2005 (3) TMI 654 - AT - Central Excise

Summary

Issues:
1. Whether duty payment on the value of the body built on a duty-paid chassis of an ambulance is in accordance with the law.
2. Interpretation of Notification No. 241/86-C.E. and Chapter 87 of the Central Excise Tariff Act.
3. Application of Supreme Court ruling in CCE v. Ram Body Builders and Board's Circular No. 447/13/99-C.X. to the case.

Analysis:
1. The appellants were engaged in fabricating bodies on bare chassis of motor vehicles under Chapter 87 of the Central Excise Tariff Act. They cleared an ambulance by paying duty on the body's value and claiming exemption under Notification No. 241/86-C.E. The department alleged short payment of duty, contending that the chassis value should be included in the assessable value. The original authority confirmed the demand, but the appellants argued that duty was already paid on the chassis, so its value should not be included. The appellate authorities held that the chassis should have been cleared under a specific heading for the exemption. The appeal challenges this decision.

2. The appellants argued that body building on chassis under Heading 87.03 did not constitute 'manufacture' of a motor vehicle during the relevant period. They cited the Supreme Court's decision in CCE v. Ram Body Builders, where it was held that bodies built on customer-supplied chassis fell under a different heading. Additionally, they referred to Board's Circular No. 447/13/99-C.X., stating the Supreme Court ruling's applicability before a specific date. The tribunal found that duty payment on the body value was correct based on the Apex Court's decision and the Board's circular. The lower authorities' contrary view was deemed unsustainable, and the appeal was allowed.

3. The tribunal concluded that the appellants' duty payment on the body built on a duty-paid chassis was consistent with the law as the body building did not amount to 'manufacture' during the relevant period. The decision in CCE v. Ram Body Builders and the Board's circular supported this interpretation. The tribunal set aside the impugned order, highlighting that the chassis value should not have been included in the assessable value. The appeal was allowed, emphasizing the correct application of legal principles and precedents.

(Operative part of the order was pronounced in open Court on 10-3-2005)