2001 (1) TMI 802 - AT - Central Excise

Summary

Issues:
1. Interpretation of Exemption Notification No. 462/86-C.E. for fabricating bodies on motor vehicle chassis.

Analysis:
The central issue in this appeal before the Appellate Tribunal CEGAT, New Delhi, was the eligibility of the Respondents to claim the benefit of Exemption Notification No. 462/86-C.E., dated 9-12-86, concerning the fabrication of bodies on motor vehicle chassis. The Revenue contended that the Notification providing a concessional rate of duty was applicable only to manufacturers of motor vehicles and not to those engaged solely in fabricating bodies on the chassis.

The learned D.R. representing the Revenue argued that the benefit of the Notification was intended for manufacturers of motor vehicles falling within Chapter No. 87 of the Central Excise Tariff Act, and not for entities engaged in body fabrication. Reference was made to legal precedents, such as the decision in the case of Ambala Coach Builders v. CCE, Delhi, emphasizing that the activity of body building on chassis does not constitute the manufacture of a motor vehicle under Chapter 87. The classification of bodies built on chassis was highlighted as falling under Heading 87.07 of the Tariff, as established in various judicial decisions.

In contrast, the Respondents' representative contended that once a body is fabricated on the chassis, it results in the creation of a motor vehicle, making them eligible for the exemption under Notification No. 462/86. Additionally, the absence of provisional assessment provisions under Rule 9B of the Central Excise Rules at the relevant time was raised as a supporting argument by the Respondents.

Upon considering the arguments from both sides, the Tribunal referred to the Supreme Court's decision in CCE v. Ram Body Builders, which clarified that bodies built on customer-supplied chassis fall under a specific heading of the Central Excise Tariff. It was established that the Respondents, engaged solely in body fabrication, were not involved in the manufacturing of motor vehicles, thus rendering them ineligible for the concessional duty rate under the said Notification. The Tribunal upheld the classification of bodies built on chassis under Heading 87.07, as affirmed in the Kamal Auto Industries case, which was subsequently confirmed by the Supreme Court.

Furthermore, the Tribunal noted that the Respondents had not challenged the provisional assessment order when initially passed, precluding them from raising objections at a later stage. Consequently, the appeal filed by the Revenue was allowed based on the grounds that the Respondents were not entitled to the benefit of the Notification due to their activities not constituting the manufacture of motor vehicles.