2014 (8) TMI 404 - AT - Central Excise

Automobile Cess - mounting of body on chassis supplied - Held that - In terms of the Board s Circular No.11/88 dt.31.08.88 which has been issued after consulting the Ministry of Industry, there was no intention to charge Automobile Cess on the activity of the independent body builders and that when an independent body builder builds body on the chassis received by him made from chassis manufacturer and on which Automobile Chassis has been paid by the chassis manufacturer, the body builder would not be liable to pay the Cess. Based on this Circular, the Tribunal in the case of Harish Industries (1999 (10) TMI 203 - CEGAT, NEW DELHI) has held that an independent body builder building body on the chassis received from chassis manufacturers on which cess has been paid, would not be liable to pay Automobile Cess once again. In view of this we are prima facie view that appellant have strong prima facie case in their favour and, therefore, the requirement of pre-deposit of Automobile Cess demand, interest thereon and penalty is waived for hearing of the appeal and recovery thereof is stayed - Stay granted.

Summary

Issues:
1. Recovery of Automobile Cess under Industries (Development and Regulation) Act, 1951.
2. Imposition of penalty under Central Excise Rules.
3. Appeal against orders confirming Cess demand, interest, and penalties.
4. Interpretation of Board's Circular No. 11/88 regarding Automobile Cess liability for independent body builders.
5. Prima facie view on waiver of pre-deposit for hearing the appeal.

Analysis:

1. The Appellant, engaged in mounting bodies on chassis supplied by M/s. Swaraj Mazda Limited, faced a Show Cause Notice for recovery of Automobile Cess under the Industries (Development and Regulation) Act, 1951. The Commissioner confirmed the Cess demand and imposed penalties under Central Excise Rules. Another Cess demand was confirmed by the Assistant Commissioner for a different period, along with interest and penalties. Appeals against these orders were dismissed by the Commissioner (Appeals), leading to the filing of appeals and a stay application.

2. The Appellant argued that based on Board's Circular No. 41/88, no Cess should be payable by independent body builders if the chassis manufacturer has already paid the Automobile Cess on the chassis. They cited precedents where the Tribunal ruled in favor of independent body builders in similar situations. The Appellant requested a waiver of pre-deposit for the appeal and stay on recovery.

3. The Respondent, opposing the stay application, emphasized that Automobile Cess is leviable on goods manufactured in Scheduled Industries, including the Automobile sector. Referring to Rule 2(f) of the Automobile Cess Rule, it was argued that building a body on chassis constitutes manufacturing, attracting Automobile Cess even if the chassis manufacturer has paid the Cess.

4. The Tribunal examined the submissions and records, noting the Board's Circular exempting independent body builders from paying Cess if the chassis manufacturer has already paid. Citing precedents supporting this interpretation, the Tribunal found a strong prima facie case in favor of the Appellant. Consequently, the requirement of pre-deposit for the Automobile Cess demand, interest, and penalties was waived, and recovery stayed for the appeal hearing.

This judgment highlights the interpretation of legal provisions, precedents, and circulars governing the liability of independent body builders for Automobile Cess. The Tribunal's decision to waive pre-deposit and stay recovery showcases a balanced approach towards ensuring justice and fairness in tax disputes.