1988 (6) TMI 169 - AT - Central Excise

Summary

Issues:
- Chargeability of Central Excise duty on specialised material handling equipment installed on motor vehicles.

Detailed Analysis:

Issue: Chargeability of Central Excise duty on specialised material handling equipment
The dispute in this appeal revolves around the chargeability of Central Excise duty on specialised material handling equipment mounted on motor vehicles. The appellants were involved in fitting various specialised equipment on duty-paid chassis, transforming them into different types of vehicles like Hi-lift commissary van, Baggage Conveyor, Passenger steps, etc. The lower authorities assessed the specialised equipment separately under Item 68 of the Tariff as goods not elsewhere specified. However, the Tribunal noted that the lower authorities failed to reassess the entire vehicle as a motor vehicle under Item No. 34, which includes a special definition of "motor vehicles." The Tribunal observed that the scheme of the Tariff was to treat the entire composite vehicle as a motor vehicle but ignore the specialised equipment part while assessing the vehicle. The specialised equipment did not exist as a separate identifiable article but was born as a fixture of the specialised vehicle. Therefore, there was no justification to assess the equipment separately under Item 68. The Tribunal emphasized that the whole composite vehicle should not be notionally broken into two parts for the purpose of separate assessment.

Issue: Applicability of exemption notifications
The appellants argued that even if the specialised equipment could be taxed under Item 68, it should be entitled to full exemption under notifications Nos. 167/79-C.E., dated 19-4-1979, and 118/75-C.E., dated 30-4-1975. The first notification exempted parts of motor vehicles under Item 68 intended for further manufacture of excisable goods, while the second notification exempted goods under Item 68 meant for use in the same or another factory of the manufacturer. The Tribunal noted that the legal fiction created by Tariff Entry 34 treated the composite specialised vehicle as a motor vehicle, entitling any part of the vehicle to be considered a motor vehicle part. The Tribunal also highlighted that even though the specialised vehicle itself was not going to be used in the factory, the specialised equipment was intended for mounting on the chassis. Therefore, the Tribunal concluded that the appellants were eligible for exemption under the notifications as the specialised equipment was integral to the composite vehicle and was not to be taxed separately under Item 68.

Conclusion
The Tribunal held that no duty was chargeable under Item 68 on the specialised equipment, which was considered a fixture on the duty-paid chassis. Consequently, the impugned orders were set aside, and the appeal was allowed in favor of the appellants, granting them consequential relief.