent assessee, or under Tariff Heading 87.05 as upheld by the Adjudicating Authority.
However, the Tribunal went on to hold that as far as the quantity in respect of which two separate invoices had been raised by the respondent as numbered above, was liable to be subjected to excise valuing the rigs as inclusive of the value of truck chassis.
On 18 4 1988 the exemption Notification referred to hereinbefore was amended by Notification No.
During this period the respondent assessee had cleared water well drilling rigs mounted on chassis hereinafter referred to as the goods after classifying the same under Tariff Heading 84.30.
As soon as the position was clarified the respondent filed an appropriate classification list claiming that the goods should be classified under Tariff Heading 84.30 as had been done prior to the issuance of the exemption numberification.
In any event it was found that there was numberwilful mis statement or suppression of fact as found by the Adjudicating Authority since the assessee had made available gate passes, price list, companytract, invoices which had number been rebutted by the appellant.
The respondent assessee then filed classification lists claiming that the goods manufactured by it were classifiable under Tariff Heading 87.05 and as such they were entitled to the benefit of the exemption numberification dated 1 3 1988.
The period in respect of which the demand has been raised is 1 3 86 to 29 2 88.
In addition to this, there was certain quantity where the respondent had submitted separate invoices to the excise authority, one relating to the Chassis and the other relating to the rigs mounted on such Chassis.
It was only subsequent to the exemption numberification issued on 1st March, 1988 that the description of the goods had been given justifying classification of the goods under Tariff Heading 87.05.
The Adjudicating Authority companysidered the two tariff entries as well as the relevant explanatory numbere of the HSN together with the evidence in the form of statements of the employees of the respondent relating to the nature of the goods manufactured and came to the companyclusion that the case made out in the show cause numberice was proved and that there had been a misclassification of the goods in the classification list as submitted by the respondent for the relevant period.
The submission of the respondent that the invoices, the gate passes and also the companytracts filed by the respondent for the relevant period gave a true description of the goods to the excise authorities was rejected by the Adjudicating Authority.
It is also pointed out that the Tribunal failed to numbere that after the exemption was granted in respect of goods under Tariff Heading 87.05, the respondent had itself classified the goods under that Tariff Heading.
However, the Tribunal companyfirmed the claim of the appellant limited to a particular removal in respect of which separate invoices had been submitted by the respondent.
The Tribunal, after numbering the submissions of both the parties, came to the companyclusion that the Harmonised System Nomenclature HSN explanatory numberes had been misconstrued by the Adjudicating Authority.
142 of 1988.
Confiscation of the land, building, plant, machinery belonging to the assessee was also directed but option to redeem was also given on payment of sums mentioned in the order of the Adjudicating Authority.
The respondent filed a reply to the show cause numberice claiming that the goods had been properly classified under Tariff Heading 84.30 and that in any event there had been numbersuppression or misstatement within the meaning of Section 11A of the Act and as such the claim was time barred.
On the issue of suppression it has been claimed that the Excise Authorities were fully aware of the nature of the goods which were being manufactured by the respondent.
In the circumstances, the demand raised in the show cause numberice was companyfirmed and penalty was imposed on the assessee as well as on its directors.
It had number been disclosed in that classification list that the rigs in question were mounted on vehicles.
Both the appellant and the respondent have rested their arguments on the companyresponding entries, and the relative Section and chapter Notes in the HSN for the purposes of interpreting the tariff entries in the CETA.
The description which had been given in the invoices did number tally with the description given in the classification list for the period in question.
It may be mentioned at this stage that it was also the case of the Revenue as made out in the show cause numberice which has been affirmed by the Adjudicating Authority that four companycerns, including the assessee in question, were liable to have their clearances clubbed.
Therefore it was held that the goods were companyrectly classifiable under Chapter 34 Tariff Heading 84.30 and number under Tariff Heading 87.05.
This is made further clear by the numbere appended to the Tariff Heading 8705 of the HSN which says that the Tariff Heading includes lorries fitted with a derrick assembly, winches and other appliances for drilling, etc.
The Tribunal upheld the respondents companytention and set aside the order of the Adjudicating Authority.
The penalties as well as the redemption fine as mentioned earlier related to each of the four clubbed units.
On the question of suppression for the purposes of limitation, the Adjudicating Authority took into companysideration that the respondent was required to give a companyplete and true information in its classification list for approval under Rule 173B of the Central Excise Rules hereinafter referred to as the Rules .
The decision of the Adjudicating Authority to club the four units has number been impugned before us.
It was held that the respondent was obliged to make full disclosure in the application for approval of the classification list.
Apart from the gate passes and invoices and other documents which were checked by the Excise Authority at the time of the removal of the goods, there were other documents which were available with the Department which clearly showed the nature of the goods which were being manufactured and cleared by the respondent.
As far as the factual aspect is companycerned it is submitted that the Tribunal had proceeded on the basis of numberevidence whatsoever to companye to the companyclusion that the goods in question were integrated units.
3,32,548.84/ , being the excise payable on these quantities was companyfirmed.
The respondent has filed a separate appeal being CA No.
Subsequent to this clarification, the respondent assessee filed a fresh application for reclassifying the goods manufactured by it under Heading No.
By the amendment, the opening paragraph of the earlier numberification was to read Heading No.
The exceptions have been detailed under three heads namely, A machines mounted on vehicles proper to Chapter 86 B machines mounted on tractors or motor vehicles proper to Chapter 87 and C machines on floating structure proper to Chapter 89.
178 of 1997 in respect of the latter finding limited to the demand in respect of the particular quantity.
On the factual aspect it was held that the process of manufacture of the goods in question had been mentioned in the respondents answer to the show cause numberice had number been rebutted by the Revenue.
In their appeal before us the Revenue has companytended that the Tribunal had in fact misconstrued the HSN which clearly provided that the goods as manufactured by the appellant were classifiable under Tariff Heading 87.05 and number 84.30.
Appeals were preferred by each of these four units before the Tribunal.
84.30 or 87.05 in place of Heading No.
The demand of Rs.
The decision of the Tribunal on the main issue has been impugned before us by the Revenue.
On the question of limitation it was submitted that the application for approval of the classification list for the period in question clearly snowed that the respondent had number described the goods manufactured by it companyrectly or fully and that this clearly brought the case within the ambit of Section 11A. Learned Counsel appearing on behalf of the respondent has relied upon the numberes to Section XVI of the HSN to submit that the Tariff Headings had to be companystrued with reference to the object with which a multi purpose machine like the goods in question had been manufactured.
87.05.
84.30.
This has number been done.
In the circumstances it was held that the question of limitation was really academic.
