MARUTI UDYOG LTD Vs. COLLECTOR OF CENTRAL EXCISE

JUDGEMENT

(1.) THESE are two appeals filed by M/s. Bharat Seats Ltd. (BSL) and M/s. Maruti Udyog Ltd. (MUL) against the Orders No. 122/93 and 123/93 both dated 15 -12 -1993, respectively passed by the Collector, Central Excise, New Delhi. As the issues in both the appeals are connected, both these appeals are being disposed of by one common order.

(2.) BRIEFLY stated the facts are that M/s. Maruti Udyog Ltd. manufacture motor vehicles and avail of Modvat credit of duty paid on inputs under Rule 57A of the Central Excise Rules. M/s. Bharat Seats Ltd., manufacture seats for motor vehicles exclusively for MUL. BSL also availed of Modvat credit of duty paid on inputs. M/s. BSL manufactured three essential parts of seats, namely, trim set, steel frame and PU Foam cushion/padding; that in addition certain parts were purchased by MUL from outside parties and supplied to BSL; that the three parts were sold to MUL on payment of appropriate duty; that MUL used to take credit of the duty paid on parts immediately on receipt of gate passes; that the said parts were reissued to BSL for the manufacture of seats on job work basis; that BSL supplied the complete seats to MUL who used them in the manufacture of motor vehicles; that prior to 21 -1 -1989, parts of seats used to be physically transported by BSL to MUL under gate passes and then these parts were physically re -issued to BSL under Rule 57F(2), as it stood at the material time for manufacturing seats by BSL; that from 21 -1 -1989, parts of seats did not actually move from the factory of BSL to the factory of MUL and vice versa; that, however, Modvat credit was availed of the duty paid on such parts of seats by MUL; that MUL also issued challans under Rule 57F(2) to BSL as if the parts of seats had been sent to BSL for further processing. Separate show cause notices both dated 5 -10 -1993 were issued to M/s. BSL and MUL for initiating action for recovering of credit, for imposing penalty and for confiscating the seized goods.

(3.) LEARNED Sr. Advocate also submitted that the appellants have filed classification list from time to time for trim sets under Heading 87.08, for moulded Polyurethane Foam Pedding under Heading 39.26. for seat frame of steel as parts of seats under Heading 94.01 and the goods were cleared by them according to the approved classification lists; that in respect of classification list effective from 1 -3 -1989 the classification of trim sets was changed by the Asst. Collector from Heading 87.08 to 94.01 while approving the same. Learned Sr. Advocate contended that in collateral proceedings the Department challenged the approved classification list. Reliance was placed on the decision in the case of Jay Industries v. CCE, Hyderabad, 1984 (16) E.L.T. 462 (Tribunal) wherein it was held "that there is a unwritten law that when a tax collecting authority makes an assessment which is incorrect, it is prohibited from saying to the tax payer later that he (tax payer) cannot do anything that may be a consequence of the incorrect assessment made by itself (tax collecting agency)." Reliance was also placed on the decision in Mafatlal Industries v. UOI, 1997 (89) E.L.T. 247 (S.C.) wherein it was held that one of the principle of law based on public policy is the sanctity attached to the finality of any proceeding. An order does not become ineffective or unforceable simply because at a later point of time different view of law is taken. The learned Sr. Advocate emphasised that in their classification list effective from 20 -3 -1990 they had claimed classification for complete seat under Heading 94.01 declaring tariff rate of duty of 25% as the applicable duty; that this classification list was duly approved by the Department despite complete exemption available under Sl. No. 2 of Notification No. 80/90. Similarly in the same classification list exemption under Notification No. 217/86 for captive consumption of parts of seat was approved by the Asst. Collector despite the exemption available under Sl. No. 1 of Notification No. 80/90. He also contended that Bharat Seats has not misrepresented any fact to the Department so as to warrant invocation of extended period of limitation for demanding the duty; that the department was fully aware of the entire fact as various show cause notices were issued by the Department to Maruti Udyog Ltd. seeking to deny Modvat credit on parts of seats on the ground that the seat manufactured by Bharat Seats Ltd. under Rule 57F(2) were not intermediate products and were final product exempted under notification No. 80/90. Reliance was also placed on the decision in the case of CCE v. National Fertilizers Ltd., 1990 (48) E.L.T. 562 wherein it was held that once the classification list has been approved it cannot be changed or corrected with retrospective effect and consequently the assessee cannot be asked to reverse the credit already availed of.