1989 (12) TMI 55 - HC - Central Excise

Summary

Issues Involved:
1. Whether building bodies on chassis amounts to manufacturing motor vehicles.
2. Applicability of excise duty on body builders u/s 87.02 and 87.04.
3. Interpretation of tax statutes and classification of goods.

Summary:

Issue 1: Whether building bodies on chassis amounts to manufacturing motor vehicles.
The respondents, engaged in building bodies for trucks and buses on customer-supplied chassis, were not considered manufacturers of motor vehicles. The learned Single Judge concluded that the respondents' turnover being less than Rupees ten lacs, they were not in a position to manufacture motor vehicles. The bodies built/fabricated by the respondents on the chassis supplied by the customers cannot be termed to be motor vehicles. The court emphasized that the process of manufacturing the body on the chassis did not culminate in the manufacture of a complete motor vehicle, thus, the respondents were covered under Heading No. 87.07, which exempts them from excise duty.

Issue 2: Applicability of excise duty on body builders u/s 87.02 and 87.04.
The appellants argued that building bodies on chassis amounts to manufacturing motor vehicles, thus liable for excise duty under Headings 87.02 and 87.04. However, the court found no substance in this contention, stating that the bodies built for motor vehicles are covered by Heading No. 87.07, exempting them from excise duty. The court noted that the process of manufacturing bodies is not an essential ingredient for the payment of excise duty, and the end-product produced by body building is not a motor vehicle.

Issue 3: Interpretation of tax statutes and classification of goods.
The court emphasized that tax statutes must be strictly construed, and the words must be understood in the context of their trade usage. The court relied on precedents like Dunlop India Ltd. & Madras Rubber Factory Ltd. v. Union of India and others, and Synthetics & Chemicals Ltd. etc. v. State of U.P. and others, which highlighted that the meaning given to articles in a fiscal statute must align with their common parlance in trade. The court concluded that building bodies on chassis does not amount to manufacturing motor vehicles, and thus, the respondents are not liable to take any licence or pay excise duty under the contested headings.

Conclusion:
The appeals were dismissed, affirming that building bodies on chassis does not constitute manufacturing motor vehicles, and the respondents are exempt from excise duty under Heading No. 87.07.