1. The question for decision in this appeal to the Tribunal is whether 528 Fare Meters of the value of Rs. 4,31,400/- cleared by the appellants during December, 1979 and January, 1980 for export to Ceylon (5 directly by the appellants, 500 exported through M/s. Bajaj Auto Ltd., Poona (hereinafter Bajaj) and 23 meters exported through M/s.
Automobiles Products of India Ltd. (hereinafter API) should be included within the clearance made for home consumption by the appellants for the purposes of their availing exemption under Notification No.89/79-C.E,, dated 1-3-79.
2. Notification No. 89/79-C.E., dated 1-3-79 grants exemption and concession in respect of the goods falling under T.I. 68 to small scale manufacturers whose total capital investment on plant and machinery installed in the Industrial Put does not exceed Rs. 10,00 000. There is no dispute that the appellants Fulfilled this condition. Under the notification aforesaid, first clearance of goods upto an aggregate value not exceeding Rs. 15 lakhs are exempt from whole of duty of excise and next 15 lakhs are chargeable to 4% ad valorem duty under para 2 nothing contained in the notification shall apply to a manufacturer if the total value of the said goods cleared for home consumption by him or on his behalf from one or more a factory in the preceding financial year had exceeded Rs. 30 lakhs. Notification No.105/80-C.E., dated 19-6 80 is the successor notification to this notification and has in para 3 similar condition under which the notification is not to apply to a manufacturer if the total value of the goods cleared for home consumption by him or on his behalf from one or more factories the preceding financial year exceeded Rs. 30 lakhs.
Appellants are manufacturers of Fare Meters for Taxis and Auto-Rickshaws falling under T.I. 68 of the C.E.T. The statutory rate of duty at the material time was 8% ad valorem. Appellants' clearances for the previous financial year 1978-79 did not exceed Rs. 30 lakhs.
They were therefore entitled to claim the benefit of exemption and concession under the Notification No. 89/79-C.E. for the year 1979-80.
The Range Superintendent, Thanewane Division at the time of assessing the R.T. 12s of the Appellants noticed that appellants had cleared Auto-rickshaw fare meters without payment of duty under Gate Pass in form G.P. I, numbers 37-98 although they had crossed the exemption limit of first 15 lakhs. The Range Superintendent, therefore called upon the appellants by letter dated 20-2-80 to debit a sum of Rs. 37,417.28 paise in their P.L.As. being the Central Excise duty payable at 4% ad valorem on the clearances effected under the gate passes described above. The appellants debited only a sum of Rs. 20,161.08 paise in their P.L.A. on 22-2-80 against the demand. Thereafter show cause notice dated 26-2-80 demanding the remaining amount of Rs. 17,256.00 was served on the appellants. In reply to the show cause notice; the appellants by their letter dated 20-2-1980 submitted that the sum of Rs. 17,256.00 being the Excise duty at the rate of 4% ad valorem on clearance of value of Rs. 4,31,400 related to 528 meters, which had been exported to Ceylon through Bajaj (500 numbers), API (23) and themselves (5 meters). The appellants submitted that these clearances were not liable to excise duty. The appellants filed documents in their defence. The Assistant Collector of Central Excise, Thane I Dn. by his order dated 6-5-80 held that as the meters were exported to Ceylon the S.C.N. was not sustainable. He, therefore, withdrew the S.C.N. and the demand of Rs. 17,256.00.
3. The Collector of Central Excise, Bombay-II, acting under Section 35A of the Central Excises and Salt Act, 1944 (hereinafter called the Act) was of the view that the order passed by the Asstt. Collector, Central Excise, was not legal, proper and correct. He served a Review Notice dated 14-10-80 on the appellants calling upon them to show cause why the order be not set aside and appropriate order passed. The appellants replied to the Review Notice chalengiog the same. For reasons detailed in the order, Collector of Central Excise held that value of Rs. 4,31,400/- of 528 meters would be included for the purpose of availing of exemption under Notification No. 89/79-C.E. and 4% ad valorem duty would work to Rs. 17,256/-. He, therefore, set aside the Asstt.
Collector's order and ordered recovery of the amount from the appellants. He, however, did not impose any penalty on the appellants.
