ROPLAS (INDIA) LTD Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THESE two appeals of M/s. Roplas (India) Ltd. relate to dutiability of Fibre Glass Reinforced Plastic (FRP) bodies manufactured by them and fitted on jeeps of M/s. Mahindra and Mahindra Ltd.

(2.) IMPUGNED Order No. P -337/94 issued on 10 -10 -1994 was passed in an appeal filed under Section 35E(2) of the Central Excise Act, 1944 and this order sets aside classification list No. 49/91 -92 effective from 1 -3 -1992 approved by the Assistant Collector. The Assistant Collector had approved the classification of the FRP bodies under sub -heading 8707.00 of the Schedule to the Central Excise Tariff and held that the goods were liable to nil rate of duty as jeeps are received from M/s. Mahindra and Mahindra Ltd. under Rule 57F(2) and that no duty is payable by M/s. Roplas (India) Ltd. as M/s. Mahindra and Mahindra Ltd. are paying duty on the value of the jeep including the value of the FPR bodies. Appeal No. E/1298/96 -B1 is in respect of the impugned order No. P/107/96, dated 23 -2 -1996 upholding duty demand consequent to the decision that M/s. Roplas (India) Ltd. are liable to pay duty on the FRP bodies. The order -in -original had demanded a duty of Rs. 62,69,055.00 in respect of clearances during 1992 and 1993 which had been raised under four show cause notices. The impugned order has, however, directed reworking of the amount so as to give some relief to the appellants by way of excluding trade discount and duty payable while fixing the assessable value.

(3.) THE facts of the case are that M/s. Mahindra and Mahindra Ltd. manufacture chassis of jeeps and send them to the appellants for manufacture and fixing of bodies on them. After fitment of bodies, the appellants return the jeeps to M/s. Mahindra and Mahindra Ltd. who clear them after payment of duty on the value inclusive of the value of FRP bodies. The appellants paid no duty on the bodies manufactured and fitted on the jeeps. This is a long standing arrangement between the two parties and the Central Excise Authorities had also approved this arrangement. In 1972 M/s. Mahindra and Mahindra had applied to the Collector for permission to remove the semi -finished jeeps (i.e. without bodies) to Roplas without payment of duty, the return of the jeeps after fitment of bodies (again without payment of duty) by Roplas to M/s. Mahindra and Mahindra and the removal of such jeeps after payment of duty by M/s. Mahindra and Mahindra under Rule 56B of the Central Excise Rules, 1944. The Collector of Central Excise granted permission for the same. Similarly, with the coming into effect of Modvat procedure, permission was sought for carrying out the same movement of goods under Rule 57F(2) of the Central Excise Rules, 1944 and the same was granted. Some show cause notices were also issued in 1990 and 1991 to M/s. Roplas (India) Ltd. demanding duty on the FRP bodies and these proceedings were dropped by the Assistant Collector in August, 1991. We are not reproducing all the details of the proceedings on this issue between the manufacturers and the Central Excise Authorities as it is elaborately reproduced in the impugned Order P -337/94, dated 10 -10 -94. Suffice it to mention that the procedure followed had been mutually agreed upon between the manufacturers and the Central Excise Authorities and the impugned Order No. P -337/94 is a departure from this agreed procedure.