Hero Cycle Not Required To Pay Automobile Cess On E-Bike As It Was Already Paid At The Time Of Import: CESTAT
The Chandigarh bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that Hero Cycle is not required to pay automobile cess on an e-bike as it was already paid at the time of import.The bench of S. S. Garg (Judicial Member) has observed that the entire information regarding the clearance of the e-bike was reflected in the ER-1 return submitted to the...
The Chandigarh bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that Hero Cycle is not required to pay automobile cess on an e-bike as it was already paid at the time of import.
The bench of S. S. Garg (Judicial Member) has observed that the entire information regarding the clearance of the e-bike was reflected in the ER-1 return submitted to the department periodically, and the department never raised any objection regarding the non-deposit of automobile cess, which clearly shows that automobile cess was paid as per the concurrence of the department.
The appellant/assessee is in the manufacturing of e-bikes and parts falling under headings 8711 and 8714, respectively, of the Central Excise Tariff Act, 1985. They imported e-bike parts and e-bikes in CKD condition, falling under headings 8714 and 8711 of the Central Excise Tariff Act, respectively. The E-bikes were chargeable to duty as per Section 4 of the Central Excise Act, and the E-bike parts were on an MRP basis as per Section 4A of the Central Excise Act.
A show cause notice was issued to the appellant alleging that the appellant imported E-Bike parts and E-Bikes in CKD condition. The e-bike was granted full exemption from duty. The appellant was required to show the production and clearance of E-Bikes in the relevant columns of ER-1. The E-Bike manufactured and cleared by the appellant attracts automobile cess at the @ 1/8% adv. leviable under Notification No. S.O. No. 247(E) dt. 22.03.1990, as amended, issued by the Ministry of Industries, Department of Industrial Development.
The allegation against the appellant is that they did not file any mandatory return in the format prescribed under the Automobile Cess Rules, 1984, and suppressed the production, clearance, and value of E-Bikes from the department with intent to evade payment of automobile cess.
The appellant filed a detailed reply to the show cause notice and submitted that they imported an E-Bike in CKD condition and E-Bike parts falling under headings 8711 and 8714, respectively. They assembled E-Bikes from E-Bike parts imported and also assembled E-Bikes imported in CKD condition.
They started importing E-Bike parts in 2007, and the first consignment was imported via bills of entry nos. 208 and 209, both dated February 17, 2007. They have also cleared e-bikes since March 2007.
The e-bikes were made exempt vide notification no. 25/2008-CE dated April 29, 2008. The e-bikes imported in CKD condition, after assembly, were cleared without payment of central excise duty as goods imported and cleared from factory premises falling under the sub-heading, and the processes undertaken did not amount to manufacture as per Section 2(f) of the Central Excise Act, as no new or distinct product came into existence. Moreover, clearance of E-bikes imported in CKD condition was not reflected in the ER-1 return as there was no manufacturing activity involved.
The demand for automobile cess again is incorrect, as the same had already been discharged at the time of the importation of an e-bike in CKD condition. The classification at the time of importation and at the time of clearance for home consumption are the same. After following the due process, the additional commissioner demanded the automobile cess under Section 11A by invoking the extended period of limitation along with interest under Section 11AB and also imposing an equal penalty under Section 11AC.
The appellant filed the appeal before the Commissioner, who held that there is a need to work out automobile cess on the amount of value addition; accordingly, the matter will require a fresh computation to re-look, with no finding with regard to the interest and penalty.
The appellant contended that e-bikes imported in CKD condition and cleared were not reflected in the ER-1 return because neither manufacturing activity was carried out nor duty was payable.
The tribunal found that e-bikes imported in CKD condition after assembly were cleared without payment of duty, as the goods were imported and cleared fall under the same sub-heading, and the processes undertaken do not amount to manufacture as per Section 2(f) of the Central Excise Act, as no new or distinct product came into existence.
The ITAT held that the appellant is not required to pay automobile cess because he has already paid the same at the time of import, as shown in the Bill of Entry 531 dated July 11, 2008.
Counsel For Appellant: Poojan Malhotra
Counsel For Respondent: Raman Mittal
Case Title: M/s Hero Cycle Ltd. Versus Commissioner of CGST, Ludhiana
Case No.: Excise Appeal No. 59084 of 2013