2002 (11) TMI 208 - AT - Central Excise

Summary

Issues:
1. Liability to pay duty on fabrication of body on Motor Vehicle Chassis received under Rule 57F of the Central Excise Rules, 1944.

Analysis:
The appeal involved the question of whether the appellant, engaged in fabricating bodies on motor vehicle chassis received under Rule 57F, was liable to pay duty. The appellant argued that they undertook the fabrication process step by step using raw materials purchased from the market, without taking Modvat credit. They contended that the operation was covered by Rule 57F, and no duty could be demanded as long as the permission under Rule 57F was operative. The appellant also highlighted that the duty had already been paid by the manufacturer selling the vehicles, and demanding duty again would amount to double taxation. They relied on legal precedents to support their position.

The appellant further mentioned that they received duty-paid chassis from Transport Corporation for fabrication, availed exemptions, and referred to a government notification exempting duty on bodies built by independent body builders during a specific period. On the other hand, the Departmental Representative argued that the appellant, using their own raw materials for fabrication, was not a job worker under Rule 57F, and thus liable to discharge duty on the fabricated bodies.

The Tribunal considered both arguments and noted that the bodies fabricated by the appellant were classifiable under Heading 87.07 of the Tariff. It was observed that the appellant was engaged in fabricating bodies on chassis using their own materials, not covered by Rule 57F. Citing legal precedents, the Tribunal held that duty had to be discharged by the appellant before clearing the bodies, even though the duty was paid by the manufacturer. The Tribunal also allowed the appellant to avail Modvat credit on the duty paid on inputs.

Regarding the decisions cited by the appellant, the Tribunal found them inapplicable to the present case. It was clarified that the appellant's fabrication process differed from the cases cited. The Tribunal also noted that no penalty was applicable to the appellant based on the circumstances. Consequently, the penalty was set aside, and the appeal was disposed of accordingly.