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2017 (9) TMI 266 - AT - Central ExciseClassification of goods - body building for motor vehicles on chassis falling under CETH 8706 - The appellants placed reliance on Note 5 of Chapter 7 which states that building a body on chassis amounts to manufacture of motor vehicle. But the claim of the appellant was not accepted by the department - whether such goods cleared by the appellant are classifiable under Heading 8704 as motor vehicles for transport of goods or under Heading 8707 as bodies for the motor vehicle of Headings 8701 to 8705 ? - Held that - identical issue has come up in assessee s own case before the Tribunal in M/s. Commercial Engineers and Body Builders Co. Ltd. Vs. CCE & ST, Bhopal 2017 (6) TMI 855 - CESTAT NEW DELHI , where it was held that A plain reading of the chapter note alongwith the relevant tariff headings makes it clear that the product cleared by the appellant after body building activity is a manufactured motor vehicle. Considering the nature of motor vehicle, which is for transport of goods, the same has to be classified under Heading 8704 - appeal allowed - decided in favor of appellant.
Issues: Classification of final product as motor vehicle or body; Availment of credit on inputs used by the appellants
Classification of Final Product as Motor Vehicle or Body: The appeal was filed against the Order in Appeal No.BPL-EXCUS-000-APP-060-14-15 dated 06.06.2014, concerning the period of dispute from October 2011 to November 2011. The appellant was engaged in manufacturing motor vehicles by building bodies on chassis of motor vehicles under Chapter 8706 of the Central Excise Tariff Act, 1985. The appellant received duty paid chassis from customers and built bodies on them without taking credit for the duty paid on the chassis. The remaining essential inputs for body building were procured independently and credit was taken for those items. The final product cleared by the appellant was a built motor vehicle with both body and chassis, not just a body. The appellant argued that according to Note 5 of Chapter 87, building a body on a chassis amounts to the manufacture of a motor vehicle. However, the department did not accept this claim, leading to the appeal. The Tribunal referred to a similar case where the claim of the appellant was allowed based on Chapter Note 5 of Chapter 87, which states that building a body on a chassis under Heading 8706 amounts to the manufacture of a motor vehicle. The Tribunal noted that the product cleared by the appellant after body building activity was a manufactured motor vehicle for transporting goods, which should be classified under Heading 8704. The Tribunal emphasized that the appellants should be considered manufacturers of motor vehicles based on the clear wording of Chapter Note 5. The Tribunal highlighted that the product cleared by the appellant should be classified as per the provisions of the Tariff, and classifying it under Heading 8707 as simply bodies for motor vehicles would go against the legal provisions. The Tribunal also cited previous decisions supporting the classification of independent body builders as manufacturers of motor vehicles. Availment of Credit on Inputs Used by the Appellants: Regarding the second issue of availing credit on inputs used by the appellants, it was noted that they had reversed credit attributable to inputs used in the manufacture of exempted goods. The appellant argued that reversal of credit amounts to non-availment, citing various decided cases in support of their position. The Tribunal agreed with the appellant's argument, stating that reversal of credit does amount to non-availment. The Tribunal found merit in the appellant's reliance on previous cases and concluded that the impugned orders were not legally sustainable. As a result, the appeals were allowed, and the impugned order was set aside. In conclusion, the Tribunal allowed the appeal filed by the appellant based on the classification of the final product as a motor vehicle under Chapter 8704 and the issue of availing credit on inputs used by the appellants. The impugned order was set aside, and the appeals were allowed, following a similar decision in a previous case.
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