4. Aggrieved with this order, the appellants have filed the present appeal. At the hearing of the appeal Shri A. Hidayatullah, learned Counsel for the appellants submitted that the Fare Meters were not meant for home consumption nor were they capable of being utilised for home consumption because their tariff was based on the Ceylonese rates and markings were in Ceylonese currency. They were fitted with double counters which are not used in auto-rickshaws in India, gear box arrangement was different to that for meters made for home consumption, cartons were all marked MSHC and Colombo which are export cartons. M/s Bajaj & A.P.I, were given sales tax exemption for export of goods by Form 14 issued under Section 12 of the Bombay Sales Tax Act, 1959. The type and specification of the meters was as given by the Ceylonese Importers and they were not manufactured for home consumption. He further submitted that meters were in fact exported and were not fitted to the Auto-rickshaws as alleged in the Review Notice and the material evidence to this effect had been disregarded. In this connection he pointed out the following evidence : (a) packing lists with AR4A forms shows separate packing from other parts and accessories of the autorickshaw ; (b) packing lists show that size of the packing of the meters is totally different and distinct from that of other parts and accessories- for 8 meters the size of packing was-410x480x480 mm.
for 4 meters the size of packing was-220x480x480 mm ; (c) autorickshaws were exported in wooden crates and the meters were separately packed and exported in 5 ply corrugated fibreboard cartons of the appellants; (d) the certificates of Bajaj and API establish that meters were not 'fitted' to the autorickshaws; (e) 80 meters were directly shipped by the clearing agents (Dalai & Co.) which shows that the meters were not 'fitted'; (f) no question of fitting can arise because in some shipments only autorickshaws were exported as is clear from the packing lists.
5. He also urged that Review notice and order import a limitation in the language of the notification by stating that export goods had to be directly exported and this limitation of language was not permissible in interpreting the notification. It was further urged, that Reviewing authoritiy is bound by the scope of review notice and cannot exercise or decide an issue not raised in it. The order thus passed by the Collector of Central Excise, Bombay was beyond jurisdiction. The reference in the order to spare tyres also getting the rebate was not in the review notice and no opportunity given to meet the same to show that it is irrelevant; because no excise duty is paid on tyres supplied as original equipment to manufacturers of motor vehicles. The order decided the issue by reference to analogy and consequences of granting relief which was irrelevant consideration.
6. Shri A. Hidayatullah, counsel for the appellants in support of the appellants' claim strongly relied on a decision of the Tribunal in International Minelmech v. Collector of Central Excise, Meerut--1983 E.L.T. 2367, in which it was held that for the operation of Notification No. 105/80-C.E. there is no need for actual export of goods by manufacturers but it is sufficient if the goods are cleared for export. Goods cleared for export and actually exported out of India cannot be considered as goods cleared for home consumption and as a consequence the value of such goods cannot be taken into consideration for computation of the value of clearance under the Notification No.105/80-C.E. A comparative statement showing the points considered by the Tribunal in International Minelmech's case and between the present case was filed before the Bench. The points of comparison are set out in tabulated form below :- Factors showing goods were for export and actually exported in International Minelmech.------------------------------------------------------------------Factors showing goods were for Factors showing goods were forexport and actually exported in export and actually exported inMinelmech.
Appellants' case.-------------------------------------------------------------------1. Ballarpur certified goods were 1.Bajaj and API certified goods exported were exported.2. Order placed by Ballarpur on 2.Purchase order by Bajaj on I.M. showed goods were for Appellants' shows goods were to specific purpose of export.
be manufactured according to Srilanka party's requirements3.Invoices of I.M. shows goods were 3.Invoices of Appellants to Bajaj supplied against specific orders shows goods were supplied for for export.
export (mentions "Srilanka Tariff" and same Purchase Order No.4. Copies of Bill of Lading and 4.Packing Lists separately identifypacking lists identifies markings goods of Appeallants, Packing wasof materials supplied by I.M. different in cartons bearing `MSHC' and `Colombo markings.5. Goods were shipped in original 5. Goods were shipped in Original packings.
Packings.6. Shipping Bills are certified 6. Shipping Bills are certified by Customs to show export by Customs to show export actually took place.
actually took place.7. No sales tax was charged 7. No sales tax was charged (form 14 was issued).8. Goods were paid for by Ballarpur 8. Goods were paid for by Bajaj and then exported but Tribunal and API and then exported considered this fact was but this is irrelevant, irrelevant.
as per Tribunal's decision in International Minelmech.9. No. GP 2 issued by I.M. and 9. GP 1 were issued as claimed they were within clearances were above Rs. 15 exemption limits.
lakhs He, therefore, strongly urged that the value of clearances of 528 fare meters should not be included in the value of clearances for the purpose of the aforesaid notification.
8. On behalf of the respondent, Shri V. Lakshmikumaran, SDR agreed that on the 9 points the two cases were comparable but submitted that there was a Tenth point on which they vitally differ and this struck at the very root of the appellants claim. He submitted that in the case of International Minelmech P. Ltd. v C.C.E. Meerut (Supra), the goods supplied by the manufacturer (appellants in that case) to M/s, Ballarpur Industries Ltd. were clearly and specifically for export and were actually exported to Thailand and there was no addition of machines etc. by M/s. Ballarpur Industries to the goods supplied by the manufacturers; whereas, in the present appeals the fare meters supplied by the appellants to M/s. Bajaj and API were cleared by them as components of autorickshaws in C.K.D. conditions and C.K.D. pack. He submitted that what was exported by M/s. Bajaj and API were not fare meters but auto-rickshaws fitted with fare meters as components. In this view of the matter there could be no comparison between precedent and the present appeal.
