2015 (10) TMI 1795 - AT - Central Excise

Waiver of pre deposit - Penalty u/s 11AC - Held that - Chassis are supplied by the appellant s customers, who are themselves not the manufacturer of the chassis. Such customers are like State Transport Corporation or any other private customers. The appellant undertook the same process of body building on the said chassis and claimed the classification of the same under Heading No. 87.04, as motor vehicles for transportation of the goods. Inasmuch as there is Notification No. 6/2006-C.E., dated 1-3-2006 granting exemption to motor vehicles falling under Heading No. 87.04, the appellant claimed the benefit of the same. It may not be out of place to mention here that the exemption as available in terms of the said notification is not applicable to motor vehicles manufactured on the chassis supplied by the chassis manufacturers inasmuch as the same are expressly excluded from the benefit of the notification in terms of the condition-9 of the notification in question. - as in terms of the said Chapter Note-5 of Chapter 87, body building activity would amount to manufacture of motor vehicles, which in the instant case, are classifiable under Heading No. 87.04, it has to be held that notification in question is available to the assessee. - appellant has good prima facie case in its favour - Stay granted.

Summary

Issues:
Classification of motor vehicles under Heading No. 87.04, Exemption under Notification No. 6/2006-C.E., Interpretation of Chapter Note-5 of Chapter 87.

Classification of Motor Vehicles under Heading No. 87.04:
The appellant is involved in fabricating bodies on duty paid chassis provided by customers. Revenue accepted the classification of bodies built on chassis provided by manufacturers as motor vehicles under Heading No. 8703 or 8704. However, a dispute arose when the chassis were supplied by customers who were not manufacturers. The appellant claimed classification under Heading No. 87.04 for vehicles built on customer-supplied chassis, seeking exemption under Notification No. 6/2006-C.E. The Revenue contended that building bodies on such chassis amounted to manufacturing bodies under Heading No. 87.07, not motor vehicles under Heading No. 87.04.

Exemption under Notification No. 6/2006-C.E.:
The appellant claimed exemption under Notification No. 6/2006-C.E. for vehicles built on customer-supplied chassis under Heading No. 87.04. The Revenue disputed this claim, arguing that the activity of building bodies on such chassis did not qualify as manufacturing motor vehicles under Heading No. 87.04, as per the conditions of the notification. The dispute only pertained to vehicles manufactured on customer-supplied chassis, as vehicles on chassis supplied by manufacturers were excluded from the notification.

Interpretation of Chapter Note-5 of Chapter 87:
Chapter Note-5 of Chapter 87, introduced in 2005, states that building a body on chassis under Heading 8706 amounts to manufacturing a motor vehicle. The Commissioner erroneously relied on previous Tribunal decisions predating the introduction of Chapter Note-5, which deemed body building as separate from manufacturing motor vehicles. The Tribunal held that under Chapter Note-5, body building on chassis under Heading 8706 constitutes manufacturing motor vehicles under Heading No. 87.04, making the notification applicable to the appellant.

In conclusion, the Tribunal found in favor of the appellant, allowing the stay petition unconditionally due to a prima facie case in their favor regarding the classification of vehicles built on customer-supplied chassis under Heading No. 87.04 and the applicability of the exemption under Notification No. 6/2006-C.E. The interpretation of Chapter Note-5 of Chapter 87 played a crucial role in determining that body building activity on such chassis amounts to manufacturing motor vehicles, making the notification applicable to the appellant.