2015 (2) TMI 1091 - AT - Central Excise

Waiver of pre deposit - Denial of exemption claim - Whether the appellant would be eligible for exemption under Notification No. 6/06-CE (Sl.No.39) which prescribes nil rate of duty for the motor vehicles for transport of goods (other than those specially designed for transportation of compressed and Liquefied Gasses) falling under heading 8704 of the tariff subject to condition that the vehicle has been manufactured out of chassis falling under heading 8706 on which the excise duty has been paid and the body builder has not taken cenvat credit of the duty paid on chassis or other inputs used in the manufacture of such vehicles, and also that the manufacturer of the vehicle is not the chassis manufacturer - Held that - w.e.f. 2005 Chapter Note 5 has been introduced to Chapter 87 according to which, for the purpose of this chapter building of body or fabrication or mounting or fitting of the structure or equipment on the Chassis falling under heading 8706 shall amount to manufacture of motor vehicle. In view of this chapter note, which was introduced since 2005, the chassis with the body constructed by a body builder, would have to be classified as a motor vehicle and since in this case the vehicle manufactured are meant for transportation of goods the same would be classifiable under heading 8704. The judgment of Hon ble Punjab and Haryana in the case of Union of India vs. Darshan Singh Pavitar Singh (1989 (12) TMI 55 - HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH) pertains to the period when chapter note 5 was not there. - in the appellant s own case in respect of another manufacturing unit, the Tribunal vide order No.54303/2014 dated 26.11.2014 has granted unconditional stay. In view of this, the requirement of pre-deposit of the duty demand, interest and penalty is waived for hearing of the appeal and recovery thereof stayed. - Stay granted.

Summary

Issues involved: Classification of goods under heading 8704 or 8707 for exemption eligibility under Notification No. 6/06-CE (Sl.No.39).

Analysis:
1. The appellants, independent body builders, construct bodies on duty paid chassis for vehicles meant for transporting goods. The dispute revolves around whether they are eligible for exemption under Notification No. 6/06-CE (Sl.No.39) for motor vehicles for transport of goods under heading 8704, provided certain conditions are met. The Commissioner denied the exemption, classifying the chassis under heading 8707 as bodies, not vehicles for transport of goods under heading 8704, leading to duty demands, interest, and penalties.

2. The appellant's counsel argued that as per Chapter Note 5 introduced in 2005, building a body on a chassis falls under manufacturing of a motor vehicle, making the body-built vehicles classifiable under heading 8707. However, the counsel contended that only bodies for vehicles under headings 8701 to 8705 are covered under heading 8707, and a complete vehicle by constructing a body on a chassis should be classified as a motor vehicle under heading 8704. The counsel emphasized that once goods are classifiable under heading 8704, exemption under the notification should apply, as all conditions are met.

3. The Department's representative opposed the stay application, relying on judgments from the Punjab and Haryana High Court and Tribunal cases to support the classification of the goods as bodies under heading 8707, thus negating the applicability of the exemption notification. The Tribunal analyzed the submissions and records, noting that Chapter Note 5 introduced in 2005 classifies chassis with constructed bodies by body builders as motor vehicles, with the goods in question meant for transporting goods falling under heading 8704.

4. The Tribunal distinguished the cited judgments, noting they were from periods predating the introduction of Chapter Note 5 in 2005. The Tribunal also highlighted a previous case where unconditional stay was granted for a similar issue, leading to a waiver of pre-deposit for the duty demand, interest, and penalty in this case. Consequently, the Tribunal allowed the stay applications, directing the appeals to be tagged with another appeal involving an identical issue.

In conclusion, the Tribunal granted the stay applications, waiving the pre-deposit requirements for duty demand, interest, and penalty, based on the classification of goods under heading 8704 for exemption eligibility under Notification No. 6/06-CE (Sl.No.39) in light of Chapter Note 5 introduced in 2005.