9. He submitted that A. R. 4 forms presented by Bajaj and API describe the goods for export as Bajaj Auto-rickshaws with spares tyres and tubes. The value of the auto-rickshaws indicated by Bajaj in AR 4 form was inclusive of value of accessories including the fare meters. The letter of credit and shipping bills of API describe the goods meant for export as auto-rickshaws inter-alia fitted with fare meters. The value indicated in the shipping bills and other documents was for the entire unit and not separately for the accessories which were not sent or fitted along with vehicles. He submitted that just because the components were indicated separately in the packing list it could not be concluded that Bajaj & API were exporting the items individually. He further urged that Drawback, cash assistance etc. were available to Bajaj and API on complete auto-rickshaws and not to their individual components. He gave analogy of a printed carton manufacturer manufacturing with writing in foreign language clearly meant for foreign use in a foreign country. He submitted that it could not be said that the printed cartons were for home consumption. He gave illustration of cycles despatched in C.K.D. condition and submitted that all the components went to make cycle falling under Item 35 of the CET. In support of this submission he relied on T.S. Cycles of India, Madras v. Union of India and Ors., 1983 E.L.T. 681 (Madras) and Order No. 220/1983-B dated 31-3-1983 in the case of Collector of Customs v.Bharat Heavy Electricals Ltd. He also submitted that the order of the Bench in the case of M/s. International Minelmech P. Ltd. v. C.C.E.Meerut, (CEGAT) (Supra) per incuriam it had not taken note of following three decisions of the Supreme Court which explained the meaning of 'Export':State of Mysore and Ors. v. Mysore Spinning and Manufacturing Co. and Ors., AIR (ii) Burmah Shell Oil Storage and Distributing Co. v. C.T.O., (1961) 1 S.C.R. 902;State of Kerala v. Cochin Coal Co. Ltd., 10. Shri Lakshmikumaran also submitted that the meaning of word 'Consumption' had been explained in the following two cases : (i) Anwar Khan Mehboob Co. v. State of Bombay, (1961) 1 S.C.R. 709; andState of Travancore Cochin v. Shanumga Vilas Cashewnut Factory, (1954) S.C.R. 53.
11. Relying on these decisions, he submitted that the Fare Meters had been consumed at home by Bajaj & API and therefore, it could not be said that these Fare Meters had been exported to Ceylon. On these grounds, Shri Lakshmikumaran urged dismissal of the appeal.
12. In reply, in his further submissions, Shri A. Hidayatullah, submitted as follows : (i) Description of goods in the Shipping Bill and the drawback, claimed on auto-rickshaws inclusive of the value of the fare meters is irrelevant because : (a) The Shipping Bills were only an application for claiming drawback, not a grant thereof and the amount has to be determined thereafter.
(b) Irrespective of any claim in the Shipping Bills, as admittedly, the fare meters were not excise duty paid, no drawback could be given under R. 3(1) proviso 1 of the Drawback Rules.
(c) Under Schedule II, item 50 no drawback was admissible as fare meters commercially understood are not a "part" or "accessory" of an auto-rickshaw.
(a) Bajaj/API did not regard them as such as they issued Form 14 certificates for Sales Tax purposes i.e. a declaration that the fare meters were not for use in the manufacture of the auto-rickshaw (otherwise Form 15 would have been issued).
(c) A "part" has to be something without which the goods in question are not complete and not usable and this test is not satisfied, in the case of fare meters.
(d) An "accessory" is something which adds to the convenience or effectiveness which test is not satisfied in the case of fare meters.
(iii) In any event, the issue cannot be raised at this stage as the Appellate Tribunal is bound by the scope of the review show cause notice where the only issue is whether the fare meters were fitted to the auto-rickshaws at the time of export so as to contend they were cleared for home consumption. An appellate authority is bound by the jurisdiction exercisable by the subordinate authority.
(iv) The question of C.K.D. condition of the exports may be relevant to only the various parts of the autorickshaw and not other goods exported at the same time.
(v) The certificate of Bajaj and API are relevant material which explain what was meant in the Shipping Bills by the word "fittings'.
They cannot be disregarded and the probative value has to be tested in accordance with law.
