2001 (1) TMI 121 - AT - Central Excise

Summary

Issues:
1. Denial of exemption under Notification No. 162/86 post 1-3-1992 due to changes in Tariff Item 8702.
2. Interpretation of the change in Tariff Heading and its impact on the eligibility for exemption.
3. Requirement of proof for a vehicle to be considered as "public transport type passenger vehicle" for exemption eligibility.
4. Justification of duty demand based on changes in Tariff Heading and exemption criteria.

Analysis:

1. The appellant, engaged in manufacturing motor vehicles, was liable for Central Excise Duty under Tariff Item 8702. Notification No. 162/86 initially provided a 20% ad valorem duty exemption for "Public transport type passenger motor vehicles." A subsequent show cause notice challenged this exemption for the period 1-3-1992 to 16-6-1992, leading to a duty demand of approximately Rs. 65 lakhs. The appeal stemmed from the rejection of this challenge by the Collector of Central Excise and Customs, Pune.

2. The crux of the issue lay in the change introduced in the wording of Tariff Item 8702 post the 1992-93 budget. The alteration shifted the description from "Public transport type passenger motor vehicles" to "Motor vehicles for the transport of ten or more persons, including the driver." This change impacted the eligibility criteria for exemption under Notification No. 162/86, leading to the denial of the exemption post 1-3-1992 until the issuance of a subsequent notification aligning the wording.

3. The appellant contended that the change in the Tariff Heading did not affect the entitlement to exemption under Notification No. 162/86. They argued that the wording change was editorial and textual, with no impact on the exemption criteria. The authorities failed to provide evidence that the motor vehicle in question ceased to qualify as a "public transport type passenger vehicle" post 1-3-1992, emphasizing the lack of grounds for the duty demand.

4. The Tribunal held that there was insufficient evidence to support the claim that the vehicle no longer met the criteria for exemption as a "public transport type passenger vehicle" from 1-3-1992. The duty demand was deemed unjustified, emphasizing that the change in the Tariff Heading did not alter the nature of the appellant's vehicle. The Tribunal critiqued the equating of "public transport type passenger vehicle" with vehicles registered as public transport, highlighting the incorrect interpretation of the exemption criteria.

In conclusion, the Tribunal allowed the appeal, setting aside the impugned order and relieving the appellant of the duty demand, as there was no substantiated basis for denying the exemption based on the changes in the Tariff Heading.