Tractor Cess not leviable on part and accessories of Tractor

M/s Gatiman Auto Pvt. Limited Vs CCE & CGST (CESTAT Delhi)

The issue before us is to decided as to whether the tractor cess is leviable on the part and component of the tractor cleared by the appellant. After going through the case laws cited and circular issued by the Ministry of Finance, it is clear that part and accessories etc. of the tractor cannot be compared

with that of the tractor itself. Therefore, the tractor cess is not leviable thereon in terms of Notification (supra). For the aforesaid conclusion, we also draw our support to CB EC Circular (supra) in the case of parts and accessories of the automobile which clearly goes in favour of the appellant. We are conscious of the fact that aforesaid circular is with reference to automobile cess but the principle enunciated there is squarely applicable in the instant case.

FULL TEXT OF THE CESTAT JUDGMENT

The present appeals are directed against the Order-in-Appeal No. IND-EXCUS-000-APP-256-258-17-18 dated 25.10.2017 passed by the Commissioner (Appeals), CGST & C. Ex., Indore wherein he has upheld the order passed by the primary adjudicating authority. In the impugned order, the Commissioner (Appeals) has held that tractor cess is imposable on the parts and accessories of the tractors in terms by Notification dated 06.09.1985 issued by the Department of Heavy Industries, New Delhi amended by Notification dated 12.11.1993.

2. Brief facts of the case are that the appellant was issued show cause notice dated 01.07.2014 wherein it was alleged that the appellant has cleared parts of the tractors during the period 2009 to March 2010 and did not pay tractor cess and hence contravened the provisions of Section 9 (1) of the Industrial (Development and Regulation) Act, 1951read with Ministry of Industry SO No. 55(E) dated 19.01.1993. According to Rule 2 of the Tractor Cess Rules, 1992, the provisions of the Central Excise and Salt Act, 1944 and the Rules made thereunder has been made applicable for the purpose of levy and collection of tractor cess and hence the provisions of Section 11A of the Central Excise Act, 1944 equally applicable in this case. It was alleged that the appellant by not paying the Tractor cess has contravened the provision of Rule 6 of the Central Excise Rules, 2002 read with Rule 3 of the Tractor Cess Rules, 1992 with intention to evade tax and therefore extended period of limitation was also applied as per Central Excise Act (supra).

3. Ld. Advocate appearing on behalf of the appellant submitted that on perusal of the notification regarding imposition of tractors cess, it is evident that cess is leviable on tractor and not on the parts, components and accessories thereof to tractor cess as the Government of India has not notified the same by the independent notification. It is also impressed upon by the ld. Advocate that the tractor cess is applicable to the tractors only and is not leviable to parts and accessories thereof. In support of the argument, he has relied upon the case laws in the case of CCE, Jamshedpur vs. Tata Motors Ltd. -2016 (336) ELT 208 regarding the imposition of automobile cess alongwith the other decision namely S. M. Kannappa Automobiles P. Ltd. vs. CCE, Bangalore – 2008 (224) ELT 467 (Tri. Bang.). He also referred to Circular No. 41/88, dated 31.08.1988 issued by the Ministry of Finance, New Delhi regarding levy of cess on automobiles consequent upon the introduction of new Central Excise Tariff, 1985. It has been clarified in the impugned circular that –

The matter has been referred to Administrative Ministry who have intimated that the intention behind the notification levying the cess is to realise such levy from the vehicle manufacturers and not from the body builders. Further, the provision of IDR Act, 1951, under which the notification levying the cess has been issued, provides that the rate of cess shall not in any case exceed two annas per cent of the value of the goods. If the cess is levied in line with the Excise Tariff Act, 1985, this would exceed the maximum rate of 1/8^th per cent prescribed in the IDR Act. Therefore, the cess may continue to be levied and collected on the vehicles in the condition they are cleared from the premises of the manufacturers and no cess should be levied again in case the body on the chassis is built by an independent body builder on the cess paid chassis”.

3.1 It was therefore argued by the ld. Advocate that the ratio laid down in the aforesaid judgments are mutatis-mutandis applicable for imposition of tractor cess on the parts, components and accessories of tractor is to be treated at par with that of automobile cess and the levy on the component and part of the automobile. He further stated that Commissioner (Appeals) has not considered the relevant provision of the I RDA Act regarding the imposition of cess on the tractor notifications in proper perspective and not decided the issue regarding the application thereof on the parts/ components of tractor.

4. On the other hand, ld. AR appearing for the Revenue reiterated the ground contended in the aforesaid order.

5. Heard the parties and perused appeal record.

6. The issue before us is to decided as to whether the tractor cess is leviable on the part and component of the tractor cleared by the appellant. After going through the case laws cited and circular issued by the Ministry of Finance, it is clear that part and accessories etc. of the tractor cannot be compared with that of the tractor itself. Therefore, the tractor cess is not leviable thereon in terms of Notification (supra). For the aforesaid conclusion, we also draw our support to CB EC Circular (supra) in the case of parts and accessories of the automobile which clearly goes in favour of the appellant. We are conscious of the fact that aforesaid circular is with reference to automobile cess but the principle enunciated there is squarely applicable in the instant case.

7. In view of the above, we set aside the impugned orders and allow appeals with consequential relief, if any.