13. We may first deal with first the three Supreme Court's decision cited above, dealing with the meaning of word 'Export'. In this connection, it is sufficient to say that the three decisions were interpreting Article 286 of the Constitution of India and were concerned with Sales Tax, Here we are concerned with duty of Central Excise and in interpreting an exemption Notification. The interpretation placed by the Supreme Court was with reference to the terms and wording of Article 286(1). There is also vital difference between the Sales Tax and duty of Central Excise. In fact, Shri Lakshmikumaran did not at one stage dispute the correctness of the order in the case of M/s. International Minelmech P. Ltd. (Supra) case and admitted that on the facts of the case, the decision was correct though at a later stage, he submitted that it was per incuriam. During his arguments, he was not able to pin point any particular part of the three Supreme Court decisions with reference to order of the Tribunal in M/s. International Minelmech P. Ltd. case and show that the conclusions in that order were wrong. It is also significant that in that case Shri Lakshmikumaran had himself argued for the respondent and the rulings now relied on by him were not cited in the case. We do not see any reason to depart from the earlier decision in M/s.
International Minelmech P. Ltd.'s case Shri Lakshmikumaran's reliance on three Supreme Court decisions: As to the decision relating to meaning of consumption it is sufficient to say whether or not there has been consumption of fare meters at the time auto-rickshaws were exported by M/s. Bajaj and API would depend on the question whether fare meters are component parts or accessories of auto-rickshaws. There can be no doubt that fare meters are not component parts of auto-rickshaws. They cannot also be called accessories. We do not find on record copies of the order placed by overseas buyers on Bajaj and API to know whether the overseas buyers wanted auto-rickshaws taxis or auto-rickshaws simplicitor. This documents would not be in the possession of the appellants. The Department had by issue of Show Cause Notice set aside the order in appellants favour passed by the A.C. Central Excise. One would expect the Department to place a copy of this order before the Bench. That has not been done.
14. As to 5 fare meters, which have directly been exported by the appellants, though proper documents for the purpose were not filed by the appellants, the Department does not dispute that the appellants should get the benefit in respect of these five fare meters. These would therefore, have to be excluded while computing the value of clearances made by the appellants. About 23 meters supplied by the appellants to API, though API has given a certificate that meters were packed in separate boxes and were not fitted on auto-rickshaws, we find that Bill of Lading in respect of API placed on file shows that auto-rickshaws were fitted with fare meters. From this, in the absence of copy of the order placed by the overseas buyers it could be safely presumed that the order must have been for auto-rickshaws taxis. In the circumstances, with respect to 23 fare meters relying on the document, it could be concluded that the fare meters had been consumed in auto-rickshaws taxis and what was exported was taxi auto-rickshaws. The Certificate issued by the API does not help the appellants in view of this contradiction in their own document.
15. Coming to the fare meters exported through M/s Bajaj Auto Ltd., the documents filed do not suffer from any such infirmity as in the case of API. The Show Cause notice dated 20-10-1980 issued to the appellants alleged that vehicles falling under Tariff Item 34 of the CET after fitting meters to the vehicles were cleared by the vehicle manufacturers and as such sale of 528 meters cannot be considered as export sales (this quantity included the 500 meters exported by Bajaj).
This allegation in the Show Cause notice is not borne out by evidence in respect of these 500 meters. There is nothing to show that the fare meters were fitted with auto-rickshaws. Besides purchase order by Bajaj on appellants shows that the goods were manufactured according to foreign buyers requirements. Invoice of appellants to Bajaj shows goods were supplied for export. Packing list separately identified the goods of the appellants. Goods were shipped in original packings. Shipping Bills are certified by Customs to show export actually having taken place. No Sales tax was charged from the Appellants. The appellants had issued gate passes which is an added factor in appellants' favour as compared to M/s. International Minelmech P. Ltd. The tenth point of difference urged by Shri Lakshmikumaran for the reasons we have set out above that fare meter is neither a component part nor accessory of the auto-rickshaws and in the absence of the copy of the order from overseas buyers does not help the respondent. We have already pointed out how the allegations made in the Show Cause Notice have not been substantiated by the evidence.
16. As to Department's argument that appellants should have followed Rules 12 & 13 of the Rules for export of excisable goods, it is sufficient to say that as appellants had not paid duty there was no question of their claiming rebate under Rule 12 of the Rules. As for their following Rule 13 the same would have been applicable to the appellants if they had not claimed benefit of exemption notification and were otherwise liable to payment of duty. There is nothing to show that the goods cleared free of duty under an exemption notification cannot be exported. From the facts of the case it does not appear that appellants could have obtained excise documents like AR 4 or AR 4A to cover the export, since no duty liability whether for refund or for failure to export could arise, the facts of the present case make it clear beyond doubt that 505 fare meters had actually been exported out of India. It is now idle to conjecture whether they were cleared for home consumption and then exported or cleared for export ab initio. The facts of the present case are substantially similar to International Minelmeck P. Ltd.'s case and in some respects it is better for the appellants. We would, therefore, hold that 505 fare meters are entitled to be treated as exported and their value deductible in arriving at the value of the clearance for home consumption in the relevant financial year. We therefore, allow the appeal in respect of 505 fare meters with consequential relief to the appellants. The appeal is thus partly allowed.