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2017 (8) TMI 1215 - AT - Central ExciseExemption from Special Excise Duty (SED) - N/N. 6/2002-CE dated 1.3.2002 - It was alleged that some motor vehicles, after clearance from the factory are sold to the ultimate customers through Regional Sales Offices (RSO)/Depots of M/s. Ashok Leyland Ltd without the seventh tyre. The said seventh tyres get retained at the RSOs/depots. Therefore such seventh tyre cannot be said to be used in the manufacture of excisable goods in terms of N/N. 6/2002-CE dated 01.03.2002 rendering them ineligible for the exemption - Held that - The Motor Vehicle Act has statutorily required motor vehicles to have seven tyres - six tyres fitted to the chassis and seventh as a spare tyre. At the point of sale of the motor vehicle, only six tyres have been found fitted on the chassis. Such being the case, the contention of the appellant that the seventh tyre also has been used in the motor vehicle cannot be appreciated - The contention of the appellant that they have complied with the provisions of Motor Vehicles Act is also misplaced - appeal dismissed - decided against appellant.
Issues:
Interpretation of Notification No. 6/2002-CE dated 1.3.2002 regarding the exemption of tyres/tubes/flaps from Special Excise Duty (SED) if used in the manufacture of motor vehicles. Compliance with the conditions specified in the notification for availing the duty exemption. Applicability of Motor Vehicles Act requirements on the sale of vehicles with respect to the number of tyres. Analysis: The case involved an appeal against demands for special excise duty, penalties, and interest imposed on the appellant, engaged in manufacturing chassis for motor vehicles, for allegedly breaching the conditions of Notification No. 6/2002-CE dated 1.3.2002. The notification exempted tyres/tubes/flaps from SED if used in the manufacture of motor vehicles. The issue arose as some motor vehicles sold to customers were missing the seventh tyre, which was retained at Regional Sales Offices (RSO)/Depots, leading to the demand for duty payment and penalties. The appellant argued that the notification only pertains to the usage of tyres in the manufacturing process, which they claimed to have complied with. They contended that the sale of vehicles without the seventh tyre from RSOs falls outside the purview of the notification and cited statutory compliance under the Motor Vehicles Act, which requires vehicles to be cleared with seven tyres. The Department, on the other hand, supported the duty demand, stating that the appellant breached the conditions of the notification by selling vehicles with only six tyres when cleared from the factory with seven tyres as per the Motor Vehicles Act requirements. The Bench questioned the removal of the seventh tyre at the point of sale and the appellant's inability to explain its accounting post-removal. The Tribunal upheld the impugned orders, dismissing the appeals. It found that despite the appellant's claim of using all seven tyres in the manufacturing process, the Motor Vehicles Act mandates vehicles to have seven tyres, with the seventh as a spare. As vehicles were sold with only six tyres, the contention that the seventh tyre was also used in the vehicle was deemed unsubstantiated. The Tribunal concluded that the appellant failed to comply with the Act's provisions, justifying the duty demand and penalties imposed. In light of the above analysis, the Tribunal upheld the demands and penalties, emphasizing the statutory requirement of seven tyres under the Motor Vehicles Act, which the appellant failed to adhere to despite claiming compliance with the notification's conditions.
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