2015 (10) TMI 145 - AT - Central Excise

Waiver of pre deposit - Whether the appellant, who are body builders, would be liable to pay automobile cess on the complete vehicles cleared by them from their factory - held that - Tribunal s judgement in the case of S.M. Kannappa Automobiles P.Ltd. (2007 (11) TMI 207 - CESTAT, BANGALORE) is based on the Board s Circular no.41/88 dated 31.08.88, wherein it has been clarified that the matter had been referred to the Administrative Ministry, who have intimated that the intention behind the notification levying the automobile cess is to realize such levy from the vehicle manufacturers and not from the body builders, that the provisions of IDR Act, 1951, under which the notification levying the cess has been issued, provides that the rate of cess shall not, in any case, exceed two annas per cent of the value of the goods and if the cess is levied in line with the Central Excise Tariff Act, 1985, the same would exceed the maximum rate of 1/8th per cent prescribed in the IDR Act and therefore, the cess may continue to be levied and collected on the vehicles in the condition they are cleared from the premises of the manufacturers and no cess should be levied again in case the body on the chassis is built by an independent body builders on the cess paid chassis. - prima facie view that notwithstanding the introduction of Chapter Note-5 of Chapter 87 w.e.f. 2005, the Board s Circular No.41/88 dated 31.08.88, which has been issued after consultation with the Administrative Ministry, is still valid. Therefore, prima facie, the impugned order is not correct and the appellant have strong prima facie case in their favour - Stay granted.

Summary

Issues involved:
Whether the body builders are liable to pay automobile cess on vehicles cleared by them from their factory despite the chassis manufacturers already paying the duty on the chassis at the time of clearance.

Analysis:

Issue 1: Liability of body builders to pay automobile cess
The dispute revolves around whether the body builders are obligated to pay automobile cess on vehicles cleared by them, considering that the chassis manufacturers had already paid the duty on the chassis at the time of clearance. The Department invoked Chapter Notes 5 of Chapter 87 of the Central Excise Tariff to argue that the body builders, as manufacturers of motor vehicles, should also pay the cess under the Industries (Development and Regulation) Act, 1951. The Addl. Commissioner confirmed demands against the body builders, which were upheld by the Commissioner (Appeals). However, the body builders relied on precedents and a Board's Circular to assert that if the chassis manufacturers had paid the cess, they should not be required to pay it again. The Tribunal referred to the Board's Circular no.41/88, which clarified that the intention behind the notification levying the cess was to realize it from vehicle manufacturers and not body builders. The Tribunal found this circular still valid and waived the requirement of pre-deposit of cess, demand, interest, and penalty for the hearing of the appeals, allowing the stay applications.

In conclusion, the Tribunal held that the body builders were not liable to pay the automobile cess on vehicles cleared by them from their factory if the chassis manufacturers had already paid the cess at the time of clearance. The judgment emphasized the validity of the Board's Circular no.41/88, which clarified the intention behind levying the cess and exempted body builders in such cases. The Tribunal found in favor of the body builders, waiving the requirement of pre-deposit and allowing the stay applications for the appeals.