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Judgment
The petitioners filed this writ petition to quash the order passed by the first respondent in Proceedings No. 846 of dated 22nd August, 1978. As
per this order, the first respondent has held that the replacement parts cannot be treated as original equipment parts entitling the exemption
contemplated under Notification No. 101 of 1971-Central Excise.
The short facts of this case :- The petitioners are the manufacturers of motor cycles. They purchase original parts from the market and assemble
the motor cycles. For such purchase there is an exemption in the excise duty. This exemption can be spelt out by the Notification No. 101/1971-
Central Excise which reads as follows :-
In exercise of the powers conferred by sub-rule (1) of rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts motor
vehicle parts, namely, brake linings, clutch facings, engine valves, gaskets, nozzles, and nozzle holders, piston rings, shock absorbers, thin walled
bearings and tie rod ends, falling under item No. 34-A of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944), from the whole
of duty of excise leviable thereon :
Provided that -
(i) it is proved to the satisfaction of the Collector of Central Excise that the aforesaid parts are intended to be used as original equipment parts by
the manufacturers of motor vehicles falling under item No. 34 of the aforesaid Schedule; and
(ii) in relation to any concession in respect of any such parts the procedure set out in Chapter X of the said Rules is followed.
In this particular case, the petitioners claimed exemption from the duty for the substituted parts fixed in the motor cycles sold by them during the
warranty period. It is an admitted fact that no extra charge is levied for such fittings and those parts are from the parts purchased under the same
lot by the petitioners which enjoy the exemption from excise duty. The authorities below, after adverting to the notification referred to above,
clearly held :-
Government therefore find that in this case the motor vehicle parts procured and received by the petitioners under the procedure laid down under
Chapter X of the Central Excise Rules with the intention to use them as original equipment parts in manufacture of motor vehicles, but subsequently
disposed of replacement parts, cannot be treated as ''original equipment parts'' and eligible for the exemption under Notification No. 101/71.
Mr. A. K. Mylswami, the learned counsel appearing for the petitioners, has tried to draw analogy by referring to the decision reported in
Commissioner of Sales Tax v. Messrs Premnath Motors (P) Ltd. - 1979 Lawyer page 65, wherein the Delhi High Court had occasion to consider
the propriety of levying sales-tax on the materials replaced by the assessee during the warranty period. In that case the Delhi High Court held :
The view taken by the Financial Commissioner that the future replacements of the parts in pursuance of the warranty have to be regarded as sales,
the price for which was already paid and which sales-tax was already levied and collected and that they were not liable to imposition of further
sales tax is correct.
I am afraid, I cannot draw analogy from this decision to the facts of the present case, It has been held by various decisions both by the High Courts
and by the Supreme Court that the concessional rate of duty can be availed of only by those who satisfy the conditions which have been laid down
in the Notification [Refer - Union of India (UOI) and Another Vs. Parameswaran Match Works and Others, . The notification in this parts is very
specific to the effect that the concession is for original equipment parts available to the manufacturers of motor vehicles falling under item No. 34-A
of the First Schedule to the Central Excises and Salt Act, 1944. The present excise duty exemption is claimed for the replacement of the
equipment during the warranty period. This, in my opinion, will not come under the category of the ''original equipment parts'' as contemplated in
the Notification No. 101/71 referred above. Correctly the authorities below have negatived the contention of the petitioners herein and I am in
complete agreement with such finding and reasoning given by the authorities below.
For all these reasons, the writ petition is dismissed. There will be no order as to costs.